From my Notes: PE Conference Takeaways

In February, I had the opportunity to attend the 17th Annual Beecken Petty O’Keefe & Company Private Equity Conference, hosted by Booth’s Private Equity Group and the Polsky Center.  As someone who spent time in the industry prior to Booth but has been unplugged from the world of PE over the past couple of years, I’m especially thankful for events like these for keeping me abreast of all that’s happening in the private equity space and for preparing me for my eventual return to the industry.

This year’s event was jampacked with a diverse set of keynote speakers and panels, addressing topics ranging from new fund formation to buy and build strategies, and everything in between. 

My personal favorite item on the agenda was the keynote address by Marcel Erni (Booth ’91), Co-founder and CIO of Partners Group, a global private equity firm with $66B in assets under management based in Switzerland.  His story of starting a small fund in the late ’90s with the idea of bringing private equity to German speaking countries in Europe, and seeing the firm grow into one of the largest investors in the world today was incredible to hear. 

Throughout the day, I jotted down notes on the themes that I thought were particularly interesting for students thinking about future careers in PE.  Here are some of the greatest hits from my notes:    

Get ready to buckle up, it’s a competitive world out there. This was probably the most recurring theme of the conference for me.  Multiple speakers addressed the competitive challenge created by large funds coming down-market, a very frothy fundraising environment, and even limited partners becoming direct buyers of assets.  This has translated into increasingly competitive deal processes (great news for all my entrepreneur friends out there!), with 2 or 3 parties going through the full diligence process but only one selected to proceed, which means some firms spending millions in diligence fees to lose out on a deal!   

The “bubble” mania may be overblown. That being said, the industry should be okay (hopefully).  One of the speakers made a clear distinction between the recent bitcoin craze and private equity—one is a bubble, by definition, and the other is not.  In the grand scheme of things, PE is still small compared to other asset classes, and the growth seen in the industry today has been experienced before.   

There are a lot of ways to skin this cat. It was fascinating to see how different funds pursue different strategies and approaches to generating returns.  No two funds that presented on that day were the same! We heard from geographically focused funds to global funds, sector specific to sector agnostic, and different takes on the “operational” approach to value creation. 

Know your angle and play it well. Given the competitive nature of the market (see item 1), having an “angle” on a deal and a relationship with a company’s management team long before a deal process is especially important.  Many speakers mentioned that if they have not known the target for well over a year before a process, they will simply pass on the opportunity given the low likelihood of winning.   

First-time funds are a whole new world. Fundraising for any firm is a whole separate job, but learning how new funds establish their strategy and niche even before going out to the market was very interesting.  And this panel reminded me of a surprising takeaway from Professor Kaplan’s Entrepreneurial Finance and Private Equity course (a must-take, trust me), that first-time funds actually perform quite well.

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