How can PE firms differentiate themselves in the current landscape?
There’s a near-term and long-term answer. In the near term, those GPs that can deliver scale distributions and strong portfolio growth against a choppy market backdrop will differentiate themselves. It’s easy to say, but hard to do consistently.
In our case, over the past 12 months we have returned more than €13 billion to our investors (including LP co-investors) – €9 billion of which came from our funds. That equates to 22 percent of unrealised NAV at the start of that period. Half of that was delivered through strategic exits. Meanwhile, our buyout portfolio grew earnings organically in the mid-teens and is well positioned to deliver something similar again in 2026. Those firms that can deliver this kind of performance year in, year out will automatically set themselves apart.
Longer term, some firms are going to differentiate themselves on scale and capital distribution, and others will do so on specialism and performance. There is no right or wrong approach, but you need to know who you are and to deliver on that.
We’re building every facet of our firm around specialism and performance, total alignment with our LPs, and being the best possible destination for talent in private equity. In the next cycle, simplicity of mission and focus will be paramount.
What are LPs looking for as they evaluate managers?
LPs make long-duration, illiquid capital commitments to GPs, and the most basic thing they are looking for is alignment. They want to know they can trust the GP as a steward of their capital over the long term. That means they’re looking for a stable leadership team, a stable firm-level strategy, a focused investing strategy, high transparency and people who do what they say they will.
Beyond that, the exam question is: how well set up is a GP to perform in this investing cycle? Does this GP have a clearly differentiated strategy, can they execute it through cycles, can they translate that into alpha, have they consistently turned marks into money, and so on? You only have a right to survive in this industry if you can price a transformation plan and deliver it consistently. Simply rolling forward metrics means buying beta, backing beta and getting beta. We see our job as “buy alpha, sell beta”.
How have things changed when it comes to attracting and retaining PE talent?
The fundamentals have not changed: people want great career development, great cultures and great compensation.
We were founded by entrepreneurs, built by entrepreneurs and today are run by entrepreneurs. We take great pride in taking a kernel of entrepreneurialism and nurturing people into fully-fledged deal leads.
We particularly like independent thinkers who question common wisdom, and we then bind that with experience and mistake-avoidance. That combination will always make for great PE talent.
In terms of investing, how do you see the thematic landscape changing from the last cycle to the next?
The investing environment has shifted permanently and the firms that don’t adapt – and those that haven’t already adapted – will struggle. It’s rare that the same factor dominates across investing cycles; at various times, energy, banks and telecoms have all dominated financial markets. In the latest cycle, software has generated significant alpha, but we aren’t expecting that to repeat itself.
Where we are most focused right now is in “tech at the intersection”. Our thesis is that the best alpha in the next investing cycle will be found at the intersection of technology and our three non-tech sectors (services, healthcare and consumer).
We have a long and successful track record in technology investing, with a scaled investing office in Silicon Valley, and we have partnered with Microsoft, Salesforce, ServiceNow, Google, Cisco and many other leading technology companies.
Putting that capability to work in more traditional sectors, driving technology-led transformation plans in market-leading services, healthcare and consumer companies, is where our energy is going.
What are management teams looking for when assessing potential PE investors?
Harvesting is easy; growth is hard. The management teams we partner with tend to be seeking a partner with a genuine growth mindset and a shared vision for their business.
After that, it’s about capabilities – in digitisation, in talent sourcing, in geographic expansion and so on – that will allow them to achieve their ambitions.
We believe we are one of the few fully scaled GPs with two things: multi-sector investing expertise with deep-rooted digitisation capabilities that cut across those sectors; and an equal-weighted US and European platform, in terms of deployment and leadership.
What that means is we tend to partner with management teams for whom digitisation is a key value creation lever and/or who are regional champions seeking transatlantic expansion.
To give you some examples, in the last three months we have announced four monetisations: Boats Group, Golden Goose, Evelyn Partners and Alter Domus. Boats Group is a US business we have helped to grow significantly in Europe; and Golden Goose, also in the consumer sector, is an Italian business where we helped the management team to scale rapidly in the US. Meanwhile, Evelyn Partners and Alter Domus are services businesses whose now-modern and AI-enabled technology platforms we invested in deeply during our investments. It’s in these kinds of situations where we believe we excel.
