In the short term, very few private equity deals will be completed, but the light at the end of the tunnel is not very far away, said Raymond Svider, ’89, co-chairman of BC Partners, a leading private equity firm with offices across Europe and in New York. “Once the irregularities of the current environment fade, people will look at the data and continue to put money into private equity,” Svider said.
Svider provided the afternoon keynote presentation during the Eighth Annual Beecken Petty O’Keefe & Company Private Equity Conference, sponsored by the Polsky Center for Entrepreneurship and the student-led Entrepreneurship, Venture Capital & Private Equity Group, at the Chicago Cultural Center on February 20.
Currently, private equity must carefully engineer its approach to investing, exploring different deal structures, and different geographies, Svider said. “We must take more risks, but that does not mean being stupid,” he said.
More buyouts will fail, investments will decline, and exits will be difficult, Svider said. “The increased number of secondary transactions provides fantastic opportunities to get things on the cheap,” he said.
The few deals signed and completed in the short term will be very successful with exceptional returns, Svider said. “The market will be more rational, which will be good for the whole industry,” he said. “You’ll see deals that are better financed, better structured, and more sustainable.”
Private equity succeeds because of four primary factors, Svider said:
Succeeding in private equity requires a wide range of skills and a long list of attributes, Svider said. Among them are:
The Entrepreneurship, Venture Capital & Private Equity Group chose Svider as a keynote speaker to provide an international perspective on private equity, said second-year student Nathan Saegesser, co-chair of the group. “He pointed out that the United States and Europe are two very different markets doing private equity,” Saegesser said. “Many of the other topics of the conference were U.S.-focused, whereas he added the extra insight on the international side.”
— Phil Rockrohr
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