Private Equity Trends: Exits, Capital Calls, and Market Uncertainty with Rick Kes of RSM 3-4-25
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What are the current trends in private equity exits?
This is Scott Becker with the Becker Private Equity in Business podcast. I'm thrilled today to be joined by Rick Kess. Rick is a brilliant leader and partner from RSM. He joins us regularly. Rick, we're going to talk today a little bit about the private equity world and what you're seeing. I think the most fascinating thing that I'm seeing are two things that I'll sort of use as almost personal anecdotes into the market and get your sense of this. The first thing is, I'm an investor in one fund, I'm an LP, and that LP just announced one of your exits, and the exit is something that we're seeing more and more of. It's an exit of a company who's selling into another company owned by another fund in that family under that same sponsor. So more and more people finding ways to do exits that are sort of non-traditional, and it might just be circumstance, but it might be a way to get the exit of that fund, get something going in the next fund. But that's one topic.
The second thing is starting to see as a limited partner, capital calls again. I wanted to get your sense of what are you seeing out there in the exit environment? What are you seeing out there in the putting money to work environment? What are you seeing out there?
How are capital calls returning in the market?
Yeah, Scott, I think in some sense, the overall market conditions that we're seeing, I would think, people are getting a little bit more, I guess, understanding of the interest rate environment and understanding of the fact that there's a lot of things that may or may not be you know, beneficial to the lowering of the interest rates. So I think some people are almost putting that aside and saying, okay, well, you know, we can't do much about this, right? And so we need to do something. And, you know, perhaps to your point, you know, it's selling within the same fund family. That could be one idea.
What is the impact of interest rates on investment strategies?
And to your point, the other idea is just moving on and figuring out what exits can happen and what activity could happen, even absent the interest rate environment. Because obviously, there's some noise. suggesting inflation still maybe not yet to where the Fed would like it to be. I think some data came out late last week that showed personal consumption around 2.5%, which I think the target's around 2%. So that could be a little bit of a headwind against lowering interest rates. And then, of course, you know, I think there was some data from a manufacturing perspective around manufacturing purchasing up about, you know, 14, 15% because of tariff and tariff-related price adjustments. And so I think because of those two things, we may not see the interest rate environment be as favorable as we would have hoped absent those two data points and other data points, obviously, to that impact. So I think because of that, you know, funds are just obviously reacting and saying, we got to do something.
Let's move forward and move on and, you know, make something work.
How are tariffs affecting the market conditions?
Thank you. And there's a fascinating point you just made because we're talking today. It's Monday, March 3rd. It's a day where the markets are down because at least they're pointing to the fact that President Trump is going to hit with some more tariffs that will start tomorrow. And what you just said was a fascinating microcosm of what's going on. The markets don't love the tariffs. But what you also said is that manufacturing is up some in this country. And I remember talking to a close friend from Indiana not long ago who owns some manufacturing plants. And they're also getting those going if they could staff them again, in part because they've got to be manufacturing goods here, not overseas. So you've got this very complicated world that we live in.
where many of us don't love the tariffs because they're causing some trouble in the stock market and can lead to more inflation. And at the same time, they're having some of that effect that President Trump wants them to have, which is leading some more manufacturing back to the United States. So, I mean, all these things seem to be so complicated in terms of the different conflicting efforts and purposes of them. And I know you can't talk politics, but I thought that's fascinating what you just mentioned on the manufacturing side.
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Chapters
5 chapters
1
What are the current trends in private equity exits?
0:00–1:08
2
How are capital calls returning in the market?
1:08–1:49
3
What is the impact of interest rates on investment strategies?
1:49–3:04
4
How are tariffs affecting the market conditions?
3:04–4:16
5
What challenges are manufacturers facing today?
4:16–6:52
Speakers
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