Philip Canfield, a GTCR managing director, says there are other ways to monetize the franchise value of a GP. GTCR operates as a private partnership and has a model for evaluating executives, said Canfield, who spoke Wednesday at the Buyouts Chicago conference.
The Chicago private equity firm “brings people up as they deserve it,” Canfield said. As contributions for a particular executive decline, their standing in the firm, as well as their pay, also drops, he said.
“For pure PE firms or pure hedge funds, [going public] is not necessary,” Canfield told peHUB.
Several large buyout shops, including Blackstone, the Carlyle Group, Apollo Global and Oaktree Capital Group, have gone public. Ares Management is also considering launching an IPO, Reuters has reported. “I think there are a lot of conflicts inherit in that,” Canfield said.
Canfield was asked if this means GTCR will likely not go public. “That’s a good bet,” he said.
Many PE executives and bankers attending the Buyouts conference have called the current M&A market “tepid” and “lacking confidence.” Canfield was asked why M&A has been slow this year. The GTCR executive said many firms “pulled forward” their deals to fourth quarter so that sellers could pay a lower tax rate.
Canfield, however, does expect an uptick in M&A later this year. The pipeline is strong, he said. “I think we’ll see [an increase in M&A] in Q3,” he said.
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