NextWave Private Equity

Pete Witte, EY Global Private Equity Lead Analyst, explores the key themes and market dynamics from 1Q 2023 that are top of mind for Private Equity (PE) investors.

PE Pulse is a quarterly report and corresponding podcast miniseries that provides analysis and insights on private equity market activity and trends.

Visit https://www.ey.com/pepulse to view this quarter's summary.

In this episode, we will provide a quick rundown of what we're seeing in the private equity space. All the important themes and trends, and how today's macro environment is impacting PE – in terms of deployment, fundraising, financing, and some of the longer-term impacts.

In this episode of the NextWave Private Equity podcast, Bridget Walsh, EY Global Private Equity Leader, will be discussing the entrance of retail investors in the private equity market with Jenny Johnson, CEO of Franklin Templeton.

In this episode, Mark Benedetti, Co-Head of Ardian US, joins our host Bridget Walsh, EY Global Private Equity Leader, to discuss the growing role of secondaries in the private equity market.

Pete Witte, EY Global Private Equity Lead Analyst, explores the key themes and market dynamics from 4Q 2022 that are top of mind for PE investors.

PE Pulse is a quarterly report and corresponding podcast miniseries that provides analysis and insights on private equity market activity and trends.

Visit https://www.ey.com/pepulse to view this quarter's summary.

2022 was an incredibly dynamic year for the private equity (PE) industry, characterized by growth, innovation, creativity and the trademark resiliency that has defined the industry since its inception. The first half of the year saw a deal environment that carried over much of the momentum from 2021's record levels of activity and the second half of the year saw PE firms become increasingly cautious in the face of rising inflationary pressures, the macro impacts of the war in Ukraine, a widening valuations gap, and widespread dislocation in the financing markets that restricted access to PE's traditional sources of financing.

Pete Witte, EY Global Private Equity Lead Analyst, explores the key themes and market dynamics from 3Q 2022 that are top of mind for PE investors.

PE Pulse is a quarterly report and corresponding podcast miniseries that provides analysis and insights on private equity market activity and trends.

Visit https://www.ey.com/pepulse to view this quarter's summary.

The PE sector continued to experience a number of cyclical headwinds in the third quarter, as rising interest rates, growing concerns of a recession, deteriorating macro sentiment and challenges in the financing markets all conspired to limit firms' ability to execute new transactions. At the same time, however, firms continue to position themselves for long-term strategic growth, with new product launches and innovations, and by tapping new sources of capital that will allow the industry to continue to grow.

Greg Schooley, EY-Parthenon US Value Creation Leader, joins Winna Brown to discuss what tasks PE is outsourcing across business functions such as finance, IT, HR and customer service to create value.

The path to successful value creation in private equity (PE) today goes beyond typical levers such as G&A cost-cutting, sales force effectiveness and strategic sourcing. It's about an approach that leverages digital tools including automation, strategic outsourcing and advanced analytics.

Going forward, PE-owned companies of all sizes may need to look at outsourcing as a way to access cutting-edge technologies and capabilities that can lead to revenue growth opportunities, in addition to reducing costs.

Pam Jackson, CEO of Level20, joins Winna Brown to reveal how mentorship programs can help women build long-term careers in PE.

According to a report that EY teams recently published on diversity, equity and inclusiveness (DEI), the private equity industry's ability to meet stakeholder demands, access capital, win deals and compete for talent is increasingly contingent on progress against DEI metrics. Talent management has become the number two strategic priority across PE firms of all sizes, second only to asset growth. DEI initiatives are now proliferating in private equity as the industry begins to address how its culture has historically impeded diversity.

Level20 is a non-profit organization based in the UK that is dedicated to improving gender diversity in the European PE industry and specifically in senior leadership roles at PE firms.

Read "Can PE win deals if it doesn't deal with DEI?": https://www.ey.com/en_gl/private-equity/can-pe-win-deals-if-it-doesn-t-deal-with-dei

Calculate how long it will take to achieve your diversity goals: https://kenaninstitute.unc.edu/diversity-integration-model/

Ten ways male PE leaders can support and mentor their female colleagues:

1. Serve as role models and mentors
2. Engage with colleagues who are different from yourself
3. Encourage women to realize their value
4. Promote stories of inspiring women
5. Engage in small interventions
6. Embody inclusive leadership
7. Give cultural shifts time to come to fruition
8. Build a diverse talent pipeline from the bottom over time
9. Recognize that recruiting senior women is not a "quick win"
10. Model how long it will take to achieve your diversity goals with the EY Diversity Integration Model

In this episode, Laura Grattan, Managing Director at Crosspoint Capital, and Jeff Vogel, Head of the Software Strategy Group at EY-Parthenon, join Winna Brown to explore how PE firms can position themselves to win tech deals in today's highly competitive market.

Contact Laura: [email protected] Contact Jeff: [email protected]

According to the latest EY PE Pulse report, 2021 was the year of the tech deal: 30% of total capital deployed last year was allocated to technology companies. The technology sector, once just another industry vertical, now permeates every sector, claiming an ever-increasing share of deals as more companies differentiate themselves based on their technology regardless of the industry in which they sit or serve.

Crosspoint Capital focuses on the cybersecurity, privacy and infrastructure software sectors. PE firms that choose a niche specialization in the tech sector can bring deep sector expertise that translates to value creation for their portfolio companies. In an increasingly competitive tech environment, PE firms that focus on a highly targeted category of assets can find themselves in a differentiated position. They are able to quickly discern where to spend time, recognize the opportunities and limitations of an asset, and identify patterns indicative of future success.

Three characteristics of today's tech deal environment include:

1. Increasing presence of and need for club deals
2. Increasing speed at which deals are clearing
3. Developing deal theses early

To the NextWave Private Equity audience:

Since February of 2020, just before the covid-19 pandemic uprooted all of our lives, the EY global private equity team has turned to this podcast series to discuss the topics and insights that are top-of-mind for our audience of PE executives and practitioners.

From the bottom of my heart, thank you! For listening, for giving us your time and for trusting us to deliver best-in-class perspectives.

Over the next couple of months, we will re-publish some of our most downloaded and talked-about episodes about tech deals, DEI and other timely topics. These are some of our best episodes, and when you listen, you will surely understand why.

Thanks for tuning in!

Winna Brown, EY Americas ESG Private Equity Leader [email protected]

Maha Eltobgy, Chief Sustainability Officer and Managing Director at Brightstar Capital Partners, joins Winna Brown to explore how operating executives can effectively communicate the value prop of ESG at the portco level.

ESG is top of mind for PE executives right now. According to the 2022 EY Global Private Equity survey, ESG is one of the top four strategic priorities listed by PE firms. 42% of the largest fund managers seriously consider ESG in their decision-making process, while a further 39% say they consider ESG issues seriously in certain risk areas. ESG is a top priority for firms, but effectively implementing ESG strategy and principles across the portfolio remains challenging.

Five ways PE can navigate the implementation of ESG strategy and principles across the portfolio include:

1. Win trust of management teams
2. Start with employee retention and engagement
3. Meet the portfolio company where they are in their journey
4. Demonstrate how ESG values translate to business value
5. Translate ESG principles into tangible, actionable initiatives