Becker Private Equity & Business Podcast
Private Equity Sentiment, Market Momentum & Access to Capital with Rick Kes of RSM 5-17-25
Sat, 17 May 2025
In this episode, Rick Kes, Partner at RSM, joins Scott Becker to discuss the cautious optimism in private equity, the impact of public market news on investor sentiment, and ongoing challenges around interest rates and access to capital.
Chapter 1: What is RSM and its role in private equity?
This is Scott Becker with the Becker Private Equity and Business Podcast. Thrilled today to be joined by regular guest, Rick Kess. Rick talks to us regularly about issues he's watching in private equity and trends he's seeing. Rick, let me ask you to take a moment to tee yourself up. Tell us a little bit about RSM and about yourself.
Then we'll talk a little bit about what trends you're watching currently, whether the market's rebounding, the trade thoughts are going to help the private equity markets.
Yeah, Scott, thank you. Yeah, for those of you who aren't familiar with RSM, we are the leading provider of services to the middle market. So we are the fifth largest professional service firm in the U.S., very focused on companies, you know, around a hundred million dollars to about $5 billion of revenue.
So big swath of the GDP, roughly about a little over a third of the overall GDP is represented in that client base. So, you know, we provide tons of services to private equity companies and their portfolio holdings due to the fact that many of them kind of sit in the middle market. And we have been doing so for a very long time and build a pretty robust
Chapter 2: What trends are currently impacting private equity?
both brand reputation in the market as well as just kind of infrastructure of managing our private equity relationships in a way that we think differentiates us from the competitors. You know, me, myself, I've been at the firm about 20 years, served in many roles within the industry of healthcare and overall just private equity related management.
So I'm glad to be part of the conversation and, you know, talk a little bit about what's going on and what we're seeing.
Chapter 3: How are public market news affecting private equity sentiment?
Thank you so much. So the markets have been rebounding recently, almost back to flat year to date, the public markets. Literally, it feels like for the last six weeks, the private equity markets have been on sort of a pause. What is your sense of how those are going to start rebounding or moving? Any thoughts on that?
Yeah, I mean, obviously, with the news that broke this morning about a 90-day pause on certain tariffs with China, I think that's interesting news for sure. And I wasn't surprised to see the markets react in a favorable fashion to that. I do think, like we've talked about before, Scott, that The public market is obviously very easy to read. It's very easy to obtain data about.
Chapter 4: What is the current investor sentiment in private equity?
It's very easy to kind of get insights. You can pop on CNBC or Bloomberg Television or whatever you want to watch and get a lot of great intel and kind of the sentiment of the street, if you will. It's a lot harder in the private equity world, as you know, because, you know, a lot of that stuff is just quite frankly private. And so really harder to get to it.
You know, I think we spent a lot of time, obviously, with fund fund managers, you know, people within private equity groups, people at the portfolio level. I think the overall sentiment is that a lot of them are kind of cautiously optimistic and they've been that way for a long time.
Chapter 5: What factors could influence the private equity market's recovery?
I think we all see a lot of the data points, whether it be dry powder or hold periods or other things where we start to think, well, if we just get a couple nice, you know, momentum changes, whether it's interest rate cuts or, you know, good deal environment or any, you know, any little thing that could help, you know, push the ball down the hill.
Once that ball starts, I think a lot of people are hoping that it keeps rolling. And, you know, I think that there's some truth to that. So I think, you know, The news that broke today is great. I think it pushes people into a positive sentiment overall, even though it's more probably from the public markets.
Chapter 6: What are the challenges facing access to capital in private equity?
But I think overall, positivity is going to help push that ball forward and start to gain momentum and speed and have it go down the hill and start the deal flow volume that I think we've all kind of been waiting for for the last 18 months or so.
Thank you. And at the end of the day, margins and debt, and the cost of debt are still very important. So a company's margins performing, and are the interest rates going to be too high or not, are still very, very important.
And so to your point, even though the public markets explode upward today, that doesn't mean that margins have gotten better for a lot of privately held companies, where the interest rate costs are yet down, where it makes it easier to buy things with financing.
Yeah, very much so. And I think the other... thing that sounds to be a bit of a challenge is even You know, one thing is affording the interest rates, you know, just being able to cash flow it and or, you know, produce, you know, sustainable margins, including interest expense.
But on top of that, it's even just access to capital sometimes can be really challenging for some of these businesses, even well capitalized or highly valued companies are starting to have a sense that capital access is Not quite what it was, you know, maybe, you know, three, four years ago or the last time they went to the bank and asked for some additional capacity.
So, you know, I do think that continues to be an interesting environment, you know, from a bank financing perspective.
Well, it's interesting you say it and that the venture world is also a little bit tighter on investing. That's been for a couple of years from what I could tell. And on top of that, anecdotally, I watched Landman this week, the latest episode or one of the latest episodes. And there, one of the Wildcat drillers was having a hard time getting investment as well.
And I say that somewhat facetiously, but it is telling you the times that access to capital is more challenging, particularly unless you have a great balance sheet.
Yeah, yeah, that's very, very true. And it's got great, great taste in TV shows. I love Landman. Billy Bob Thornton is one of the most talented actors of our time. He's just crazy how well he can kind of adapt into that role. It's quite interesting compared to what you see from him and kind of in his non-character role. So that's a great show. I very much enjoy that show.
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