Matt Wolf
speaker
221 appearances
14 recordings
2 series
first heard Jan 2025
last heard Jun 2025
Matt Wolf’s voice in public audio — every appearance, attributed to the second.
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the role of family offices in those exits um you know it might be surprising to people for people to hear but there's estimates that family offices worldwide most of which are in the u.s have six trillion dollars of assets uh more than hedge funds and they have long investment horizons
So I'm curious to see and kind of expecting to see that we'll see a large uptick in family offices buying these portfolio companies from private equity groups that are looking to exit. They're going to have to exit a lower multiple. And if you're a family office that has a 7, 10 or even indefinite hold period, you know, this might look like a good deal on some of these actions, right? Yeah.
Yeah, I mean, I think just another note on that hold period, right, is if, you know, I think it'll make the family offices in some cases, again, when it's a cash generating or near cash sharing business, they'll be much more competitive in this deal environment than a lot of traditional private equity sponsors.
If you plan to hold something over 10, 15 years, then you are generally much more willing to make investments in improvements and operations that might pay off over a longer period of time, but make sense to you as an investor that would help
you know kind of win deals away from other other private equity firms so i think you know historically family offices have been a little on the periphery of um sort of mid-market pe transactions and i think we'll we'll see them step a little more into the into the limelight here um so it'll be interesting to watch right and certainly every family office is different they have different strategies different goals of course but um it'd be interesting to see that
that wind away. I guess the other thing that we're also, of course, closely watching is we had a surprising CPI print yesterday, more sort of government confusion, uncertainty around tariffs, around policy choices, all of this that
creates, you know, more uncertainty in the business decision making environment and adding taxes and sort of not like an actual IRS tax, but sort of a tax to making decisions, making investment decisions and allocating capital across capital markets. So, you know, that's something we watch.
pretty closely and markets pricing and less of a chance of you know fed rate reductions this year but and all of this uncertainty is sort of clouding the business environment increasing costs of making decisions and it's something we watch uh watch very closely well the point on the inflation print really ties into your earlier point because as private equity funds see less relief in interest rates they're more likely to say i better take this asset off the table and try and get rid of it
Yeah, and I guess just to clarify one of my earlier points, too, I completely agree. I'm not saying that tariffs are good or bad or that DOGE, the Government Accountability Efficiency Group, is good or bad. All I'm saying is that it's just creating a lot of uncertainty right now that I think is making it difficult. I know it's making it difficult for a lot of sponsors and management teams to plan.
But, you know, also... I think it can create opportunity for the right buyers as well. So I think we'll see that dynamic shift.
Absolutely. Maybe we can do a whole other episode on that. But, you know, it's like the financing, the government financing regulatory environment for health care is this sort of like patchwork.
quilt or you know that kind of holds everything up but you know if you move this knob over here then on the other side of the control board this lever flips into a bad situation right so like for example you know one of the things that i i think is on sort of the chopping block uh potentially in the spring spring funding bill is site neutral payments for hospitals and on the surface like this makes sense right why would we reimburse
for a procedure that's simply done, reimbursed more for that procedure if it's done on a hospital campus than if it's done in a physician office out in the suburbs, right? If the procedure can be safely done in both locations, why would we pay more just because you choose to go get it done at the hospital, go get it done at the lower cost side of service? We'll pay the same either place.
And some estimates to save $156 million a year, maybe $156 billion, excuse me, not million, billion. But, you know, that supports other things that support other things. And it is this really, really complicated patchwork. That's right.
Yeah, absolutely. It's a very complex system. And, you know, I don't think anybody would argue that there is no inefficiencies or waste or anything like that. Nobody would, no serious person would argue that. We just got to go about it in the right way, go about reducing it in the right way.
Happy to, Scott. Actually, a colleague of mine put together some really interesting research that we're still kind of tweaking and iterating on, but looking at sort of the growing complexity of business operations over the past decade.
15 plus years or so uh and i wanted to share a little bit about that because i think it's very relevant especially as we look at you know private equity operators uh middle market large companies small companies doesn't matter just i found these numbers to be fascinating and i wanted to share them and so for example we look at um the top 50 and it doesn't really matter what we look at look the top 50 bottom 50 of the s p 500 excluding financials and real estate
So the top 50 of the S&P 500, excluding financials and real estate, the number of total suppliers those companies have now compared to 2009 has almost tripled. The number of customers those companies have now, compared to 2009, has increased over five times. And on the bottom end of the bottom 50 S&P 500, it's increases of four times and nine times really for number of customers.
And what that tells me, again, just by looking at the sort of subset of the top and bottom of the S&P 500, excluding financials and real estate, is just this explosion in the complexity of managing businesses that sort of evolved during the era of zero interest rates and now
you know, we're all kind of coming to terms with either as advisors or investors or as management teams of how do we actually navigate these incredibly complex business environments now that the cost of capital is higher? How do we do that in a way that makes returns? And, you know, we talk about that and we've talked about it on the podcast. I think people
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