It uses techniques that are specific to the problem at hand and extends to investments beyond public equities. The practice of value investing is flexible and tactical. It explores how the practice has evolved since its inception and provides cutting-edge insights and best practices for the future of investing in a world of disruption and ever-changing trends in the market. Ultimately, while the balance of power might be shifting back toward LPs, funds can still rely on lagged valuations to keep their investors happy (and fees high).Building on our popular Value Investing program, the Advanced Value Investing program provides a deeper dive into the world of value investing. Boosting efficiency and enhancing cash flows is certainly harder than loading companies up with cheap debt and hoping for lofty exit multiples, but private funds should theoretically be well-equipped to make impactful improvements. One tool that the fates have not taken from PE funds is the ability to make meaningful operational improvements within the companies they buy. A higher cost of debt and the possibility of lower multiples are pushing expected IRRs below most hurdle rates, which explains the slowdown in deal-making.įor buyout firms in particular, there are only so many ways they can create value without relying on cheap debt financing. Here's the problem: funds can't charge fees on capital that hasn't been deployed, but investing now could mean accepting lower IRRs. Aggressive fundraising has left many PE firms with large commitments that have yet to be invested. Private markets are proving to be markets after all, but PE funds are faced with a unique set of conditions to contend with when compared to their public market peers.įor example, GPs are facing a perplexing issue: TOO MUCH money on hand.
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