Ep. 31 Fireside Chat on Global PE Challenges & Opportunities

51 Labs hosted a fireside chat on global PE challenges & opportunities. 

TOPICS: (1) Developments in M&A and private equity across Asia, Europe, Africa, and the US, (2) Regulatory dynamics

See below for key takeaways from a unique panel of 3 global PE firms, a global investment banking advisor, and the largest & most active global PE legal practice.

Panelists:

• BDA Partners, Euan Rellie, Co-Founder
• Kirkland & Ellis, Duncan Enista, Partner
• Cathay Capital, Andre Puong, Partner, $4bn AUM, 143 investments
• DPI, Joanne Yoo, Managing Director, $1.6bn AUM, pan-African
• Riverside Company, Bob Landis, Founding Partner (Origination), $10bn AUM, 650+ transactions
• 51 Labs, Jordan Selleck, CEO & Co-Founder, a digital marketing agency for the middle market

Here are some of the key takeaways:

1. Global buyout transactions fell 60% from January to April and transaction volume is now trending around 1/3 of the five-year monthly average
2. Uncertainty in the US is hampering deal flow relative to other markets
3. Deals are getting done, but largely for add-ons and platforms known pre-COVID
4. Earn-outs: Not seeing a significant uptick in earn-outs; however, Duncan is seeing them as a way to get sellers back to the table when the valuations weren’t what they had hoped for during the lockdown
5. Hong Kong: The mood is bleak, according to Euan. Firms are moving out and there’s a feeling that it’s quickly becoming less of the multinational hub that attracted people for decades. In the short term, tying Hong Kong closer to China might not be all bad. For example, Chinese companies which may have be reluctant to do IPOs in Western markets might favor listing in Hong Kong
6. China: Doing most cross-border deals with China is incredibly difficult now. Also, 20 years ago you do a business meeting in a hotel lobby in China and you would find partners knocking on your door if you had a good product/brand in Western markets. Today, you have competitive local brands that are going to eat your lunch if you're not extremely aggressive and localize your business. You can't use the playbook of 20 years ago
7. Africa: Joanne Yoo, Managing Director at DPI, made it clear that Africa is not as connected to the rest of the world so the pandemic hit later and caused less damage. DPI's deal activity is actually busier than before. Their portfolio companies have largely been deemed as essential businesses and, like many lower/mid market company in Africa, they hold more inventory than other markets
8. What impact will the upcoming US election have on their business and strategies, based on a scale of 1-5? Joanne 2, Bob 3, Andre 3, Duncan 2, Euan 2