Wharton PE Conference Notebook: Organizer Thoughts

The following was compiled by Rohan Deuskar, a first-year MBA student at the Wharton School. Prior to Wharton, Rohan was a serial entrepreneur and most recently ran the Innovation Department at mobile marketing firm Vibes Media.

I asked the Wharton conference organizers for their key takeaways from keynotes by John Megrue Jr., CEO of Apax Partners U.S., and Dalip Pathak, head of Warburg Pincus Europe and India. Here we go:

“What Dalip Pathak said about the past two recession periods lasting 10-13 years is really revealing. Conversations about where we are in the cycle are probably not as appropriate as accepting that the business climate is what it is now and figuring out how to make smart investments. There is not an upheaval around the corner. PE is not going away, VC is not going away…they’re going to evolve.”
– Tram Nguyen, Conference Co-Chair

“John Megrue and Dalip Pathak both said that providing risk capital to entrepreneurs and early stage ventures comes with stewardship of capital, being a statesman, being broader than just being a hungry, greedy investor…it is on the private equity players to fund entrepreneurs, to back them, to punish the CEO when he’s not doing well, to reward him when he does.”
– Aditya Joshi, Conference Co-chair

“While this is a really serious crisis for private equity as an asset class, it’s not the first time the industry has faced something like this. As one of the keynotes said today, if you look at the top quartile PE firms, they consistently out-perform the public markets and the remaining private equity firms. They provide risk-adjusted returns of 30%-40% and they do that consistently. If you look at the remaining 75% of firms, they are not very different in terms of their return profile from the public equity markets. That’s really where the turnover is in the private equity industry.”
– Thomas Metscher, Panel Organizer

“It might be too early for the industry to be celebrating. Dalip Pathak’s key message was ‘is it really a post-crisis world? If you look at history, maybe it’s not.’”
– Rahul Sanghavi, Conference Co-chair

“My key takeaway was around value creation, about what private equity firms are bringing to the table. The era of financial engineering is over. John Megrue was saying that half the private equity firms may be gone in 3 or 4 years. But he was very confident that his firm is going to be around. There were a lot of panelists who were very confident that although this is a bad time, they were confident about their operational expertise and how they can bring value to the table.”
– Andrew Chang, Conference Co-Chair