PIN (Power in Numbers)’s Post

As a former member of Bain's #PrivateEquity Group, with a couple other stints in PE & CorpDev, I enjoy reading Bain & Company's Private Equity report each year. It contains neatly distilled insights (à la Bain) from knowledgeable professionals, including former office colleagues such as Christophe De Vusser (Brussels - elected as the next CEO) and Karen Khalaf (Dubai - not elected as CEO yet!). Let me share a few key takeaways. ▶️ WHERE WE STAND: 🔸 Market has stalled – the speed at which interest rates increased has resulted in a huge drop in both number of deals and exit value 🔸 There are record levels of dry powder ready for deployment... a fourth of it waiting for 4 years 🔸 Nearly half of buyout PortCos have been held for 4 years ▶️ THIS WILL REQUIRE FUNDS TO: 🔸 Double down on value creation to generate operating leverage – focusing on activating organic, profitable growth 🔸 Manage the portfolio very deliberately to balance liquidity needs vs. capturing unrealized potential 🔸 Communicate clearly with LPs to instill confidence and stand out during fund-raising Of course, GenAI can't be left out of any serious analysis these days... ▶️ REFLECTIONS ON GEN AI: 🔸 Understand how GenAI might disrupt your industries and PortCos 🔸 Explore how to reduce back-office costs in your firms 🔸 More strategically (and arguably harder), unlock value by improving customer experience and helping your team focus on what only they can do 🔸 Use GenAI to sharpen insights across all your funds' lifecycle stages - sourcing, screening, due diligence, portfolio management and exit. While high returns in Private Equity may not be as common as in years past, there is a lot of value waiting for high performers who can adapt to the current conditions. I invite you to explore the report too! I include the link on the first comment.

Bain & Company Private Equity Midyear Report 2024 ➡ Private equity’s two-year slide in deals, exits, and funds closed slowed in the first half of 2024, but activity remained tentative and momentum scarce. ` ➡Limited partners, meanwhile, continue to press for an increased pace of distributions and are focusing new commitments on a narrow swath of favored funds. ➡General partners who can’t shepherd portfolio companies to attractive outcomes may face a shakeout. But there are practical ways to get the wheel spinning again.

Wow, that's an impressive track record! It just goes to show the impact and influence that McKinsey alumni have in the business world. The fact that over 80 unicorn companies have been founded by McKinsey alumni is truly remarkable. Not only does it speak to their entrepreneurial spirit, but also to the valuable skills and knowledge they gained during their time at McKinsey. I'm sure these companies are making waves in their respective industries and contributing to economic growth. Keep up the great work, McKinsey & Company! #success #entrepreneurship

Key takeaways of Bain's Global M&A report - 2023 was the year when buyers and sellers struggled to align on valuations. Strategic deal multiples reached their lowest point in 15 years. This valuation gap emerged as the primary barrier to dealmaking, compounded by high interest rates, macroeconomic uncertainties, heightened regulatory scrutiny, and emerging political challenges. -  The Enterprise Value/EBITDA (EV/EBITDA) ratio for strategic deals dropped by 16%, marking the lowest multiples in a decade. The overall M&A market decreased by 15% in 2023 to $3.2T, the lowest level in ten years, and strategic M&A activity declined by 6%. Deal multiples reached a 15-year low at 10.1x, with the potential for further decreases; historically, troughs occur between 9 and 10x. Buyers were wary of overpriced assets, while sellers were reluctant to lower prices. -  Tech sector deal values dropped by ~ 45%, with median valuations falling from 2021’s high of 25x EV/EBITDA to 13x last year. Despite rebounds in healthcare, life sciences, energy, and natural resources M&A, these were insufficient to offset the declines in tech and manufacturing. -  Corporates divested non-strategic assets, and private equity firms offloaded mature portfolio companies. -  Bain research suggests that active acquirers outperform their less active or inactive counterparts in long-term shareholder returns. Companies that consistently invest in acquisitions across economic cycles, using proven and customized strategies to transform their operations, are the ones that ultimately succeed. -   Bain surveyed over 300 M&A professionals about their adoption of generative AI in M&A processes. Their research indicates that current usage stands at 16% but is expected to surge to 80% within the next three years. Early adoption is mainly seen in the technology, healthcare, and finance sectors, particularly among larger companies engaging in moderate M&A activity, averaging three to five deals annually. The primary applications are in sourcing and screening potential targets, as well as in due diligence. - For deal makers yet to adopt generative AI, beginning involves addressing three critical questions: 1) Where will generative AI deliver the most value; 2) How to create a distinct advantage, especially focusing on a sustainable competitive edge over time; and 3) Strategies to mitigate associated risks. #mergersandacquisitions #mergersacquisitionsdivestitures #cfoinsights

Dive into Bain’s Diverse Teams, One Bain report, sharing some of the ways we magnify the diverse strengths, perspectives, and experiences of our talent, so that we can deliver extraordinary results. Witness our Diverse Teams, One Bain operating principle at work: https://lnkd.in/e4V-fBix

BREAKING: Bain Capital's Strategic Expansion in Asia and Their Acquisition of Goldman Sachs' talent. 🚀 Interested in a career at Bain Capital or Goldman Sachs? 🏢 Intensifying focus on the lucrative Asian property market 💼 Welcoming Man Kinoshita, ex-Goldman Sachs exec, as partner 📈 Japan's property investment volume surges 52% amid global downturns For a deep dive into Bain's strategic move and what it spells for the industry, read the full article here: https://lnkd.in/eTM4pnhH #BainCapital #RealEstateInvestment #AsiaBusiness #Finance #Strategy

For years, our operating principles have guided how we excel as a firm, as teams, and as individuals. They also define who we are: Diverse Teams, One Bain. For 2024, we highlight what we're doing globally #atBain, with clients, and in communities as we live into this operating principle. Read our annual Diverse Teams, One Bain Report here: https://atbain.co/3Rnl2ZQ

Missed your chance to attend #iqeqcrossroads? Check out the highlights video below to have a peak into what was discussed. #events #finance #insight #london