Spotlight On Podcast
Spotlight On Podcast
Spotlight On with Carl Evander, Partner & Global Head of Private Equity at OC&C Strategy Consultants
In this episode of Spotlight On, TBP's Founder, Nicholas Barton, sits down with Carl Evander, OC&C's Global Head of Private Equity, who offers an insider's view off the back of a trip to Superreturn Berlin. Carl discusses how private equity is navigating today's tough economic climate, including rising interest rates and tech disruption.
Carl visits PE at a turning point, moving from a boom to a cautious period. Despite this, Carl also notes that long-term PE returns still beat public markets. He notes that firms must transform businesses, not just buy and hold, driving the rise of value creation teams and investment in sectors like energy transition and AI data centers.
He also provides a nuanced take on AI: great for productivity, but not a replacement for human judgment. Join this insightful conversation on PE's evolution in uncertain times.
Welcome to Spotlight On, the must-listen podcast series where visionary leaders, global executives, trailblazing entrepreneurs and top-tier experts come together to share their inspiring stories and tackle the hottest issues facing businesses today, Brought to you by the Barton Partnership, an award-winning global talent solution organization. We specialize in executive search, independent consulting and consulting solutions from strategy through to execution. Our mission to help businesses accelerate their growth by connecting them with world-class strategy and transformation talent. Tune in and join us as we shine a spotlight on the game-changers and thought-leaders who are shaping the future of business. Today I'm talking to Carl Evander.
Speaker 1:Carl's the global head of OCNC's private equity practice, with a focus on advising private equity clients and their portfolio companies on strategic questions across the investment cycle. Carl is also co-leader of the firm's B2B practice in the US and serves as an elected member of the OC&C Global Board. Over the course of a 20-year-plus career in consulting and as a private equity investor, he has built deep experience working globally in complex industries where information is scarce. He has covered a range of B2B industries, with a particular focus on companies in the infrastructure and construction space, along with business services, industrial services, food manufacturing, waste and facilities management. In addition to his work at OC&C's corporate client. Carl also leads the firm's pro bono efforts in North America. He serves on the board of EO Education, a national education non-profit organisation. He's based in New York but has previously lived and worked across the UK, Europe, Africa and Asia.
Speaker 1:Carl, great to have you here today. You and I have known each other a long time, so I've been looking forward to this conversation for a while, so thank you for joining me on this, and certainly keen to talk about your recent trip to Super Return. But let's start with you. Tell us about your career history to date, Tell us what led you to OCNC and tell us about your role there as well.
Speaker 2:Thank you so much for having me, nick. It's great to be here and looking forward to the conversation, happy to take you through the rich tapestry that is my history. I've been doing this for a couple of decades now. I started my career back in London at Bain. I kind of came out of college didn't quite know what I wanted to do with my life.
Speaker 2:Somebody said something about strategy consulting and I thought that sounds interesting and took to a roughly like efficient fish to water I mean maybe a saltwater fish to fresh water. But eventually I figured it out and ended up being a lifelong consultant, more or less. So I started my career at Bain in London. I was always the internationalist. I was always the guy with my hand up, willing to move around. So I spent the first eight years of my career loosely based out of London, but with long stints in South Africa, in Singapore, in Hong Kong, in Shanghai and all across Europe. In 2012, that's about eight years into my career, I made the move over to the US, still with Bain, still doing fundamentally the type of consulting I had by that point made my specialism, which was a lot around both private equity and sort of the intersection of private equity and industrials and B2B businesses.
Speaker 1:And this was in New York at Bain.
Speaker 2:This was in New York at Bain, yeah, when I moved although I had done the same thing in Europe as well Stayed at Bain in New York for four to five years and then got that itch that we all got. I'd been someone who'd constantly been in the moves. I'd moved geography, I'd moved topics somewhat and felt like I didn't want to be a lifelong consultant. I felt like I don't want to do this advisory thing. I want to be an owner, I want to take care of things.
Speaker 2:I spent a lot of my career at that point with private equity investors, thinking about how they add value to businesses and thinking about how they set up their own portfolio value creation teams, and got an opportunity to do just that in a small mid-market fund in the US just that in a small mid-market fund in the US.
Speaker 2:So for a while I left and became a private equity operating partner on a number of portfolio companies, but sort of quite rapidly becoming a real operator for a while. I joke that it's the only real job I've ever done in my life. But I was seconded onto one of our businesses as a chief commercial officer and got to sort of see the real nitty gritty and it was a huge learning experience for me. I think it has made me a much stronger advisor because I learned in that the realities of how to make growth happen on the ground, how to make change happen on the ground, that are very different than the somewhat academic lens that consultants can sometimes take on things, where you, you know, you sort of you see that the world is a spreadsheet and you think to yourself, hey, I'll add 10 more sales people here and if they're effective, then I'll grow, and you think, well, that's not quite what it looks like on the ground.
Speaker 1:What advice would you give anyone now, give yourself, if you could turn back the clock and making that transition from consulting into private equity now? What advice would you give anyone thinking about making that move into a similar role?
Speaker 2:I mean I think it is a great type of role to do. I think it is a great opportunity to make. I think I probably should have made it earlier in my career. I think I started to develop a little bit of senioritis already by the time I left Bain and I think it is the transition back to the coalface and it's a lot less supported as a role. And so you are doing your own analysis, you're back to the Excel, you're back to the PowerPoint, and that was probably a tougher transition than it would have been if I'd made that move five to 10 years earlier in my career. But I think it is a great way of continuing to build on the skills that you learn as a consultant but to take those into a real world application and what was interesting is that you went straight from consulting into that role.
Speaker 1:You didn't have any real world experience exactly.
Speaker 2:I still barely have any real world experience. A harder transition, but it was one that was.
Speaker 1:I think it was a very good way of doing it and and then you decided it wasn't for you, or and then I decided it wasn't for me. Exactly.
Speaker 2:No then. Then two things happened really for me. One was I realized when I got close to the cold face that, while I liked the detail, what I really missed was the pure focus on strategy, and I missed the the ability to to work on lots of different topics that were always the most important topic for my clients.
Speaker 2:And so you know when you start to do, when you're chief commercial officer of a small regional business, you're worrying day to day much more about individual customers, about production quotas, about sales concerns, and you're worrying a lot less about the big picture strategy stuff, which was really why I had gone into consulting in the first place and what I had loved about the job. And the other thing I missed was the teams. I mean, for me, the most rewarding thing about my job continues to be the people I get to work with, and that is both my clients, but it's also the teams on the ground and it's the problem solving as a group, it's the ability to learn from other people on an ongoing basis that really energizes me, and you get that much more, I think, in consulting than you do in deep operations, where you by nature end up being a little bit more independent.
Speaker 2:This was also at a time when COVID was hitting and I'd been spending five days a week on the road. My wife was pregnant with our first child and it was a very good opportunity to transition back into something that was a little bit less travel and a little bit more comfortable.
Speaker 1:Which sounds unusual for a consulting job, but that's exactly what you've got.
Speaker 2:Well, that is the beauty of doing the type of consulting that I do, and, to some degree, the type of consulting that OC&C does, relative to the type of consulting that I've been exposed to earlier in my career, is we're not really on the ground at the client site four days a week type of people. It's not the type of projects we do. Private equity, by nature, is a lot less travel, and so it tends to be a little bit more office based.
Speaker 1:As it's noted here, you're global head of OCNC's private equity practice and you co-lead the firm's B2B practice as well in the US, as well as serving as an elected member of the global board, which is fantastic. Tell us a bit about that and what that encompasses.
Speaker 2:OC&C is a pure play strategy firm. We've been around for 35 years. The genesis of the firm was very much out of the UK, one of the things that drew it to me as an expat Brit. I'd actually applied to OC&C coming out of undergrad in 2003, not to age myself and been firmly rejected by them at the time. Finally they accepted me.
Speaker 2:We primarily do two things we do strategy and we do diligence, and about 50% of our work is in the private equity community. About 50% of our work is in the corporate world community. About 50% of our work is in the corporate world. And when we say strategy we mean strategy and that is. I think we don't do what I became used to at Bain, which is sort of year-long transformation programs, lots of in-depth things like operational improvements and cost reduction. We are much more focused on quick c-suite level high level strategy work. That then bridges very nicely into the type of problems you're trying to solve when you're doing commercial due diligence for private equity clients and you're doing strategy for private equity clients too, who are trying to be targeted. They're trying to be focused on what are the key levers?
Speaker 1:I can?
Speaker 2:pull.
Speaker 2:That will really drive value and and they're trying to do that with a view of who do I want to be when I grow up in the business, and that's always been our strength, and the way we organize and have always organized is much more by sector vertical than it is by horizontal capability. So we are fundamentally sector experts or sector specialists, all of whom do both strategy and diligence. We don't have a private equity ring fence like Ebene does. The people who work with our corporate clients on their most important questions are the same people who are then evaluating businesses for private equity or working with our private equity businesses or working with our private equity businesses. So what does that mean for my role as the horizontal leader in a world that is more vertically specialized? Really, it's a role of coordination and just making sure that across these sectors, private equity is one community. Private equity doesn't always arrange itself in the way that we might arrange ourselves, and so we are all talking to fundamentally the same people. We're all trying to drive to the same goals with our clients, and a lot of my role is making sure that we are doing that in a coordinated way, both at account levels, so when we're talking to the same people, we know what the other hand is doing, but also at a product execution level, thinking about what are the types of projects we can be doing more with our clients, how can we be better improving the way that we do diligence, the tools that we use in diligence and the way that we serve the private equity community in as helpful a way as possible?
Speaker 2:Because I think we've been emerging. I mean, I think we've been arguably for 20, 30 years and if you sort of take the European view, but certainly in the US, I think we've got a really strong growing position as one of the leading, certainly boutique providers of strategic advice into private equity. And I think that is a you know, it's always fun. One of the things that drew me to coming back to consulting at OC&C is it's always fun to be a challenger brand. But I think the type of work that we do, the quality of the work that we do and the breadth of coverage that we will offer to private equity from kind of diligence through to value creation, through to exit planning and sell side I think has really resonated with the market. So that has been a lot of my focus is how do we evangelize that gospel, how do we get in front of more private clients. How do we continue to maintain the strength of that proposition?
Speaker 1:Great. Well, listen, let's move on, because really what I want to do is pick your brains on super return as our eyes and ears on the ground, as our intrepid reporter, keen to get your view on what you took away from that. You were in Berlin last week. What were your away from that? I mean, you were in Berlin last week. What were your observations from that? What were some of your key takeaways? Did you come away positive, optimistic? Did you come away deflated? How was the whole experience? Was this the first time you've been, or you've been before?
Speaker 2:This was my first time at Super Returns, which was a really fascinating experience.
Speaker 2:It was incredibly well attended up and down, both in terms of representation of firms, but also if you just look at years for private equity and certainly not private equity writ large, but as an industry you know I think you can paint a picture of a significant investment boom in the sort of 2019 to 21 period. Certainly, 2021 was incredibly busy and that was playing into a low interest rate environment with a lot of dry powder and a significant growth trajectory on businesses that were being bought and so people were coming in and buying things at a very high price. But they's coming from the Ukraine crisis in Europe, strong inflationary pressure in the US. Now, obviously, the noise that's coming from tariffs and other global questions has put a little bit of a dent in some of those growth plans. Has put a little bit of a dent in some of those growth plans. It has driven up interest rates, so now, suddenly, interest rates are much higher, so the cost of borrowing is going to be higher for the next buyers.
Speaker 2:And it has somewhat stalled activity for the last 18, 24 months. So we're seeing a lot less exits, in part because the IPO channel has dried up and we're seeing nervous LPs, which obviously, with high interest rates, is a much more exciting space to be. It's gotten everyone a little bit cautious about their ability to do deals, both to exit existing businesses that aren't doing as well as you thought they were and where you bought them at such a high price that you need to get a high price at exit bought them at such a high price that you need to get a high price at exit but then also some nervousness around the ability to put capital to work, which you always get in private equity, because there's always funds that were raised five years earlier and are looking at their investment cycle and the expectations of drawdown from LPs and the need to put capital to work. The optimism side of it is certainly there are pockets that remain exciting and debt was a big topic that came up. The expectation is the market will work itself out.
Speaker 2:Yes, we're in a position right now where DPI is a challenge, where exits aren't coming, but there are so many assets out there that just fundamentally, will need to be exited. The money needs to go back to LPs. There's more money coming in at the top end that needs to get deployed. Yes, there's been uncertainty. That uncertainty is now becoming clarity around the uncertainty, which I realize is a slightly weird distinction, but I think once you know there's going to be uncertainty, you can almost plan for uncertainty. It's giving people a path to getting comfort around new deals Before super returns, and it's true of my general conversations. In the market there is a growing expectation for deal volume acceleration, if it's in one quarter, two quarters, three quarters, but it's not in two years that the dam's going to break and at some point the volumes are going to start to increase again and deals are going to get made. And so that's the sort of short term look, this will work itself out optimism. It's almost a kind of hey look, we've seen this picture before. Yes, it's a little bit struggling right now, but we think we'll get through it.
Speaker 2:I think that was coupled with some really interesting data brought by people and just general commentary around a firm belief that private equity is still one of the best, if not the best, way to fund and hold businesses in the market, particularly in the middle market. Five-year returns, 10-year returns, 15-year returns they still outpace public markets. The value that you can drive as a private equity-backed business is higher than it is in public markets. You are taken away from the short-term quarterly earnings cycle and need to please a market that is looking at very recent data and very short-term data. You're giving yourself access to patient capital that can transform businesses and drive value over a longer horizon, and so I think, unsurprisingly, the delegates and the speakers were unapologetic in their support of private equity as an asset class and continue to believe that it will be a big driver and it will continue to be a strong asset class. There's a point of view that I am buoyed by but also firmly believe in.
Speaker 1:Good, you and I both. So was there one piece of insight or one prediction about the private equity market that dominated discussions there?
Speaker 2:Two big ones were partly this debt question, but also just it's my first time as superintendents, but it's not my first time in this industry, so some of these feel like messages that we've heard over and over again. But I think it only becomes more and more important in an environment like this to do good deals and do them well, and what that means and what a lot of the conversation was about was really continued importance of value creation and operational improvement plans and the ability to not just be a passive investor but take businesses and transform them and drive growth in a way that others can't, and to have a proprietary view, particularly in auction markets, the proprietary view on the type of value you can generate with a business that allows you to bid up with confidence, that allows you to go after assets in a way that maybe your competitive competing funds won't be able to do. So that's the kind of own well and drive value well. And I think the other flip side of that the importance of sourcing and finding companies being able to do that in a thematic way, being able to do that, hopefully, in a proprietary way. You know all of these things are driving, I think, continued need for specialization, for skills, for capabilities in private equity houses that can really make a difference.
Speaker 2:We are past the world of financial engineering allowing you to make money in private equity. You know the first decade of private equity where it was just all about the LBO. It was all about the debt and then the own the asset, hold the asset, make a ton of money. That's not possible anymore. Debt's become smarter, prices have gone up, auctions are more competitive. You can't just be a buy and hold anymore.
Speaker 1:You've got to transform the businesses, you've got to add value to them when we talk about sort of privacy, firms adapting their strategies, is this one of the key things that you've seen at super returns and this is what you've been advising your clients around?
Speaker 2:yeah, I think I mean, and that that has been the the big sea change since since only since I started this career has been the growth of value creation teams in private equity obviously I I'm a good example of that and the constant evolution of those teams. Right, I think that the struggle here is there is no one right model and a lot of people have gone through many models until they found the one that works for them. There are funds that do this incredibly well. Bain Capital is an obvious early example of a fund that figured out how to do these operational changes, built a portfolio value creation team, figured out the internal mechanics of how do you pass the deal over to the value creation team, share ownership with the deal team.
Speaker 2:The Bain Capital model would not work for a large number of funds out there. The culture doesn't work with it, the individuals wouldn't work with it and the types of investments they're making aren't suited to it, and so everyone has to find the model that fits them, and it is a stop-start process. I would say and I'm sure you've seen this too right, yeah, the groups that get stood up and then get stood down again, and then another slightly different group gets stood up and you go between do want generalists, do you want specialists, do you want x operators, or do you want x, x advisors. Do you want young, hungry, or do you want old, wizened, and I don't know that there is an answer for that there isn't.
Speaker 1:I mean, this is a daily conversation we have with every property fund and a lot of it is predicated on the investments they're making and the companies within their portfolio and their needs, and I guess you know the strategic challenges that they're facing. So there isn't one answer that would fit the whole industry. But, we'll come on to that, because I'm keen to discuss how you've seen talent evolve, I guess in that regard as well, especially within that value creation world.
Speaker 1:So, again thinking about super return, but now talking about the US. How has the private equity landscape in the US evolved over the past couple of years? If I link in that what we touched upon, how do you think recent tariff policies under Trump is affecting the PE market in?
Speaker 2:the US as well. Environment, I think, has held true in the US. I think what's happened is there's been, certainly over the last two years, there's been a flight to quality is probably the wrong word but there have just been sectors that have been a little bit more resilient or seen as a little bit more attractive or, most importantly, have significant secular tailwinds behind them. That has driven up demand and has, where you've seen, a real resurgence in deal activity and a lot of money has flooded into those. And you know from you know anything infrastructure related, anything that was taking advantage of the infrastructure investment in jobs act and the inflation reduction act, where you suddenly had firm funding tailwinds into markets like engineering, like infrastructure services, both transportation, water power and you have an industry that is ripe somewhat for private equity consolidation and professionalization.
Speaker 2:It has been very busy. So there are pockets that have been incredibly busy. I think there are pockets in sort of more traditional consumer markets. There are pockets in some tech areas that have been very, very quiet, where you know there's more uncertainty that's giving driving a lot more caution, and some of that uncertainty is macroeconomic. Some of that uncertainty is around the rise of AI and how that changes. Who wins and who loses in those landscapes, and that has caused GPs to be a little bit more cautious in those markets. That turning of the corner is becoming a little bit apparent here as well, I think in the US we're seeing more green shoots across the board. The tariff question, which has of course been the core part of any diligence anyone has looked at.
Speaker 2:Some industries are pretty protected from tariffs, and so, again, you are seeing more activity and more certainty around industries that are service industry businesses, businesses that are not exposed to as complex international and global supply chains.
Speaker 2:And even then, the impact of tariffs has become a core question on how does it change the underlying macroeconomics of the industry.
Speaker 2:How does that affect?
Speaker 2:Because, even if it doesn't affect the businesses directly, it affects their customers and therefore it affects the ongoing demand for their services.
Speaker 2:And I think it has caused a pause and it has caused a lot of things, and we've seen live deals that have gone silent specifically for this reason is people try to figure out what the end result looks like, and I think the struggle that has really driven it is, if it's one thing, if you say, hey, we've got a shift in policy, this is now the tariff policy, then you can adapt to that, you can work out how it's going to impact things, you can calculate it and you can say, okay, there's going to be winners and there's going to be losers, and I can plan that out. I think what's really happened is nobody knows what the tariff policy is going to be in tomorrow. Right, we could wake up to a tweet that changes everything and and so there's, there's just turbulence, and in a world of turbulence you need there's been I think there was a few months of a real hope for stability and a hope for kind of hey, this will wash out and then we'll know the answer.
Speaker 2:I think, we're all coming to terms now with the fact that that uncertainty will continue for longer, and now people are shifting instead to how can we plan for uncertainty in both? How can we look for investments where we can protect ourselves against uncertainty, and then in our portfolio companies? How can we look for investments where we can protect ourselves against uncertainty, and then in our portfolio companies? How can we? How can we strengthen our supply chain? How can we mitigate against future impact of tariff changes, knowing that they could change any minute?
Speaker 1:So, based on that and on the back of that, what sectors are you currently seeing as being the most attractive for private equity investment right now, and what are the challenges with investing in these sectors?
Speaker 2:Yeah, so I mean, we talked a little bit about infrastructure services things that are taking advantage of the tailwinds around energy transition, the tailwinds around AI, around AI and I don't necessarily mean tech companies here, but I mean AI driving up a huge demand for data centers. That is driving up a lot of demand for businesses that serve data centers, both in the construction phase and in the ongoing management phase. But, from my perspective, is where we're seeing a lot of activity, great opportunities for investments, in part because they are nascent industries. They've been traditionally quite fragmented. So we're seeing some real success early on here of private equity businesses buying platforms and rapidly accelerating their growth, taking share, doing a series of bolt-on M&A acquisitions in a playbook that's been done in other sectors in the past.
Speaker 2:I think some of the challenge is still around managing the exact level of uncertainty, and then I think there's an element of, again, with any nascent industry or any large point of inflection, it's not always clear who the winners and losers are going to be. You have to be confident that you're backing a business that's well positioned for future trends, but you also have to be confident that you're backing a business that's well positioned for future trends, but you also have to be confident that you are backing a management team and that you yourself have the capability to ride the waves as they come and be able to adapt and change and take advantage of opportunities as they arise, because it is harder to predict long term views are growth markets, not stable markets. Growth markets will always see competitive shakeouts.
Speaker 1:How do you see technology and, I guess, ai impacting the future of private equity? I mean, when you say you can't predict, isn't there an argument to suggest that actually AI can?
Speaker 2:I don't think AI today can predict winners and losers. I think AI as it stands today is an incredibly valuable productivity tool and it will transform many industries and it will hugely transform some and it will cause the demise of some. Candidly, it will change who wins and who loses in others. Where it's who can adapt the most to AI, who can use this productivity tool? I think there's an element of truth to that. In my own industry, consulting from a productivity level I think is absolutely going to be effective. I think there is no question in my mind that the way that we do the job is rapidly changing with the advent of AI. The hey, can I just replace my OC&C study with? I'll ask chat GPT. I don't think we're there yet. I think there's still a real importance of the human in the loop in that story. I think the reasoning, the history, the human overlay that comes from experience, that isn't just data extrapolation, I think will continue to be critical.
Speaker 1:There's talk today that actually everything you get from ChatGPT isn't necessarily accurate.
Speaker 2:I mean, the hallucinations are huge. The ability of the tool to reason has been, when we have tested it in our applications, has probably been not as strong as we would like it to be, which means it is a very, very powerful tool for research. It's a very powerful tool for extracting information from vast amounts of data. The reasoning skills are, by nature, not there, and the auditability of the reasoning skills are definitely not there. Someone gave me the analogy the other day which is a very helpful one, which is you ask an analyst to go find something out and they come back and they give you an answer, and then you say great.
Speaker 1:And you say well, how did you?
Speaker 2:come up with that answer and they'll take you through exactly every step that they took and you can then audit it and say well, I'm not sure if that assumption or that data source was right. If you ask ChatCPT for an answer, it'll give you an answer and it may give you an answer that looks just as good as the answer that the analyst gave you. If you ask it how it came up with the answer, it will give you a probabilistic answer for what it thinks. The answer is to the question of how did I come up with the answer. It's not actually going to give you how it came up with the answer. It has no understanding of its own processes. It is a probability-based model that when you ask it to self-reason, it just gives you the probability answer to the self-reasoning question, not the actual self-reasoning question. Going to drive with AIs that are much more task-specific oriented and therefore can be trained to lose hallucinations over time and better prompt engineering around that, I think all of that will improve it, but it's still not going to solve for the perfect reasoning and it's still not going to give you the exactly as you say, the confidence that you get from the human factor of expertise, experience, depth of kind of? How many times have we done this before? How many times have we seen this before? That doesn't change the fact that it dramatically changes the process that we go through and the nature of the job, particularly at the junior levels, and it shifts the takes away a lot of the boring rote stuff that most people don't like to do, can automate a lot of that, and it probably shifts the balance of workload from answer generation and research generation to pressure testing and dissemination. In the past you'd send the analyst out to do a bunch of research, make some slides, come back with an answer and then there'd be a little bit of back and forth on. Is this the right answer? Let's make sure it makes sense and let's make sure it's a story that seems coherent. I think that first task is going to be a lot quicker, but that's going to push the need to spend more time on that second task. So, yes, research time will drop, but then error checking and pressure testing is going to increase and, more fundamentally and I'm old enough that I've seen a lot of this in the past productivity improvements have been multiple in consulting over the last 30, 40 years.
Speaker 2:I'm not quite old enough to say I started in a world where we didn't have Excel, but I certainly started in a world where we didn't have expert networks, for example. So you sort of think about primary research. It was a good project if you could get 10 calls in three weeks because you were sort of cold calling people to try to get answers. Suddenly the expert networks come in and now we're driving 50 to 100 calls in a two-week period and we're getting a huge amount of increased insight out of that.
Speaker 2:Data availability has grown over time. Everything has made the ability to drive value so much higher. But the answer has not been great, so we'll do a shorter project. The answer has been great. So when I did my first diligences 20 years ago they were a 50 page report with some interesting data and the key data in there, of course. But those 50 pages of analysis come out of over three weeks. Now my teams are doing 200, 250 pages of real in-depth analysis with insights coming out of a much vaster trove of information that they can then process a lot faster and generate a lot more insight out of.
Speaker 2:And I think that is probably, you know, the optimist's view is that's what's going to happen to us under ChatGPT we're going to see a huge growth in productivity. Maybe, at the margin, a change in ultimate pyramid shape may be at the margin, a change in ultimate pyramid shape, but but you cannot take away the um, the apprenticeship model, out of consulting. It's critical because you, even if you, even if you said I could, I could automate everything that my first and second year analysts do. Well, great, but I still need the third year analyst and the consultant and the manager and the associate partner. I need, I still need people who have learned how it all works and can come up and can ultimately replace me. Then maybe that changes then the sort of way you think about junior resources. Maybe it becomes more of a shadowing and apprenticeship role and less of an active doing role.
Speaker 1:With the changes that we're seeing from a technology point of view, with the impact that we're seeing not just from Trump's tariffs but the geopolitical situation across the world now, and, I guess, your experience of not only operating yourself as an operating partner but working with value creation teams how are you seeing the capability requirements change within private equity funds, the skills needed to help funds and portfolio companies navigate their way through all of this right now? How have you seen that adapt over the last 12 months and how can you see the change going forward that's going to be required?
Speaker 2:12 months is always hard to see a pattern right. I think it's probably more like a sort of 10-year trend that kind of goes through waves and I think, as we talked about, different funds will have different approaches and I am still not sold that there's a perfect answer, because I think it's always a situational answer. But I certainly think over the last five years the growth in specialization has been significant in terms of the portfolio groups are looking for. I think if you wind the clock back 15 years, even arguably, if you wind the clock back to years, even arguably, if you wind the clock back to when I started that job, it was a generalist's job, as was consulting. When I started consulting, I want a smart person who can look at my portfolio and think about how to add value and maybe bring in some expertise. But ultimately I just need smart people and they'll figure it out.
Speaker 2:I think as those groups have matured just as consulting matured, over time they have realized that actually specialization is critical. You want someone who knows how to do talent management. You want someone who knows how to work with office of the CFO, someone who understands supply chain. You want someone who understands pricing and there is much more value in specialized tools and scalpels that you can send in to really drive specific programs at your portfolio companies, more than a bunch of consulting trained generalists running around sort of trying to run mini consulting projects in the portfolio.
Speaker 2:But sometimes the answer is both right. Sometimes the answer is hey, it's important to have the generalists because the generalist can take the aggregated view, it can help with the prioritization, it can help identify what the right things are to be driving and then program manage those. But you also critically need access to specialization and sometimes that access in some choices that access comes from a deep bench of advisors, a deep bench of not employees but people who you can bring in on a consulting basis. Sometimes it comes through access to specialized consulting firms, but often, and particularly at scale private equity businesses, it is coming from individuals with expertise that can sit across portfolio companies.
Speaker 1:That's a great note to finish on, carl. It's been great talking to you today, really appreciate it. You and I have known each other a long time, as I said, and it's been great to get your insights, certainly on the Super Return event that happened last week as well. So thank you for sharing that with us. Good to see you today. Thanks very much.
Speaker 2:Thanks so much Good.