Frank Fumai, Kamal Mistry, and Roland Waz featured in Private Funds Management
Special edition on growth in private equity
It’s becoming more difficult for private equity firms to beat the market. Where should fund managers look for returns? This special issue of "Private Funds Management" digs in to the challenges for growth in private equity. Featured articles from Deloitte leaders Frank Fumai, Kamal Mistry, and Roland Waz explore the changing landscape and ways that operational due diligence and technology can help boost returns.
Industry leaders weigh in
How can private equity firms deliver above-market returns in an era of transition? In this special issue of Private Funds Management, Deloitte and other industry leaders explore the challenges facing the private equity industry and recommend strategies for growth. Topics include:
- Challenges to growth in private equity—Frank Fumai, partner, Deloitte & Touche LLP
- Today’s regulatory environment—Bruce Karpati, global chief compliance officer, KKR
- The need for deeper operational due diligence—Kamal Mistry, principal, Deloitte Consulting LLP
- The global tax landscape—Shannon Stafford, managing director and head of tax, The Carlyle Group
- The importance of the management team on the ground—Bob Swan, operating partner, General Atlantic
- Why PEs should invest in advanced technology solutions—Roland Waz, principal, Deloitte Consulting LLP
Scroll down for excerpts of select articles or download the PDF for a complimentary copy of the magazine.
Heading in the right direction
Challenges to growth loom but plenty of evidence suggests private equity is up to the task, writes Frank Fumai, partner at Deloitte & Touche LLP.
The audience at a recent PEI CFO and COO Forum in New York peppered me with questions after my speech. How will the industry deliver above-market returns when the easy gains have been realized and regulatory pressure is increasing? How will firms compete for deals in a market that’s getting more crowded by the day? Should we expect lower returns from private equity going forward? The volume of tough questions was telling: private equity is concerned about meeting increased expectations from regulators and investors alike.
"Those [private equity leaders] that don't revisit and revamp their tried-and-true formulas may find it much more difficult to raise capital in the future."
Financial engineering is no longer enough to keep private equity firms ahead of the competition. Now the focus is on operational due diligence, writes Kamal Mistry, strategy & operations principal at Deloitte Consulting LLP.
The days of buying undervalued assets, sprucing them with up a proverbial fresh coat of paint, and quickly selling them at a profit are long gone. Private equity firms are digging deeper into the operations of potential acquisitions. They’re increasingly prepared to make major operational changes to realize value. While this approach can deliver bigger returns, it also carries bigger risks. Are investors going far enough to evaluate the positive and negative implications of the major changes they think are needed?
"One of the most common issues Deloitte sees during operational diligence is with the existing technology infrastructure."
Life beyond spreadsheets
In today’s pressure-filled market, private equity firms need to invest in more advanced technology solutions. Luckily, IT is becoming more affordable and easier to implement than ever, writes Deloitte Consulting LLP principal Roland Waz.
In the past, general partners’ limited investments in information technology solutions didn’t seem to put a drag on their ability to deliver above-market returns. But in today’s environment, private equity firms can’t skate by on offline, outdated, or siloed point solutions. They need to start thinking about technology as a competitive advantage and tool for enabling growth, not just as a cost center. The key question is: How do firms strategize, prioritize, and select the key areas to focus their technology investments?
Five key trends are putting pressure on PE firms to invest in advanced technologies. Firms that continue to under-invest will be challenged to grow and sustain returns, meet investor and regulatory expectations, and manage operational risk.