Human Capital Forum Recap | August 2022

Every quarter we bring together top PE human capital and talent executives to discuss current industry topics and to offer talent leaders in private equity the chance to discuss critical topics of the day. The PE human capital role is rapidly evolving as the private equity industry increasingly invests time and cash flows into human resources.

The BluWave Human Capital Forums follow Chatham House Rule, so our takeaways herein are kept at a high level. Are you in private equity and interested learning the details by joining fellow leading PE professionals during our next Human Capital Forum?  RSVP for our next event on November 2nd.

In our most recent Forum, we discussed many topics including:

  • The private equity industry is seeing the ongoing downturn as a unique talent hiring opportunity.
  • Human capital leaders are working closely with their portfolio company leaders to accumulate best practices and share them across their portfolio for the good of all.
  • The private equity industry is actively polling its portfolio companies to understand the voice of their employees and improve engagement and retention.
  • Human capital leaders are spending significant time bringing additional skills and talent to new portfolio companies and supporting the development of their teams.
  • The PE industry is using data and objective assessment tools to improve portfolio company performance.
  • In the days ahead, human capital leaders are looking to spend more time enhancing culture, supporting leadership development, and sharing best practices during rapidly changing times.

We thoroughly enjoyed these thought-provoking conversations that occurred during this recent gathering of PE human capital professionals. If we can be of assistance, please let us know.

Additionally, you may be interested in checking out some of our human capital specific resources, which can be found here:

Q2 2022 BluWave Insights

Every quarter our team analyzes the projects we work on with our 500+ PE firm clients to get a birdseye view of the market. You can request your copy here to view all of the trends that we have seen over the past quarter.

Key findings from Q2 include value creation remaining strong due to the record number of deals made at robust valuation multiples during 2021, inflation continuing to wreak havoc on global economies, and the recessionary pressures availing substantial opportunities for all of the best business builders.

Learn more about the insights we gleaned from the report by watching the video below.

To request the full the report, click here.


Video transcript:

BluWave has a unique vantage in the North American economy. While working with more than 500 of the world’s top business builders, we’re able to understand unique insights into how and why the best business builders in the world are assessing opportunities and building value in their portfolio companies. Here are some of the unique insights we generated during Q2 2022. The name of the game in the second quarter was value creation. Value creation accounted for 68% of all activity funneled through the BluWave engine. Value creation was so robust during this last quarter for a number of reasons. Number one, private equity firms invested in a large number of companies last year so they’re acting on those investments to begin transformation. Number two, deal flow is down. A lot of the best companies were sold last year. Other companies are pausing their ambitions as the economic cycle is softening and the results slow in kind. The other mega trend that is readily apparent in our data is the specter of inflation. The private equity industry is not resting on its laurels. It’s taking aggressive action to raise prices, reduce costs, and bring in the right people with the right skills for the current times. It’s our hope that the data and insights we’re sharing will help you build your business with more speed and certainty. If you’d like to learn more and get the full report, please contact any member of the BluWave team or follow a link below.

PE VP Forum Recap | June 2022

Every quarter we gather Vice Presidents in PE to discuss current industry topics and to offer these peers the chance to gather, share information, and decompress with one another. In our most recent event, we discussed how scarcity and inflation are impacting human capital in PE as well as how firms are approaching finding opportunities in a choppy market. We’ve listed our top takeaways below.

These forums are invite-only and follow Chatham House Rules, so listed below are high-level takeaways only. Are you in private equity and interested in joining fellow PE VPs during our next PE VP Forum? Register here.

Scarcity and inflation impacting human capital: One of the unsung areas where inflation is impacting the economy the most is human capital.

  • Firms are taking a closer look at culture to increase retention and not just thinking about wages, but the total employee experience and related rewards.
  • Investments are being made in portco HR (CHROs, VPs, Directors) to collaborate with marketing functions on recruiting content to promote the benefits of an organization beyond dollars per hour. Portcos are also utilizing their current staff to recruit and network with candidates, such as incentivizing them with referral bonuses.
  • Another interesting concept is building in-house training programs to grow net-new talent pools instead of taking and losing employees to and from competitors.

Finding opportunities in a choppy deal market: The confluence of rising interest rates and geopolitical pressures are causing the deal market to become increasingly choppy. Firms are looking for ways to find opportunities in the face of risk and rising recession risk.

  • Teams are getting creative in deal sourcing by exploring new channels by moving down-market and supplementing with add-ons, focusing on proprietary or limited process situations, looking for failed auctions, and continuing to build new relationships.
  • It’s becoming increasingly necessary to be mindful of quality when selecting which deals to pursue and heightened diligence in underwriting, particularly when modeling downside scenarios. This has become even more important as we’ve seen multiples climb higher and higher over the past 12 months. Deal teams are adding extra layers of scrutiny to verify that businesses are valued at a level that will be appropriate over the coming foreseeable months.
  • Teams are spending significant time exploring targets’ operating leverage to understand performance in downside scenarios.
  • A number of firms are seeing an economic reset as an opportunity to find unique opportunities to potentially get quality assets at lower multiples, gain market share, and/or consolidate markets as weaker competitors seek safety and circle wagons.

We thoroughly enjoyed getting to gather with PE VPs to discuss these current industry hot topics. We’d be happy to connect you to the PE-grade, exact-fit, third-party resources you need to assist you in this pressurized market, just contact us here.

Learn more about how we can specifically help Deal Quarterbacks and access a toolkit that can help you do your job more efficiently here.

Women in PE Forum Recap | May 2022

Every quarter we gather leading women in PE to discuss current industry topics and to offer intelligent women the chance to gather, share information, and decompress with one another. In our most recent event, we gathered to discuss the trending topics of how inflation is impacting the investment life cycle, ESG, and what the future of work looks like in PE. We have shared the themes we heard discussed across different areas below.

These forums are invite-only and follow Chatham House Rules, so listed below are high-level takeaways only. Are you a woman in private equity and interested in joining fellow leading PE professionals during our next Women in PE Forum?  Register for our upcoming Women in PE Forum here.

Inflation: Inflation is impacting every point in the investment lifecycle from capital deployment to portfolio company bottom lines.

  • Deal Flow: From a deal flow perspective, higher interest rates will rebalance how investors think of risk/reward, but there is still $2 trillion of dry powder waiting to be deployed. Valuations are beginning to come down on the public market side, but it may be months (or years) before valuations come down on the private side. In an era of inflation, generating top-tier returns will take old-school value creation to improve a company’s ability to generate profit.
  • Portco: From a portfolio company perspective, inflation is impacting labor, commodity prices, and transportation costs. To reduce labor inflationary pressure, double down on culture, embrace tiered comp structures, and lean into automation. To fight back against commodity price increases, consider multi-sourcing, supplier negotiation, and increase prices where necessary. To address transportation/supply chain issues, consider on-shoring or near-shoring to start to balance sourcing.

ESG: Expectations on ESG are continuing to evolve, shifting from a “nice to have” to a “must have.” ESG has climbed into BluWave’s top 10 use cases on both diligence and value creation in the BluWave Activity Index. LPs are now expecting firms to collect ESG data, report on it, and make meaningful progress over time. Firms are baking ESG into value creation planning and creating thorough checklists that apply to the full portfolio.

Future of Work: COVID has disrupted all dimensions of work, from the work itself, to the worker, to the workplace. Employees are now expecting remote/hybrid work. The role of the office will continue to evolve and move towards a hub for creativity, social interactions, and building culture. The work itself is also changing – more portcos are leaning into technology and automation.

We thoroughly enjoyed getting to gather with other leading women in PE to discuss these trending topics. If we can be of help with any of the above, we’d be happy to quickly connect you to the exact-fit, PE-grade, third-party resources you need.

Interested in learning more about BluWave? Check out our Introduction to BluWave video to learn more about us and how we can help you. If you have an immediate need, contact us here or use the start a project button above – we’ll be happy to help you right away.