Goodbye 2017, Hello 2018

We would like to take this opportunity to thank our many new and previous clients who have trusted us during the year with some of their most pressing organisational challenges. We have had the privilege of supporting private equity clients and their portfolio management teams in the UK, Ireland, Germany, France, Belgium, Switzerland, The Netherlands, China, India, Singapore, Sweden, Latvia and Italy.
Our main observations on the buy-out markets during 2017 were:

  1. High levels of liquidity and a lack of investment opportunities led to high multiples, easier debt and a large number of secondaries, as high proportion of companies changed hands between professional fund managers.
  2. Increasing attention is being paid to due diligence, and in particular to check that business plan projections are sustainable and can be achieved. More sophisticated buyers are taking more time to understand organisational capacity as an indicator of sustainability.
  3. Accelerated polarisation of the funds market into large, one-stop-shop funds managing a range of asset classes across industries and geographies and increasingly specialised buy-out funds. Both extremes help to reduce investment risk and cost.
  4. Large number of smaller, specialist funds, mostly targeting lower mid-market investments have entered the field.
  5. Increasing industrialisation of fund activities with the establishment of clear roles and processes across sourcing, acquisition, operational improvement and exit.
  6. More HR or Talent-Operating Partners being named to focus on portfolio company talent development. There are may flavours of the role, but it is now established in a growing number of large-, mid- and lower-cap funds.
  7. Although the short-term economic outlook looks rosy, deal-makers universally have concerns about the broader economic context and the implications of current asset price inflation in PE.

It’s difficult to make predictions with upset elections, fake news and authoritarian tendencies proliferating. However, one thing is clear for PE-backed businesses in 2018. They will be under increasing pressure to perform. Flexibility, agility and organisational excellence are needed to maintain sales and profit growth, regardless of what scenario is in the cards.

We wish you a peaceful and relaxing holiday before what will surely be a new year full of challenge and discovery.

Instead of mailing physical cards, we have chosen to send this holiday greeting. Cost of a normal mailing has been donated to a micro-finance charity helping entrepreneurs in the developing nations contribute to their communities’ development and well-being.

Kind regards,

Andros Payne
Managing Partner, Humatica