Shor t Takes
form strategic planning to financial tracking and
reporting to marketing to anything that needs to happen
to keep the business running.
Consulting: What are some of your immediate goals?
Rainey: We’ve had a really good run; the business has
grown eight-fold in terms of revenue and clearly we are
continuing on that path of growth for the business and
our private equity clients. So, supporting that growth,
and finding and developing the talent that’s needed—
we currently have about 1,300 private equity dedicated
resources and consultants globally—is a top priority.
Private equity is a fast-growing part of Bain’s business—
it represents about a quarter of Bain’s business today and
it’s growing fast. So, just keeping up with the changing
needs of our clients is another big goal.
Consulting: What do you see as Bain’s differentiators
when it comes to serving clients?
Rainey: When I think about what we need to serve our
clients, I think about getting them better insights faster.
Competing effectively for deals today really requires
having the early view on assets even before any formal
auction process starts. So, using advanced analytics in
the diligence process can really mean the difference
between winning and losing. Advanced analytics is
clearly a place that is changing rapidly and constantly
evolving; there’s always a new tool or a new data
source. So, staying on top of that and always making
sure we have the latest and greatest for our clients is
a big point of focus for us now. The other thing that
is really becoming imperative is having a view of
disruption in the industry. When we think disruption
most people think digital disruption but disruption
can come from a lot of different directions. It can be
macro-economic, or geo-political forces—we’re seeing
that now with Brexit—or customer consolidation.
Really understanding the disruption, and who will be
Consulting: What’s the current state of the PE market?
the winners and losers, is critical today. One other thing
is seamlessly integrating the commercial due diligence
with the operational due diligence. If I rewind the clock
to 20 years ago there was just due diligence, but at some
point the commercial and operational due diligence got
split and you ended up with professionals doing one or
the other but not both. That created blind spots because
it failed to capture those inter dependencies between
the strategies of the business and the operations of the
business and if you don’t understand the differences
deeply it’s really difficult to make smart decisions.
That’s something that we feel strongly about at Bain.
Rainey: It’s been an historic five-year stretch for the
private equity industry. The industry has seen more
capital invested, more capital distributed back to its
investors and more capital raised than an any point in
its history. Right now, there is about $2 trillion in private
equity dry powder, about $750 million is for buyouts
alone. But at the same time, the challenges have never
been greater. We have persistent high prices combined
with intense competition from firms who are very
aggressive on M&A; we have geo-political uncertainty;
and the ever-present threat of recession. That makes for
very challenging times for private equity deal makers
and we continue to see the number of deals trend down.
On the flip side, this is a great time to exit investments. If
you have something to sell, there has never been a better
time to sell. Institutional investors are in their eighth year
of being cash-flow positive due to the flood of the exits.
Institutional investors have been receiving $2 back for
every $1 invested in private equity. It’s a great time to
be raising new funds to put it back to work into the asset
class. There’s no question that we’re in the late stages
of the expansion. As a result, we’re seeing the cash flow
to anything that’s considered recession proof or industries,
like healthcare, that can weather a recession best. I think
most investors realize that any deal they do today, there’s
a very high likelihood that the investment will hit a
downturn at some point during the holding period.
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