Here are thoughts from Golden Gate Capital Co-founder Jesse Rogers on the “Golden Era” of private equity, mega-fund disdain, and the specter of taking private equity firms public.*
On Going Public:
Speaking as one person, and not as part of Golden Gate’s partnership, I think it’s antithetical to being a long term investor. It places a huge interest in building fee streams and misalignment with LPs. The lumpy returns that come from private equity is not what the public markets want. As we think strategically with our business, we don’t think that helps. It creates a distraction and fee incentives for things that work against our goal, which is to create superior returns for our LPs.
On The Golden Era:
I wince when I see people calling 2006-2007 as the “Golden Era” of private equity. We saw people paying too much. We hoped that 2010-11 would be like an ‘02 ’03 era, and valuations have actually bounced back a bit. I think PE pros will have to step up their game as operators and business builders.
On The Mega-Funds:
We’re a middle market fund and we look down our noses at the mega funds. That trade is broken and it’s not going to come back maybe ever, or at least for a very long time. And they have their hands full with a lot of issues in their portfolio, so I think those guys are going to be distracted. They’ll have a hard time finding ways to spend all that capital they’ve raised. In the middle market, a lot of companies actually need sponsors in the truest sense of the world and there’s a great opportunity there.
*These quotes are as exact as I can type (meaning, some paraphrasing involved).