Matt Wolf
Appearances
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
regime, I guess, for lack of a better word, and more specific to private equity. We saw big news a few days, maybe a week ago now, of Yale selling up as much as $6 billion of its private equity holdings. We've seen this convergence in returns between, at least historically now, between private equity returns and public equity returns.
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
And just thinking about what does that mean going forward, not only for
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
institutional investors and limited partners allocation to private equity but what does that mean for the the actual sponsors and how to think about deals how to how to go for how to source deals execute deals what does that mean for hold periods as um you know the the sort of global financial system works through this regime change and and a lot of investors take a you know another look at private equity and talk about that because there's there's
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
It's a trillion-dollar question. It's a great question. And I guess for additional context, at least the way that I think about it and the way a lot of observers think about it is private equity, the value proposition was, OK, invest in my fund. Your money will be locked up. but you'll get a rate of return higher than market index, pick an index, right?
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
Sort of like a CD at the bank, which are also coming back into vogue now that we have positive real interest rates. But yeah, lock up the money for a time period and you'll get a higher rate of return. But Bain actually came out with this really interesting study that showed the sort of premium to private equity returns above those public equity benchmarks
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
It fell pretty significantly over the past few years to about 11% from an average of 29% between 2014, 2017. And so now that value proposition is changing. And going forward, I'm still... Ultimately, private equity is just sort of an allocation tool. It's an asset class.
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
And I'm very bullish on it because I think going forward, as sponsors and firms sort of arrange their talent and kind of figure out what does it mean to source and execute and optimize on deals going forward, because that's looking different now than it did in the prior cycle.
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
And the firms that figure that out, they're going to be able to go back to that sort of tried and true value proposition and tell those investors whether they are high net worth individuals or otherwise accredited investors or large pension funds, large institutional investors and say,
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
Yeah, happy to, Scott, thanks. I guess quick background on myself, spent nearly 20 years in sort of the valuation, private equity deal space at Elliott Davis, which is a firm sort of based in the Southeast, serving clients nationally, again, very focused on middle market,
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
Look, we know that private equity went through this sort of difficult time of constricted returns as we all tried to figure out how do we now do deals in this period of real positive interest rates that we haven't experienced for 15 plus years. But we figured it out. Right. We are focusing on these niches. We have these operating partners. We have this model that we followed.
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
And I can point to the last fund and show how we outperformed. And you should you should try us again. So I think that's a long way of saying that I think the sort of private equity sponsor model is going through.
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
its own changes and there will be some sponsors that figure it out and they can sustain an advantage and demonstrate and sustain returns above public equity in such a way that some investors will want to lock up their money with them to access that return And there will be some sponsors that struggle to do that. But still, at the end of the day, private equity is an asset class just like others.
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
And I think there will be space for that as an asset class across various investor categories.
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
So, yes, I am at a very unique – Cross section or overlay of skill sets to be able to answer that question and and the guidance I would give give you or anybody else is it's not so much the level of the valuation, but the direction of it. So, okay, if you're invested in a position and it's been held at cost for four years, well, why is that? What's the story there? Does that story make sense?
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
How do you feel about that? Or if it's increased 100% in two years... Well, what's the story behind that growth? Does that make sense? And so, yes, there's a lot of quantitative information that goes into these valuations. And you and I have talked at length about EBITDA multiples and interest rates and SOFR curves and things like that.
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
but also really pay attention to sort of the qualitative story. And does it make sense that this mark is still at cost or that this mark has increased or that this mark has come down, right? And I think that's the telltale sign. And if you're looking at some valuations and say, wow, all of these things have, you know, we've been in these positions in this fund for decades,
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
somewhere between two to five years on all of these and they're all still held at cost. You know, that might be a sign to be skeptical, for example. But just, you know, don't worry so much about the level of the valuation or what that implied EBITDA multiple is or isn't. But how has that value changed since investment?
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
deals, audit, tax, consulting, advisory, and heavily leaning into industry and technology-based approaches to solving our clients' problems. So exciting firm, exciting time to be an advisor to these, to middle market deals nationally, globally. And it's just been a wild ride the past few months or so, as I'm sure all your listeners can also attest to. And
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
And does that change make sense with the sort of overall market story, the qualitative information that you know about the market, about the company? Does that change? change in value makes sense. That's what I would focus on.
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
Absolutely, yeah.
Becker Private Equity & Business Podcast
Private Equity at a Crossroads: Trends, Valuations & What’s Next with Matt Wolf of Elliott Davis 4-29-25
What I've been really looking at lately, Scott, is just some of the changes to allocation ideology from limited partners and other sort of institutional investors. We've seen a pullback from public equities into high-yield credits, into gold, of all things, as people try to navigate this sort of changing geopolitical, changing macroeconomic
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
Und was ich sehe, was ich sehe, ist die vorwärtssehenden Signale von Entscheidungsführern, von Geschäftsführern, was die nächsten zwölf Monate aussehen werden. We've seen a lot of major banks and other houses have signaled a base case for recession in the next 12 months.
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
It might look something like the prior issues with inventory, supply chains, everything grinding to a halt is a potential scenario that I'm kind of watching and interested in.
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
We've seen a lot of companies pull back on spending for consulting, advisory services as they focus on securing enough supplies and inventory ahead of any potential tariffs, particularly as certainly consumer products companies and others are gearing up for. already for back to school, even holiday shopping for 2025. And what is this uncertainty going to do with there?
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
And this is the thing very few people are talking about is M&A, right? Going into 2025, we had hoped that it would be a robust year for deal making as sponsors and sort of older vintage funds were looking to exit. Ja, das stimmt. But it's really been muted compared to where our expectations were even three months ago.
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
And there's no real sign to suggest that that will improve until we're on the other end of sort of this economic cycle, on the other end of the sort of likely recession.
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
Yeah, you know, it's just an interesting point that just as a corollary to just a few years ago, which feels like a long time ago of, well, we, you know, as we were emerging from the pandemic, there was a lot of talk about a soft landing. What does that look like?
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
What has to go right for us to hit this soft landing in terms of just the right monetary, fiscal, policy, other economic factors that will deliver us through the pandemic without A recession. And, you know, we largely achieved that going forward. What we're hearing is and what they're talking about is where is the soft landing?
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
Like there is no path for that soft landing, no real path that people can see or that is likely to occur. And so there's sort of, you know, what I'm hearing and what we're looking at is what what is sort of the worst case scenario? How do we there's so much uncertainty. How do we prepare for the worst? First of all, trying to figure out what that even looks like is difficult.
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
What is a likely bad or worst case scenario? And then how do we prepare for that? So in terms of deploying money, making acquisitions, I mean, it's
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
it's tough right ultimately private equity sponsor makes money by deploying capital but you know it's very difficult and the the hesitance to pull the trigger on deals has exploded uh over the past few weeks still certainly quality assets exist and there are reasons to be optimistic across sectors about making acquisitions and driving efficiency particularly in the lower end of the middle market
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
Aber man, es ist viel mehr Analyse muss in diese Verhandlungen gehen. Und Dinge werden wirklich extra berücksichtigt, wenn sie überhaupt geschaut werden.
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
Yeah, thanks, Scott. So a quick background on myself. I spent nearly 20 years in the sort of M&A valuation space, working closely with sponsors, founder-owned companies, buy side, sell side, kind of throughout the transaction cycle. And over the last six, seven years, really stepped into a role as not only a client server, but as an analyst, studying these macroeconomic and industry trends that
Becker Private Equity & Business Podcast
Private Equity Outlook: Recession Risks, Market Uncertainty & Deal-Making Slowdown with Matt Wolf 4-11-25
sort of funnel m&a activity influence executive decision makers strategies and execution of those strategies and yeah it's been never a dull day even before all of the the recent uncertainty and volatility and Es ist ein absoluter Wippsaal von Informationen. Und einfach alles voranzubringen, ist im Grunde ein Vollzeitjob.