Stay ahead in a rapidly changing world. Among software companies, growth equity-backed tech companies account for only 8% of revenue, but 19% of growth, 14% of sales and marketing spending, and 13% of research and development spending. Is that about to change? Our two-part series examines the record year in private equity and three trends that are top of mind for many of our clients. There were 28 of these firms in our sample, and they clearly won on a deal-by-deal basis, as measured by internal rate of return. We are focused on creating and inclusive culture and promoting programs and policies to achieve that mission. We support the drive for rapid returns by developing a strategic blueprint, leading workshops that align management with strategic priorities, and directing focused initiatives. Its also clear, however, that an elite group of firms has found a way to buck the trend. Nicolas Bloch is a coleader of Bain & Companys Strategy practice. Private Equity. *I have read thePrivacy Policyand agree to its terms. To a large degree, this is a function of maturity. Investors say environmental, social, and governance (ESG) matters more than ever, but limited partners and private equity firms frequently lack the tools to measure whats workingand whats not. We advise investors across the entire investment life cycle. Given the historic sell-off in the wake of the crisis, US stocks were teed up for an equally historic rebound. Please read and agree to the Privacy Policy. Stay ahead in a rapidly changing world. WebThe 12th annual event is focused on best practices in private equity portfolio operations and value creation across all functional business areas. Everyones buzzing about web3 and the metaverse, but what are the real-world implications for your business? We are proud to lead the industry on environmentally responsible practices as a Certified 100% CarbonNeutral Company. The buyout world is dominated by technology deals, but due diligence is still catching up at many firms. Real progress toward racial equity depends not only on hiring Black employees, but also on making sure they stay and thrive. While competition from the public markets will surely ease off at some point, the long-term trend in PE returns is more troublesome. BainsGreen Teamsleverage office-level green communitiesBainies who are passionate about reducing our environmental impactto champion sustainability strategies. We work with ambitious leaders who want to define the future, not hide from it. We measure our success by the success of our clients: more than 60% of the Global 500, private equity funds representing 75% of global equity capital, leading nonprofits and innovative startups. Diagnostics labs and R&D technology firms have attracted more investments from private equity firms. Environmental, social and governance (ESG) factors are poised to shape the financial investor industry for years to come. WebBain Boston was founded by Bill Bain in 1973 and serves as the corporate headquarters. What are these top-tier funds doing right? As private equitys relative outperformance attracts increasing amounts of capital from investors, competition for a limited number of high-quality assets increases, driving up average purchase price multiples. Public vs. Do you have differentiated scale that allows you to overwhelm the competition with more resources and staying power. Big deals roar back, especially in Europe. First, US monetary and tax policy couldnt have been more accommodating, leading to a slow but steady expansion that produced the lowest level of unemployment in half a century. A raft of new public policies will not only reshape portfolio strategies, they could also transform the way private equity houses run and grow their businesses. By just about any measure, private equity set a remarkable new standard in 2021. WebBain & Company is aware of various employment scams involving interview and offers of Bain & Company employment through the use of imposter websites, social media profiles, spoofed email addresses and other fraudulent means. With a deep bench, proven expertise, and state-of-the-artadvanced analytics tools, we can help you navigate these changes and achieve superior results. Private equity is in our DNA. Shorten the time frame, however, and the picture isnt what most PE investors were expecting. This article is part of our 2020 Global Private Equity Report. None of this means that the private equity industry should relax, however. They also continue to vote with their wallets. We love this format because we get to discuss cases based on our own client work. If you draw a trend line between the 10-year return in 1999 and the 10-year return today, it would show a decline of 6 percentage points over that period (see Figure 3.5). WebAfter a record-setting 2021, Bain's Global Private Equity Report provides a wealth of data and analysis on key themes affecting private equity, including the growing importance of ESG, the continued rise of Asia, the value of a well-defined sector strategy, and more. We have led hundreds of Extra 10% cases over the past few years, providing unique professional development opportunities while positively impacting local communities. Proprietary data tools, such as DealEdge, SPS, OPEXEngine, and Pyxis, reveal key insights and boost our best-in-class capabilities. Determine a targets full potential and provide a clear post-acquisition agenda. More private equity sponsors team up to win bids and spread risk. They're thinking of opening a coffee shop in a new city and wants our business advice before they proceed. While a 15% average annual return net of fees is impressive even by private equitys own high standard, parity with public markets is not what PE investors are paying for. We have partnered extensively withAcumensince 2012from strategy and operating model design, to sector-mapping and investee pipeline development. Payers look to advanced data analytics and member engagement in order to lower costs and improve outcomes. Well help you determine your unique priorities and opportunities and embed the appropriate ESG considerations into every relevant investment decision. Private Equity in 2019: Strong Deal Activity Despite Worsening Macro Conditions. Theyre more adept at developing the right management team, adding capabilities when necessary, and tapping into the right ecosystem of partners when that makes sense. *I have read thePrivacy Policyand agree to its terms. 2022 Diversity, Equity, and Inclusion Report. *I have read thePrivacy Policyand agree to its terms. WebBain Capital, LP is one of the worlds leading private investment firms with approximately $160 billion of assets under management that creates lasting impact for our investors, teams, businesses, and the communities in which we live. Stand apart from your peers and develop tailored strategies for continued excellence. WebBain & Company is a top management consulting firm. Large-scale and tech-savvy assets get the lions share of investment. While competition from the public markets will surely ease off at some point, the long-term trend in PE returns is more troublesome. *I have read thePrivacy Policyand agree to its terms. We have recently announced our renewed and strengthened commitment to advancing racial equality and social justice in our communities. Theres little reason to believe that US equities will somehow break out of this pattern and sustain these double-digit returns over the long term. *I have read thePrivacy Policyand agree to its terms. Bookmark content that interests you and it will be saved here for you to read or share later. Increasing competition for deals is driving specialization, which means that anybody youre bidding against has an angle. And with deal multiples at record levels, its not going to get any easier in the years ahead to generate the kind of performance investors are looking for. Its worth noting that public and private returns have not converged in Europe. We help tackle some of the world's toughest social issues by partnering with the most effective and change-oriented nonprofit organizations and government entities. Add in growing pressure from well-heeled corporate buyers, and generating alpha becomes even more daunting. Learn about how we help clients in the education sector. Asia-Pacific Private Equity Practice Co-Leader. And if you win at a high price, you may come to regret it. Bain teams have worked with the Office of the UN High Commissioner for Refugees to develop and operationalize a sustainable fundraising strategy and operating model, which will nearly triple current private-sector funding to $1 billion. Globally, private equity generated $512 billion in buyout deal value during the first half of 2022, putting it on pace to produce the second-highest annual total ever (behind 2021s all-time record). We recently studied a pool of 113 private equity firms that each have raised $5 billion or more since 2000. Acquisition to support independent companys product innovation and expansion in existing and new global markets TOKYO Aug 29, 2022 Bain Capital Private Equity (Bain Capital), a leading global private investment firm today announced it has signed a definitive agreement to acquire Evident Corporation (Evident), a subsidiary of ESG has grown beyond its socially conscious roots to become a core component of creating value in private equity. Please read and agree to the Privacy Policy. In about 30% of those years, the public markets generated negative real returnsthree times private equitys down-year rate for its 30-year history (see Figure 3.3). *I have read thePrivacy Policyand agree to its terms. Bain & Company ist eine international agierende Strategieberatung mit rund 12.000 Mitarbeitern. Through these "Extra 10%" projects, volunteer teams provide consulting advice to nonprofits and social enterprises. Stay ahead in a rapidly changing world. Bain has partnered with theKnowledge is Power Program (KIPP) since 2010 to increase the number of its low-income students graduating from college and more than double the number of students served. All consulting role candidates (and some non-consulting roles) can expect a case interview, regardless of which office they apply to. Please read and agree to the Privacy Policy. In addition to our work with nonprofits, we help clients accelerate their core business strategies while addressing social, environmental and economic fairness considerations. Learn about our Environmental Sustainability. This explains why a large majority of the capital flowing into private equity is targeting these top-tier firms. WebWe created the Net Promoter System to help companies measure and manage customer loyalty. High multiples arent as scary as they seem, but differentiated expertise is critical in this burgeoning sector. Together, we achieve extraordinary outcomes. Stay ahead in a rapidly changing world. Heres how the controversial explosion in special-purpose acquisition companies is unfolding. WebBain Capital is one of the worlds leading alternative investment firms. How to take the promise of career-connected learning to scale. WebOur unique approach to change management ( Results360 ) helps structure, orchestrate and enable sustained results. The best deal decisions require more than commercial diligence. The Global Development Network (GDEV) is a grassroots network that connects and mobilizes hundreds of Bainies who share a passion for global development. Weve partnered with the leading climate management and accounting platform to bring you breakthrough carbon analytics and help you accelerate your decarbonization strategy. We embrace a grassroots tradition of fostering entrepreneurial community service, encouraging employees to rally for the causes they care most about. Please read and agree to the Privacy Policy. Our dedicated case teams typically partner with clients over a prolonged period of time to address their most complex, big-picture management issues. (LPs) by Bain & Company and the Institutional Limited Partners Association (ILPA) 93%. WebAcross the private equity industry, a new focus on environmental, social and governance (ESG) issues is taking hold, as investors realize ESG can not only increase valuations but also drive a wide range of positive social outcomes. As strong as private equitys performance has been for the past decade, buyout returns have been trending downward over the past 30 years. Here's a look at some of them. 2022 Diversity, Equity, and Inclusion Report. Since 2009, when the global economy limped out of the worst recession in generations, US public equity returns have essentially matched returns from US buyouts at around 15% (see Figure 3.1). There, PEs historic outperformance continues (see Figure 3.2). None of this means that the private equity industry should relax, however. Investors have poured more than $2 trillion into buyout funds over the past decade for a simple reason: They deliver. We help leading social pioneers scale and amplify their impact. Bookmark content that interests you and it will be saved here for you to read or share later. Prioritize your ambitions, sharpen your investment decisions, and fortify your firms foundation. Working with Professor Josh Lerner of Harvard Business School, as well as State Street Global Markets and State Street Private Equity Index, we analyzed whats been driving returns in both markets. We help you maximize the value of your portfolios with an approach that spans all industries, geographies, and asset classes. Encouraged by new owner CVC Capital Partners, the insurer launched a bold four-part strategy to revive growth and reclaim the mantle of disruptor. The debate is heating up, and it may shed light on the future of ESG investing. Bain Capital, LP is one of the worlds leading private investment firms with approximately $160 billion of assets under management that creates lasting impact for our investors, teams, businesses, and the communities in which we live. Social impact externships provide our people with deep, hands-on experience working for a wide variety of NGOs, social enterprises and public sector organizations around the world. Leading private equity firms are embracing the challenges and opportunities of digital transformation wholeheartedly. Stand apart from your peers and develop tailored strategies for continued excellence. We partner with a range of organizations that are creating meaningful change in our communities. Further is a service mark of Bain & Company, Inc. A case interview is a way for us to discuss cases based on our client work. Limited partners will continue to gravitate to the industrys top performers. We work with ambitious leaders who want to define the future, not hide from it. We work with innovative education nonprofits and school systems to create better opportunities for underserved students to lead choice-filled lives. The best deal decisions require more than commercial diligence. You have to be much more focused on the sectors youre investing in, the risks youre underwriting and your ability to actually get the value once you own the asset. Improving the efficiency and productivity of Indian agriculture. Private equity outdid itself as investors raced to capture technology-fueled growth. We can help youembrace a holistic approachthat spans the entire investing value chain, so you achieve superior returns and help create a more sustainable world. Our recruiting process is outlined on this site. To address this common problem, Bain created RAPID, a tool to clarify decision accountability. Amid these shifts, private equity continues to supersize, with larger funds doing larger deals. Buyout returns have benefited mightily from rate-driven multiple expansion. There is growing evidence that when investors embed ESG considerations into their strategies, they achieve superior valuations and a host of positive outcomes. Please read and agree to the Privacy Policy. Its time to shift the ESG paradigm from compliance to impact and value. Record-high valuations are forcing acquirers to get creative. We are the worlds leading consulting firm for the industry with a global practice more than three times the size of our nearest competitor. Our integrated suite of capabilities is designed to help you boost performance across every step of the investing value chain, from strategy and fund-raising to deal generation and due diligence to portfolio management and, ultimately, exit. Per Franzn, cohead of the EQT Private Equity Advisory Team, calls the shift to credit-linked facilities a game-changing moment for the private equity industry: By linking sustainability objectives to hard incentives, we are really challenging ourselves and the portfolio companies to fully embrace the potential of sustainability. WebA case interview is a way for us to discuss cases based on our client work. Comprehensive analysis and benchmarking results in a clear plan to increase EBITDA while boosting ESG performance. These employee-led teams identify and implement environmentally sustainable practices in their local offices and share best practices globally. Please select an industry from the dropdown list. Can you confidently and repeatedly recognize patterns for value creation and deliver against them? To tackle these issues, we have organized around four key areas. Explore our Sustainability & Corporate Responsibility work. In 2017, two-thirds of all Bainies were involved in some form of social impact initiative across the globe, contributing over 30,000 hours of volunteer service and raising $1.5 million for local nonprofitsin addition to the countless hours and millions of dollars invested through our pro bono casework. Once public, growth-backed software companies continued to perform. Despite a remarkable overall performance for the Asia-Pacific private equity market last year, there are several reasons for caution in 2022 and beyond. Hgs Matthew Brockman explains how sector specialization can deliver stable returns, even through unsettling times. Our ESG expertise combined with powerful analytics from EcoVadis to reach your sustainability goals higher faster. Stay ahead in a rapidly changing world. We partner with you throughout the entire investment cycle. Sector strategy is about more than tapping what's hotits about using data to determine where you can win. Join the PE operating partner community to discuss and debate the best strategies to deliver maximum portfolio growth this October in-person in New York City. Bain is proud to share that we have led the industry as a 100% CarbonNeutral Company since 2012, offsetting all emissions, including client travel. Well help you join the ranks of leading investors, those companies that are driving positive outcomes across the full spectrum of ESG considerations: decarbonization, waste reduction, sustainable sourcing, diversity and inclusion, and many more. Prioritize your ambitions, sharpen your investment decisions, and fortify your firms foundation. For those in the bottom quartiles, raising a fund is already becoming more difficult. The network holds knowledge-building events and offers opportunities for Bainies to support developing-market social enterprises. Our healthcare and life sciences consulting expertise is built on a detailed understanding of each player across the value chain, from doctors and patients to payers, drug developers and manufacturers. WebBain's annual report looks at the central role technology plays in the global economy across all sectors, especially as companies aim to create sustained value for customers and stakeholders in a tumultuous time. Bain & Company mobilizes its global talent, strategic expertise and partnerships with leading social innovators to tackle economic, educational and environmental challenges According to Bain & Companys latest Social Impact Report, 70 percent of its 8,000 employees have participated in social impact work in the last year, Through the waves, towards a sea of opportunity. Subscribe to Bain Insights, our monthly look at the critical issues facing global businesses. Investors are hunting for value in a time of discontinuity. How agricultural intermediaries allied with smallholder farmers can transform food systems in Africa for the better. We bring deep experience in all of these issues, plus an unrivaled set of cutting-edge analytics, diagnostic and benchmarking capabilities, including our partnerships with Persefoni and EcoVadis. The diagnostic tool weve developed leverages our deep industry expertise, data science experience, and unique access to proprietary data from best-of-breed partners to: ESG projects across the investment value chain, leading investors have discussed ESG strategies with us. Of course, what came next also followed a pattern. This is why our 10-year commitment to invest$1 billion in pro bono consulting workis so important. Our economic development work leverages the power of markets and business enterprise models to create jobs, fuel income growth and improve the quality of life for the world's poor. Indeed, short sellers live for the predictions of a new normal that always seem to come at the end of a cycle. Is there a particular sector or geography that you know better than anybody else? Stay ahead in a rapidly changing world. Together, we achieve extraordinary outcomes. Bainies across the globe give their time and talent to make a difference. In a carve-out deal, you dont want to be the rookie in a process dominated by firms that have done 20 similar carve-outs and know precisely how much margin they can capture and how they will do it. We provide opportunities to work with our key partner organizations, such as Acumen, Endeavor, Ethiopian Agribusiness Accelerator Platform and KIPP. Healthcares resilience attracts both more capital and creative new forms of capital. Private equity outdid itself in 2021 as investors raced to capture technology-fueled growth. Healthcare companies are responding to changes wrought by the coronavirus and gearing up to anticipate future outbreaks. We have helped the leading institutional investors and sovereign wealth funds develop top-performing investment programs across private equity, real estate, and infrastructure asset classes. Private Equity; Retail; Social & Public Sector; Technology; Telecommunications; Change Management; Cost Reduction; Customer Experience; Data Analytics; Digital Strategy; The private equity landscape is being reshaped by myriad forces: the rise of virtual sales, the omnipresence of digital, a renewed focus on talent, and, most notably, ESG (environmental, social, and governance) investing. Ensuring you have the right investment thesis and winning approach strategy, we help focus your deal generation and sector screening process. They are also meeting demand for more sustainable, socially conscious corporate behavior, weaving ESG into all operationsand gaining market share in the process. Bain offers several opportunities to volunteer with our community partners, including office-wide Community Impact Days, which are hosted by most offices around the globe. Our team of more than 2,000 private equity consultants serves clients globally, providing essential guidance on strategy, sourcing, due diligence, post-acquisition value creation, and institutional investor strategy. Similarly, if youre doing your first industrial turnaround, you might think twice if youre bidding against a firm that is an expert at reducing costs quickly and at improving margin sustainably. The firm announced an aggressive set of goals to help curb global warming by 1.5C, in line with its commitment to the Science-Based Targets Initiative. Our pro bono work brings Bains talent, expertise and insight to organizations tackling todays urgent challenges in education, racial and social equity, economic development and the environment. As the firms oldest and largest office, it has played an integral role in transforming Bain into one of the world's leading management consulting firms. As noted earlier, the PME index has posted an 8.1% annualized return over the past 30 years, which is consistent with the 8% average logged by the S&P 500 over the 140 years for which public market data is available. The 18-month total of $1.7 trillion is by far the strongest year and a half in the industrys history (see Figure 3). Telecommunications M&A deal values continued to fall in the first half of 2022 after last years surge, but some deal types remain strong. The first clue: The surge in public valuations following the global financial crisis is neither surprising nor unprecedented. Build a foundation from which to deliver analytics strategy, develop analytic capabilities and create personalized flagship use cases. If at least 80% of a firms funds ranked in the top two quartiles of industry performance over that period, we defined it as a consistent outperformer (see Figure 3.6). Bookmark content that interests you and it will be saved here for you to read or share later. Comprehensive analysis and benchmarking results in a clear plan to increase EBITDA while boosting ESG performance. The Net Promoter Score SM (NPS ) is a single, easy-to-understand metric that predicts overall company growth and customer lifetime value.These powerful tools can help you earn the passionate loyalty of your customers while inspiring the energy, enthusiasm WebThe Covid-19 pandemic has shaken virtually every industry, none more than healthcare. We work with ambitious leaders who want to define the future, not hide from it. That process begins with a few key questions: The imperative is to develop expertise both internally and by leaning on outside partners and ecosystems if need be. Most PE investors cant get enough: Around 50% of LPs are heading into 2020 underallocated to private equity. A loose acronym for Input, Recommend, Agree, Decide and Perform, RAPID assigns owners to the five key roles in any decision. Returns in private equity, of course, arent monolithic either, which is why LPs have tended to reward certain funds over others. During ownership, they know what works and what doesnt, and they have a clear, active strategy for capturing value. Investing with Impact: Todays ESG Mandate in Private Equity, Private Equitys New Path to Payoff in Payments, Harnessing Pricing Power to Create Lasting Value, How to Assess Disruption in Due Diligence. Since our founding in 1984, weve applied our insight and experience to organically expand into several asset classes As healthcare providers enter a new period of disruption, their software investment priorities present opportunities for vendors and investors. WebBain & Company is one of the leading strategy consulting firms in the world. Funds do this in a variety of ways. Investors look for companies that can easily scale up across borders. Eric Almquist is a partner with Bain & Companys Customer Strategy & Marketing practice and the global head of consumer insights for Bain. Should they do it? Should we be worried? Post-acquisition, we support the pursuit of rapid returns by developing strategic blueprintsfor acquired companies, leading workshops that align management with strategic priorities, and directing focused initiatives. 2022 Diversity, Equity, and Inclusion Report. As investors ourselves, we leverage our expertise to expand your participation in direct investing opportunities. Its the whole of you thats important. Deals flow from provider demand for supply chain resilience, expense management, and support for alternative care. And that raises a disquieting question for buyout managers: Will the convergence in 10-year returns make it harder to raise the next $2 trillion? Determine a targets full potential and provide a clear post-acquisition agenda. We work with environmental NGOs to strengthen their conservation efforts, and with corporate clients to embed sustainability and reduce environmental impact. According to Bain & Companys latest Social Impact Report, 70 percent of its 8,000 employees have participated in social impact work in the last year, uniting behind the firms commitment to invest $1 billion in pro bono consulting by 2025. Over the past 30 years, US buyouts have generated average net returns of 13.1%, compared with 8.1% for an alternative private-market performance benchmark, based on the Long-Nickels public market equivalent (PME) method and using the S&P 500 as the proxy. We partner with organizations that have pioneered and scaled models of change that demonstrably work, but which often lack access to the type of strategic consulting that Bain can provide to help them reach full potential. Bain teams have helped shape Endeavor's global strategy and the expansion of its repeatable model to roughly 30 countries around the world. This article is Section 3 of Bains 2020 Global Private Equity Report. Incremental capital helps cutting-edge firms scale up operations.
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