Steve gave a keynote at Europe’s key Private Equity forum – SuperReturn 2010 – in Berlin yesterday.
He was then joined by three top CEOs with wide ranging experience as the leaders of publically, privately and family-funded businesses: Paul Thompson, former CEO, FTSE100 Resolution, James Bilefield, President, Conde Naste International Digital and Nick Basing, CEO, Essenden for panel and Q&A sessions: “On The Inside Looking Out: Portfolio Managers’ Perspectives On Private Equity”.
One thing really stood out for Steve and the panellist. Consensus is building among the top buy out firms and LPs that the traditional private equity model – very crudely, buying businesses in growing economies and markets and gearing with cheap debt – cannot be relied on in the coming years. More PE houses are chasing deals so prices are high – as is the cost of debt. So, as several very senior figures underlined to us, what’s left is developing higher quality management teams to drive superior organic returns.
And this is where the industry faces a major challenge. GPs need to stop talking about “operators” and “portfolio managers”. Professional managers are simply not going to drive the organic growth required in these markets (for more, see The Secrets of CEOs). GPs need to ensure they have true commercial leaders running their businesses effectively across the whole CEO agenda and delivering both short term business performance and long term growth.
For an industry traditionally grounded in rigorous financial analysis and less experienced in developing leaders, that’s no mean challenge. Good luck!
