Tuck Center for Private Equity & Venture Capital 2023 Conference

Back in Hanover on a textbook winter afternoon - flurries mixed with sleet and a balmy 27 degrees. I was back in town as Lockton sponsored the 2023 Tuck Center for Private Equity & Venture Capital Conference. And in keeping with my 2023 well-being routine, I headed across the Green for a loop around Occum Pond, up Webster Ave, stopped by Phi Delt and back to The Inn.
 
Here are my thoughts on the Conference with more details on the speakers, sessions and content below.

1. Uncertainty driven by war, geopolitical shifts, energy insecurity, inflation, interest rate hikes, recession (you know the rest) is causing a stockpile of cash (estimated $1T), increased due diligence, focus on investment fundamentals and a marked shift to secondaries (up to 50% of all deals in 2022)
2. Glimmers of optimism are shining based on economic cycles, a return to growth and the development, adoption, acceleration and integration of technologies (particularly AI, ChatGPT / Machine Learning)
3. Focus on people. Companies wanting to grow need to retain and develop their people as well as attract new talent. Again, hope rests in technology as one consultant put it “to keep up with the rocket ship pace of PE”

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Thursday evening, we had cocktails, conversations and dinner at the Hanover Inn. Dune Thorne D’98 enthusiastically spoke about today’s PE environment and go forward issues.  She sees uncertainty (the main through theme for the event) as well as opportunities, is focused on DEI / ESG and states that returns from private investments are 6-8x higher than public returns. 
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Friday morning, another lap around Occum (half walking / half skidding) was in store through the mystic morning Hanover fog. 

Jim Davidson kicked off the broader conference with his stories of how Silver Lake started and early wins even if the LPs weren’t immediately convinced (spoiler alert – they ended up very happy)
​His observations covered

• The PE model - raise $, acquire assets, optimize / build, get liquid (rinse and repeat)
• There’s a distinction between the transaction and supporting the business ongoing
• Scaled tech business still need to run like a business (not as a start-up) - optimize ROE, build recurring revenue
• See the world differently and always look for a better way (plus a great coat rack analogy)
• Silver Lake culture means no names on the front door. There’s a difference between being a partner vs an employee
• Be all in. You can never network enough. Build your own best self. Can’t do that WFH. Be part of a team
• Tech is going through a restructuring- very libertarian and carrying more social responsibility

 
It was now time for the conference’s first panel discussion, “The Decision to Sell: Continuation Funds & Long-Term Holds
 
GP led secondary/ continuation deals went from 10% to more than half in the last few years.  The continuation market is undercapitalized - big opportunity and high velocity in secondary deals
 
Some considerations and areas of focus for secondary funds

• Quality of the partner
• Quality of the asset
• Alignment of interests in the continuation

 
Ultimately, Private Equity wants to strategically transform a business into the potential of what could be - build something special
 
Shameless plugs

• Lockton’s latest whitepaper Representations & Warranties Insurance (RWI) in Secondaries Markets
• Overview of General Partnership Liability / Investment Management Insurance 
• Lockton M&A and Private Equity Support

We then had our first of 2 unstructured panel discussions where the group asked questions of ourselves and commented on a theme – ours was Implications of ChatGPT or other AI tools for the PEVC industry
 
To say our discussion was wide ranging would be an understatement. The net – the AI genie is out of the bottle with lots of concerns over control, bias and privacy. In advance of the panel, our Tuck student moderator had asked CHATGPT for what 9 topics we should discuss. We covered all 9 in 45 minutes.
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Lunch was good. I downed a sandwich along with 3 Tuck students from Beijing, Hong Kong and Mumbai sharing stories of our backgrounds, ideas and times at Dartmouth / Tuck. I relayed my tale of delivering kegs through a raging Nor’Easter in Stinson’s F150.
 
My second break out panel was “Role of Consulting Firms for VCPE Firms and Portfolio Companies”
 
Lots of dry powder in the market - $1trillion estimate

• #1 issue for consulting firms is to recruit, retain and develop talent. Gaps in hiring or slowing of client work make it harder to recover and grow over

• #2 issue is to harness tech (invest in AI) to keep up with the rocket ship pace

 
I had to leave midway through the final panel “Investment Opportunities in Technology” but I was leaving the room, a panelist said twice “In Private Equity, the goal is to get rich slowly” (echoes of build something special)
 
Walking back up Tuck Drive to The Inn, the clouds started to part and we were in for a glorious Hanover sunset. A sign perhaps? Only time will tell.
 
Always energizing to be back in Hanover, meet new people (in-person) and see some familiar faces. I look forward to the 2024 conference.

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