Moneta Family Office hosted its annual Private Market Economic Outlook in October at The Bogey Golf Club in St. Louis. The event brought together a panel of private equity industry leaders, including Mark Allsteadt, Jon Rather, and Michael Hollo.
Susan Brown moderated the panel discussion and audience Q&A, during which panelists shared their views on a range of topics related to business and the economy at large.
“Of the 20,000+ companies in the U.S. with revenues of at least $100 million, 87% are private companies… which means if you only invest in the publicly traded markets, your opportunity set is only 13% of the true investable universe.” – Susan Brown, Moneta
“It’s such an important asset class and people need exposure to it. If you look historically at returns, private equity has outperformed the public stock market by 500 – 600 basis points (5-6%) regardless of what period you look at… 3, 5, 10, 15 years. Why? Well, for us, because when we buy a business we are there for the long-term and doing what is best for the company, not to make some Wall Street analyst happy. And that is a huge advantage in the marketplace.” – Jon Rather, WCAS
Topics of discussion included:
- How should investors view private equity in the context of their overall investment portfolio?
- How does Moneta find and pick the best managers?
- Given the current economic environment – particularly higher interest rates – how does that influence decisions related to your portfolio companies?
- How do you help underlying companies with operational efficiencies and profitability?
“Anyone can buy a company, just throw out the highest price. The key in private equity is what you do after you make the investment – how are you going to add real operational value. That’s the most sustainable strategy in private equity.” – Jon Rather, WCAS
Q&A: What are the biggest mistakes that family-owned businesses commonly make when selling to private equity that they should be on the lookout for?
- “You want to have an M&A focused law firm advising you. Many folks want to use an attorney that they’ve known for a long time and they don’t have some of those resources…It works against them in the auction process.”
- “Have a regional investment book advising you and running the process. Go after the types of target buyers appropriate for you and generate some competition.”
-Mark Allsteadt, Heartwood
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