Becker Private Equity & Business Podcast
Private Equity in Uncertain Times: Insights from Rick Kes of RSM 3-11-25
Tue, 11 Mar 2025
In this episode, Richard Kes, Partner at RSM, joins Scott Becker to discuss how economic uncertainty, government spending cuts, and market volatility impact private equity investors.
Chapter 1: What insights does Rick Kes provide on private equity?
that the markets don't know what to do with it between potential government shutdown, potential reduction in government spending, tariffs and trade wars. And I guess the question I have for you, Rick, is how How does this impact the private equity investors? They don't live in the same mode as the public markets. Will this create opportunities for them?
Will this kind of turmoil lead to some slowdown? What's your sense of how this will impact the private equity deal markets?
Chapter 2: How does economic uncertainty affect private equity markets?
I don't think it's accretive to the deal market. I think the noise does have its impact in the private equity world, just because it creates so much uncertainty. What will happen next sort of thing and how it may impact, you know, a business's overall value proposition, you know, and whether you're in health care or banking or manufacturing, you know, like there are.
Chapter 3: What are the implications of government spending cuts for investors?
Chapter 4: Can private equity investors find opportunities in market volatility?
Will this kind of turmoil lead to some slowdown? What's your sense of how this will impact the private equity deal markets?
I don't think it's accretive to the deal market. I think the noise does have its impact in the private equity world, just because it creates so much uncertainty. What will happen next sort of thing and how it may impact, you know, a business's overall value proposition, you know, and whether you're in health care or banking or manufacturing, you know, like there are.
Positives and negatives to lots of different things that are happening from a legislative perspective, depending on the industry, the market, etc. So I do think that the overall uncertainty
typically isn't good for deal makers because they're not sure how to price in the uncertainty risk and how to kind of address that within their valuation and their modeling and all those kinds of things because uncertainty is something they just can't really predict the future for. So I do think it does have its contagions to the private equity market.
Chapter 5: What predictions can be made about the future of private equity?
Thank you. And is there any prediction as to how long this uncertainty will last? Now, many of us see a need for reducing government spending, bringing down inflation and so forth. But if the winning leads to lots of stock market reductions and deal flow slowing significantly, at some point we're all going to get tired of so much winning, as President Trump would say. Is there some point at which
The temperature will start to come down or should we expect four years of this sort of up and down and people being very concerned? I take it you don't have a prediction on that. You're probably not allowed to make a prediction on that. But from a business perspective, do you see some of this calming down over a certain period of time?
You know, it's really difficult to kind of have a prediction just because I think so much has happened in the last three months that has been unpredictable. So I guess to dodge your question as best as I can, I don't have a prediction. And it's maybe not so much on the reasons that you outlined, but more on the reasons of like it's just an unpredictable situation that we have.
So we're not really sure what could or might happen.
Thank you, Rick. That doesn't sound overly promising to us watching the markets crash today, but I'm hoping that this will be short lived. And, you know, I do wish Jamie Dimon had become Treasury Secretary, but he didn't want that job. And now we might be stuck with all kinds of people that are afraid to oppose President Trump. We'll see how it goes.
Rick, any other words of wisdom or words of comfort today? Because many of us with the NASDAQ down 4%, the S&P down 3% could use some of those calming words, those words of wisdom. I know you've got to have something for us.
Ja, ich meine, Scott, ich denke, ich nehme es zurück zu den Grundlagen und kontrolliere das Kontrollable. Und ich denke, unsere Theorie seit langem ist, dass du dein Bestes tust, um super effizient zu werden. Bringe dein Geschäft zu einem A-Qualität-Asset und lass den Geräusch den Geräusch sein.
Aber wenn du der beste Asset in der Klasse bist, dann ist ein bisschen dieser Geräusch nicht so wichtig für dich, wie es für die Fringe-Spieler in deiner Asset-Klasse wichtig ist. Ich wünsche meinen Klienten, sich zu bewegen, die Technologie zu nutzen, um effizienter zu werden.
Sie sollten schauen, wie Sie Ihre Kostenstruktur in Ihren vier Wäldern aufrechterhalten und der beste Asset-Performer in Ihrer Klasse werden. Und einige dieser Geräusche werden nicht so viel für Sie als für andere bedeuten.
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