10+ hours of podcasts, in 5 minutes.
16 quotes from 1 episode on Private Equity Funcast, each with a timestamped link to the source.
Jon Apter reports that private equity firms face shifting hold periods and new integration challenges as the industry evolves. Quality of earnings reports will soon demand formal adjustments for experimental AI operational expenses at exit.
Future buyers will adjust quality of earnings reports to normalize the costs of experimental AI deployment.
“I imagine when all these companies go to exit, there will be some normalization around AI spend in these quality of earnings reports…”
From Why Quality of Earnings Reports Will Soon Normalize AI Spend
Investment committees will soon feature AI agents to audit historical deal records alongside human partners.
“I think every sponsor is going to have AI sitting on their investment committees…”
Private equity sponsors handle screening and analysis well but set the wrong tone during negotiations. Operating teams build stronger connections when pitching long term equity growth to sellers.
“…it does look a little weird and sets the wrong tone if the private equity sponsor is the one doing all of the diligence on the business because ultimately you got to figure out how to integrate them.”
“…the private equity sponsor is really good at screening and can help run the analysis, but they should not be the ones building the relationships with the other side.”
“…talk about what makes your company different and get a founder excited that their equity might grow faster under your platform than on their own.”
Finance professionals leaving private equity often mistake modeling backgrounds for operational skill. Jon Apter hired a core accounting controller first to offset personal weaknesses.
“A lot of CFOs who are effectively glorified controllers or maybe a VP of finance tend to think of their jobs as either bean counters or Excel crunchers that could sit in a corner desk and not interact with the business.”
“That's right. And that's why the first hire I made was not a VP of FPNA. It was get a good controller in the seat. Right. I realized those were not my skills. I needed to bring on someone who matched up with my weaknesses.”
“Anyone who's making the jump from the high-powered private equity industry into a corporate environment really needs to assess what is the kind of corporate environment that they are looking for.”
“…what's really important with doing M&A at the size that we were is making sure that the other side who's oftentimes not banked doesn't feel like you're taking advantage of them because we're a people business.”
“…if you're going to invest in bringing on people who are like you, you have to let them fly. You can't micromanage. You could train them and advise them and ask leading questions that might get them to where you want them to get to, but you have to give them a little bit of a leash.”
“It's definitely not a cost cutting exercise right now…”
From Why Quality of Earnings Reports Will Soon Normalize AI Spend
“Six months ago we were celebrating people who had the highest token usage…”
From Why Quality of Earnings Reports Will Soon Normalize AI Spend
“Getting the right governance around your data and the right AI usage put in place, that's what the consulting model is going to look like in the future.”
From Why Quality of Earnings Reports Will Soon Normalize AI Spend
“This concept of a 5-year hold is out the window at this point…”
“When you think about spending your dollars in year one, you need to make sure you're recouping those investment dollars in year two and three if you have a three-year exit versus a 5-year exit.”
“Private equity firms are adapting themselves as well…”
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