This episode is sponsored by AlixPartners

The Disruption Matters special podcast miniseries has returned for its fifth season, and this year, our focus is on providing an ‘Exit Playbook’, wherein leading industry experts share their advice on how to generate successful exits during a climate defined by their scarcity.

This is a six-part miniseries, and we’ll be releasing a new episode here on Private Equity Spotlight every week. But if you’d rather not wait, you can listen to the whole series right now. Just click this link – if you already have a Private Equity International account, simply sign in, or register for free to access all six episodes.

In this third episode of the season, our guests make the case that any investment case needs to be tied to the likeliest exit scenarios. Not all value creation efforts are created equal in the eyes of the buyer, so the journey to exit needs to be supporting the story the seller hopes to pitch the market. This also means taking a hard look at the current management teams and the IT solutions to ensure the company is built to grow and sustain that performance. And that’s best done as early as possible.

Guests include: Jerome Losson, partner and head of portfolio operations at Ambienta; Matteo Stefanel, managing partner and co-founder of Apis Partners; Saurabh Singh, partner at AlixPartners; Alexis Underwood, partner at Wynnchurch; Chris Satchell, head of portfolio tech at CD&R; Megha Kalsi, partner on the cyber team at AlixPartners; Maurizio Mussi, partner and head of portfolio group, Europe, at Bain Capital; Helen Lee Bouygues, operating partner at Ardian; Doron Grosman, former CEO and operating partner; Riccardo Basile, operating partner and head of value creation at Permira; Neil Kalvelage, senior managing director and head of portfolio operations at Centerbridge; Brian Cassidy, president of Crestview; Jason McDannold, co-lead of the Americas private equity practice at AlixPartners; and Adrian Letts, managing partner and head of business operations at Brookfield PE.

This episode is sponsored by AlixPartners

The Disruption Matters special podcast miniseries has returned for its fifth season, and this year, our focus is on providing an ‘Exit Playbook’, wherein leading industry experts share their advice on how to generate successful exits during a climate defined by their scarcity.

This is a six-part miniseries, and we’ll be releasing a new episode here on Private Equity Spotlight every week. But if you’d rather not wait, you can listen to the whole series right now. Just click this link – if you already have a Private Equity International account, simply sign in, or register for free to access all six episodes.

In this second episode of the season, we explore how to keep the buyer’s point of view at the center of the transaction, from initial due diligence to crossing the t’s on the final sale documents. We discuss the need to make sure the value creation efforts are building the kind of company the next buyer wants. This involves building long-term relationships with interested parties to stay abreast of their priorities and reservations, as well as ensuring the story is one that resonates and is backed up by the actual performance of the company. And we end on the one secret ingredient that can’t be discounted in negotiations with that buyer.

Guests on this episode include: Mike Hollander, managing director at GTCR; Alex Greenbaum, partner and head of active core infrastructure at EQT; Alexis Underwood, partner at Wynnchurch; Doron Grossman, former CEO and operating partner; Neil Kalvelage, senior managing director and head of portfolio operations at Centerbridge; Chris Taber, partner and managing director at AlixPartners; Lane McDonald, managing director for operations & strategy at OMERS Private Equity; Riccardo Basile, operating partner and head of value creation at Permira; Jerome Losson, partner and head of portfolio operations at Ambienta; Megha Kalsi, partner on the cyber team at AlixPartners; Chris Satchell, head of portfolio tech at CD&R; Jason McDannold, co-lead of the Americas private equity practice at AlixPartners; and Matteo Stefanel, managing partner and co-founder of Apis Partners.

Clear succession plans, steadily growing fund sizes, realistic marks and genuinely effective operating partners are among the things LPs need to see from a GP before making an allocation in the current environment.

That’s according to Young Lee, a managing director at New York-headquartered fund-of-funds manager Abbott Capital, speaking on the latest episode of PEI Group’s Commitment Issues podcast series. The episode, hosted by PEI’s Chris Witkowsky, addressed the perennial topic of private equity fundraising, with Lee noting that from an LP’s perspective, “almost always a bigger fund size is bad”.

“We would love the same thing every time, people still being happy even though they’re making the same amount of money,” he said. “[Because] what we’re looking for really is whether the GP is staying in their strategy.”

Jack Purcell, a managing partner at Charlotte, North Carolina-based Ridgemont Equity Partners, countered that “some growth is a sign of progress” for GPs. Not only does a bigger fund size “communicate progress and the vibrancy of the partnership externally to investors and other counterparties”, he suggested, but “the ability to have a critical mass of assets under management and fee income to invest” matters too.

Meanwhile, on the topic of value creation, Lee warned that while “a lot of LPs focus a lot on the operations side and often value the partners who have operating experience”, this can sometimes equate to “smoke and mirrors”, where “either they’re not effective people or GPs aren’t using them effectively”.

Finally, Purcell and Lee agreed on the urgent need for more detailed succession planning at the GP level. “The amazing thing to me is that, for an industry comprised of really competitive, really smart, Type-A people who plan everything – plan their day, plan their hour, plan the minute – to not have a plan is almost comical,” Purcell said.

The views, opinions, and statements expressed by the individuals in this episode are their own and do not necessarily reflect the views, opinions or official positions of their firms or their affiliates. Nothing in this episode should be construed as investment, legal or tax advice, or as an offer or solicitation to invest in any fund or vehicle managed by the firms or any other party. Statements regarding past performance are not indicative of future results.