PE was a 40 year levered bet on declining interest rates. Now that the Fed is taking away the punch bowl, party's over.

Thoughts?

like
Posting as :
works at
You are currently posting as works at

Ok, Cassandra. What will happen is what happens to public companies - the optimal cap structure will shift to account for a higher cost of debt, multiples will come down and investors will focus on cash yield. Were many companies over levered off made up EBITDA? Probably, but there are equity cure covenants so it’s unlikely you’ll see a lot of bankruptcies. There will be no “blow up”. Returns will come down, vintages will be held longer and maybe some funds go out due to performance. It’s growth / VC that will see the largest correction.

like

Blackstone Coach coming in hot

likefunny

I hope this is true. Y’all make too much money and I’m jealous

likefunny

nah, PE is sitting on huge piles of cash ready for a correction to buy things at a discount.

likesmart

@SrAssoc1 do you actually think PE firms just buy and sell companies? That’s totally wrong, they generally do a ton during the hold period to add value, it’s not uncommon for the company they’re selling to have a totally different story from the one they bought

Mostly agree on VC and early stage PE. (RIP blockchain funds)

Disagree on late stage PE.

like

TINA - there is no alternative

It doesn't matter. The game is beating public markets, which are also poised to underperform under raising interest rates. It's s relative, not an absolute game. Investors will always be attracted to the incremental returns from the liquidity premium (industry wide) and alpha (for good firms).

likefunny

Everyone thinks differently. To me, it’s a combination of both and capital allocation. I have money in both (public and private) but at a certain %. Also, don’t forgot to hold cash at this point in time

I think everyone is missing the point here. Once rates rise to a normal level, capital allocators can get incrementally better risk adjusted returns in fixed income and more $ will flow to that vs. PE than before. There's also the notion of getting a return on CASH (4-5% sounds great!). All about opportunity cost and attractive returns. Equities (Public/private) have been the only game in town the past 15 years. Public equities have become a retail game now. PE will def be impacted, aside from those with good returns. It's more expensive to fund LBOs and valuations are lowering. Game is over for PE. So many of these MM firms who raise $ to roll up gas stations only to flip to another sponsor will be out of biz

funny

Sure, that I agree. If you are in a bottom quartile fund, you’d be out of a job soon anyways

Let’s be clear. Fund raising is not even linear, it’s almost logarithmic. The top quartile funds get the lion share of the money. Second quartile gets the scrap and rest get nothing

like

I think if you are undifferentiated in your ownership approach, yes, your fund was primarily engaging in financial engineering that was ultimately dependent on cheap debt to achieve an above market return. And the party is going to stop very quickly there, though this will be somewhat tempered by valuations going down as private/public companies face the same re-balancing of their capital structure.

For firms that have more of an “edge” in terms of operations and value creation, they’re be able to weather more of that storm and be competitive. Sustainable differentiation and segmentation is going to matter a lot more in the market environment we’re heading into

like

I don’t think P.E will be damaged in anyway.

Related Posts

Disappointed that J&J's antibody treatment didn't seem to work in hospitalized patients

like

Who here is willing to turn on networking for the next 2 hours?? People want to see their options in this bowl! You can then quietly go back into the shadows.

I’ve worked in clinical research in the academic/non profit world for the past five years. I want to transition to a role in pharma or a CRO, but haven’t been successful yet because I don’t have industry experience. Does anyone know of any CROs/pharma companies that are willing to hire someone with research expertise from an academic medical center rather than already in industry? Thanks!

like
like

I am expecting an offer tomorrow for a senior hardware engineer. Any idea what I should be looking for as pay? It's a worldwide company but very small engineering department in the pacific nw. I was also wondering if anyone has had luck negotiating vacation time?

like

Wordle 532 3/6

⬛⬛⬛⬛⬛
🟨⬛🟨🟨⬛
🟩🟩🟩🟩🟩

smartlike

What is salary of software engineer at mindbody?

like
like

What's the feel for the job market there? I've seen a few interesting openings, and I reached out to learn more about one. But haven't heard anything back.

like

So coming up to my 3 years at UK KPMG Audit, and I got an offer from a food delivery tech company (think Ubereats, Deliveroo, Doordash etc) for a performance analyst type role which monitors/reports metrics for the Operations.

I'm interested in tech and thought this was a possible to foot in the door for future financial roles in tech.

Was wondering if anyone has thoughts on such roles or...is it a dead end approach.

like

Any fishes here that came over into MAS from EY-Parthenon - would you recommend the switch?

Any consulting companies I can check out close to Conway, SC? Thinking about moving home and will have to switch companies because there are no Accenture offices within 90 miles

I searched and i’m incredulous we haven’t had this discussion yet. What’s your position on LIV. I think it’s a league mostly of has beens and never was’s designed to stroke Greg Norman’s ego and personal vendetta. I have no problem if you want to take the money to play events no one will care about and won’t get world ranking points, but don’t think you can have it both ways.

I've had my run-ins with people who like to linger in their thoughts and spend time circling in conversation because, whether they knew it or not, they were not sure what they were looking to achieve.

This has burned me in the past (e.g., Hours spent revising material, unnecessary back-and-forth communication with clients).

Hence, when you are assigned something or create something for yourself, make sure you are fully aware of your end goal, so you know what you are working towards and how t

Post Photo
like

Hi All,

I am actively looking for an opportunity as Functional QA.

Total Experience - 4 Years

In these 4 years, apart from being responsible for product testing, I have taken on multiple responsibilities like maintaining Product documentation, being Product Consultant and handling client queries, helping ETL developers to build their solutions, and conducting various training for new joiners.

Notice period - 90 days (Currently serving notice period)

like

Anyone have experience with half of a CW/AD team getting laid off?

like

Anyone know the hour requirement for firms like Littler, Ogletree, etc?

like

Does UBS provide any welcome kit?

like

Hey how is appraisals in altimetrik ??

Who do you feel is leading the charge on brand-side design at the moment? Any notable standouts that you are "wowed" by?

like

Additional Posts in Private Equity and the Buy Side

Intel on Nonantum Capital Partners?

like

How are the pipelines looking for you, our dear buy side friends (UK in particular)? I spend my days doing DDs for you folks, and we are looking QUIET…just a summer lull, or are we looking at something more systemic?

like

What the best material to improve investment team know how on the job and why? CFA, Wallstreetprep, CAIA, Corporate Finance Institute,…?

like

What are the major differences between PE firms? What are the comparison criteria if I wanted to compare which PE firms to apply to?

likehelpful

What are other ways to trace precedents in a model exam during an interview if you don’t have plug-ins like Turbo TTS?

like

Do I have a chance at making it to VC if I am objectively unattractive and balding?

likefunny

Currently at ~1 YOE in PE ops. Want to recruit for off cycle PE deal team roles for summer 2023. Is it too early to start applying/reaching out to headhunters?

like

What’s life like in LMM PE? Do I get to have a life?

like

Considering applying to KKR capstone, any idea what TC looks like for associates? Base is ~150k according to H1b site

like

Have you ever seen someone go from Big 4 TS -> buy-side, without the intermediate IBD step? Could quick promotions be enough?

like

What are the salary expectation for an analyst in infrastructure private equity with 3 years of experience ? (In london)

like

Pros-Cons of LMM PE?

like

what do you wear to the first call with a pe firm? its with an MD so assuming i may need a jacket and tie?

like

Owner of my company is purposely withholding my bonus because he thinks I’m going to quit after I get paid. Rest of the company already got paid. Ironically I had no desire to quit before….but now I do. How would you handle this?

like

What kind of background do Hedge funds look for in a consultant? Non MBB

like

Do UMM PE firms often provide MBA sponsorship for investment team associates?

like

Switched from tech consulting into PE, but I’m struggling to catch up on the accounting & modeling mechanics. Any advice for how to get better? Just time and practice?

like

Haven’t lived in either city and don’t know much but what are pros and cons of Boston vs. New York?

Have to pick between the two offices. For some context I’m around a 25 YO with minimal ties to either cit. Would love any thoughts / insights, thanks!

like

Where can I find analyst reports detailing the investment thesis/merits & drawbacks on companies? Public and non-public companies

like

New to Fishbowl?

Download the Fishbowl app to
unlock all discussions on Fishbowl.
That was just a preview…
Sign Up to see all discussions
  • Discover what it’s like to work at companies from real professionals
  • Get candid advice from people in your field in a safe space
  • Chat and network with other professionals in your field
Sign up in seconds to unlock all discussions on Fishbowl.

Already a user?
Login here

Share

Embed this post

Copy and paste embed code on your site

Preview

Download the
Fishbowl app

See what’s happening in your industry
from the palm of your hand.

A phone with Fishbowl app

Send download link to your phone

OR

Scan your QR code to download
Fishbowl app on your mobile

By continuing you agree to Terms of Use and Privacy Policy.

Messaging rates may apply

Download app

Sign up for free to view this conversation on Fishbowl

By continuing you agree to Terms of Use and Privacy Policy

Already have an account? Log in

Sign up for free to continue using Fishbowl

By continuing you agree to Terms of Use(New) and Privacy Policy(New)
Messaging rates may apply

Already have an account? Log in

For account settings, visit Fishbowl on Desktop Browser or

General

Legal