Matt Wolf
Appearances
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
In 2025, I was just based off of PE buyout investments in healthcare, sort of healthcare broadly defined, excluding life sciences. We have right now about 2,200 companies that are outside of the typical five-year hold. For private equity, we have another almost 900 companies that, you know, saw their last sort of private equity buyout over seven years ago.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
And again, this is just sort of healthcare broadly defined, excluding life sciences. And those, you know, the dollar value, at least of their last sort of buyout investment for the port co's outside of seven years, was over $42 billion, according to PitchBook data. That's primarily what I look at for this type of analysis.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
And, you know, that's a lot of money, $115 billion outside of the five-year hold, again, for this sort of semi-broad definition of healthcare. And, you know, I think sponsors are, they realize, like, the interest rate environment is not going to become more accommodative to dealmaking. And we're going to see a lot of this change hands in 2025.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
It is, I'd say broadly across health care. The real question, what we're continuing to watch is what is that bid ask spread for health care services, for providers, for businesses that accept reimbursement risk? Because I can tell you. Based on conversations I've had with a lot of sponsors in the space, there are many who are committed to investing in health care.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
They no longer want to invest in companies that take direct reimbursement risk. They don't want physician practices. They don't want hospitals. They don't want senior care. They want to put their money to work into health technology that will help support those businesses or suppliers that will help support those businesses or other sort of kind of a pick and shovel sort of play.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
Yeah, happy to, Scott. One thing that we watch closely are sort of the dollars invested into private equity-backed healthcare port codes sort of by year, by vintage, and how that relates to sort of timing expectations as we try to model out and examine potential deal flow.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
They're committed to health care, but they're leaving the services business. They don't want that reimbursement risk. And so as the as the potential buyers leave, of these healthcare providers that need to flip to a new PE as that pool of buyers sort of shrinks.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
I think we might continue to see this bid ask spread delta, at least in healthcare services that will sort of maintain even if it shrinks in other areas of healthcare.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
Yeah, absolutely. And I think we've talked about it on this podcast before, but it's really interesting. It kind of swings like a pendulum. You know, 10, 15 years ago, most sponsors stayed far away from reimbursement risk due to all of the operational regulatory challenges that you alluded to.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
But then over the prior economic cycle, as interest rates were very low and money was easy to come by, there were a lot of sponsors who started to kind of dip their toes or even get even more serious about the space. And they were able to make a lot of money doing so.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
now that we're in this new regime of higher interest rates, positive real interest rates, we're seeing the tide sort of recede again, as some of those sponsors say, you know what, this just is not a focus of ours anymore, and so we're leaving.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
And that, I think, will continue to vex sellers, but I do think it's an opportunity for buyers who remain committed to accepting that reimbursement risk, right? The competition for these deals is, is declining in many spaces.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
And so if your shop is good at diligence, good at the operations around these practice management or other businesses that accept reimbursement risk, I think there'll be a lot of hay to be made in 2025. I think that it actually benefits some of those shops. So we'll see how it all plays out. But
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
And certainly the uncertainty and challenges of the regulatory environment and reimbursement risk, those are only going to grow over time. It's not going to become a simpler business. It's only going to get more complex. But I do think that creates opportunities for the sponsors that are going to focus on the area.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
Yeah, busy. It is very busy. we're getting a lot more requests for sort of more limited diligence at earlier stages of the process. And I think this is coming from sponsors want to
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
And sort of the conventional kind of anecdotal knowledge or wisdom that's been floating around, of course, is sponsors have been waiting for the right time to exit. They need to meet their IRR thresholds. They need rates to go down, financing to become cheaper to help facilitate that deal flow. They can hit their exit targets. And what we've seen certainly in the capital market side is
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
spend they're going to spend more time and more money looking at deals to make sure that they're making the right deals you know i think a lot of the the sponsors we talk about they're expecting to look at more deals in 2025 but probably close about as many as they did last year hopefully more but they're not um you know they're very much internalizing the mantra of you know it's always a good deal to walk away from a bad one and they're they're very concerned about um
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
allocating capital in the wrong way, which makes sense, right? As interest rates increase, the opportunity cost of making your investments increase, and we're gonna see a lot more diligence around these deals before they close or if they close.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
Yeah, yeah, absolutely. I mean, we'll see – you know, oftentimes if after the limited diligence, limited look, and I use the term diligence broadly, right? It could be partially financial. It could be a partially a sort of a chart review type diligence or IT diligence or some of all of that, but a lighter touch on very specific areas of concern. And then as the process progresses,
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
expands or as the process continues, if the sponsor is still interested, then we'll go to more of a full sort of financial tax, other diligence that you would expect to see So overall, a longer process, more diligence, but starting earlier with the lighter touch.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
And then if, you know, if the lighter touch kind of suggests, hey, we think we can make this deal work, then we'll move forward, get into, you know, the next processes of the deal and do more full scope sort of diligence. So I guess the answer is both, at least the way you're seeing it, right? Again, it's got to be careful in today's deal environment with the investments that we make.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
Even as the Fed started to lower the front end of the curve, we've seen interest rates on the longer end that sort of better informs the private credit that finances a lot of these deals. Those yields have actually increased. And so it's another way of saying that the interest rate environment is unlikely to get better. much better or much more supportive of deal flow.
Becker Private Equity & Business Podcast
Healthcare Private Equity in 2025: Trends, Challenges, and Opportunities with Matt Wolf of RSM 1-29-25
And we've already seen some sponsors sort of rip the bandaid off, for lack of a better term, and exit a lot of these positions as they allocate capital towards new funds, new investments, allocate their operating partner, their deal team talent to new investments and new businesses. And we're going to see a lot more of that, I think, in
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
volume um you know it's we're now also kind of in the middle of conference seasons i've been talking to a lot of sponsors just about what they're seeing what they're trying to do and everybody wants to get deals done they want to deploy capital they want to exit long in the tooth um Aber die Zeitung kann noch nicht richtig sein und wir suchen für die richtigen Ziele.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
Die Verwaltungszyklen sind länger. Die makroökonomische Unwahrheit, die politische Unwahrheit, die bleibt immer mehr. Einige Ziele, nicht alle.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
You know, one interesting data point, though, is in terms of IPO announcements, just the number of announcements are actually up year to date over the past couple of years, which is which is a good sign, I think, you know, at least in terms of the number of announcements, not necessarily the total number.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
you know, market cap trying to go public, but at least the number of companies going public is, you know, those announced IPOs is higher than it's been the past couple years, year to date, which I think is strong, right? We want strong capital markets. It's an important part of the overall economy, even in the real economy, right? Access to capital. And so there's some bright spots there too.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
It's just, you know, this policy uncertainty will create
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
Ja, absolut. Und die Faktoren, die ich weiterhin schaue, sind in Bezug auf diesen Pause, es ist wirklich zweifelhaft. Einer ist einfach die Vintage der Investitionen, die da draußen sind, richtig? Also zum Beispiel Gesundheitsberatungsunternehmen, also Anbieter, Pflegegruppen, Dinge wie das, die privat beteiligt sind.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
We now have, we're approaching 60% of the PE-backed ones have been held for five or more years by their primary sponsor, right? Those need to get turned over. That will push deal activity. And then we also look at dry powder and middle market buyout funds. And this is, again, more healthcare specific, but it's around $250 billion of dry powder for funds that say they invest in healthcare.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
And there's, you know, overlap because some funds will invest across multiple sectors. But that's an incredible amount of dry powder. a very aging portfolio that needs to turn over. And that will continue to push to get deals done. And I think we're still working through this cycle of moving from an era where
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
Investors were rewarding growth at all costs into now this new environment where investors want sustainable cash flows. They want margin. They want financial sustainability. And for companies that have that financial sustainability story, they will have access to capital markets. They will have interest in deals. And we will see those deals happen.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
And looking through the IPOs that have been announced, We see that. That's a consistent theme in the stories. Whereas even two years ago, you're still getting a lot of, well, we need to go public so that we can get capital to scale up and be profitable. That's not the story anymore. So, yes, definitely a pause.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
And the sort of duration of that pause is going to look different for different segments of the real economy, different industries, different sizes of companies. But there are some underlying macroeconomics, some underlying capital market factors that will continue to drive deal volume, right?
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
It's not going to be, you know, like the absolute craziness of 2021, but it's not going to go to zero either.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
Absolut. Und es ist so ein guter Punkt, den du mitbringst, Scott, ob es um professionelle Geräte im Allgemeinen geht, ob es um Physiotherapeuten oder andere Verkaufsfirmen geht, oder was auch immer.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
Wir hatten diese PE-Vorschläge, als Geld weniger teuer war, die essentiell finanziell ingeniert wurden, um den Verbrauchern, den Verbrauchern dieser Unternehmen, um wirklich das Gleiche oder mehr zu machen,
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
monthly annual income that they were making plus get paid out for their their capital as part of the acquisition and now in this higher interest rate positive real interest rate environment that's just not financially sustainable right if you're a business owner and if you get a check for your ownership interest in that business then Ja, genau.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
um you know there's a lot of a lot of investors that are kind of frankly holding the bag and not not all of them certainly but you know there are some that are in some real tough uh positions that are going to have to exit at um unfavorable multiples unfavorable cash on cash returns and that's going to have to work itself through the system particularly in any sort of sort of owner operator professional services model no 100 i think that's a fascinating additional take that whenever vintage and and
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
Yeah, I would just say, you know, as we're working through this regime change that I feel like we've been talking about for at least a year, maybe almost two years, it will take time to work out. There are challenges, but, you know, those challenges...
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
create opportunities right so there are definitely opportunities for investors for operators might require some short-term pain of exiting certain companies or businesses or segments of the market but as as the regime evolves into this new sort of positive real interest rate environment that looks very much like other cycles did again we've talked about this before but the
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
The 15 or so years between the global financial crisis and the pandemic, where interest rates were very low, that was the aberration. Now we're working back towards normalcy. And as we work through this transition, there will be a lot of really great opportunities for savvy investors and savvy operators.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
Yeah, thanks, Scott. So, Matt Wolf, I'm a director at Elliott Davis. I spent my career in healthcare valuation and private equity, working on private equity-backed healthcare companies really through the life cycle.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
Ja, ich bin froh, dass ich hier bin. Elliott Davis ist eine große öffentliche Accounting-Konsultation, Audit-Taxi-Advisory-Firma. Wir sind sehr gut situiert im Core-Middle-Market bis zum Lower-Middle-Market. Das ist ein sehr nimbleres Operationsmodell, das uns ermöglicht, ein sehr astutes Core Advisor zu wachsenden Privat-Equity-Businessen zu werden. Thank you. Thank you.
Becker Private Equity & Business Podcast
Navigating Healthcare PE in a Shifting Market: Insights from Matt Wolf of Elliott Davis 5-14-25
And over the past decade or so, I've really focused on the analyst side of that as well and studying the market, putting together our content and talking about it to really anybody who will listen to me. So I'm always... Always excited to be on the show and talk about that. And, you know, I guess with the... Vielen Dank. Vielen Dank. Vielen Dank.
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
that's really creating a lot of a lot of uncertainty and confusion and and you know again it's not for me to say whether they'll be good or bad i i don't know and i'm not going to comment on that all i know is that it's creating uncertainty which delays investment it makes it just makes it more difficult to get deals done i mean 100 and whether they're good or bad again the markets hate them inflation hates them the only people that like them are sort of
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
Absolutely. And I think the other thing that perhaps those in the administration may maybe take for granted is just the the lead time on making these investment decisions. And to your points, maybe some of these defensive tariffs will encourage manufacturers to move operations back to the United States. Maybe. Right. But they. That's a very expensive decision to make that has a lot of variables.
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
A lot needs to be thought through for any sort of executive, any operation, whether it's a farmer or even a consulting professional. Like, you know, whatever. Manufacturing doesn't matter what the business is. It's a very... expensive decision investment to move some centers of production and without certainty around, well, what are those future tariffs, future costs look like?
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
It's a leap of faith to make some of those investments, and we're not seeing many companies do that.
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
Absolutely, absolutely. Ultimately, the uncertainty, whether it's uncertainty from tariffs, regulatory uncertainty about the path of future interest rates, all of that uncertainty adds to the cost of making business decisions, whether it's where do you want to place a plant, where do you want to hire people, do you want to sell a division, do you want to buy a company?
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
All of that gets made more expensive through this additional uncertainty, regardless of the source. And right now, tariffs are a huge source of uncertainty for most executives, leaders, and investors that we're talking to.
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
Yeah, it's a great question. You know, if I knew exactly the future path of the tenure, maybe we would be having this conversation on my yacht in the Mediterranean, but I don't. So, you know, what we're expecting, though, is that this uncertainty will continue to drive yields higher because of the increasing term premium.
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
Yeah, great questions and ones we're talking about. hourly, right? I mean, I will say, like, I am no sort of policy expert by any stretch of the imagination. Maybe they're good, maybe they're bad in terms of policy. I don't know. All I know and what the data show are that it's, you know, creating a lot of uncertainty in
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
So investors have less certainty about future duration, future policy, future uncertainty in general. So that spread between kind of the natural rate of the 10-year and the traded observed rate will continue to widen and it'll continue to
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
you know, we're watching sort of some of the, well, depending on the analysts and the banks you want to read and look at, you know, that sort of upper limit of 477, 48, somewhere 475 around there is kind of, depending again on who you want to listen to, who you want to read, is sort of the upper bound, the marker, you know, past that is the,
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
could potentially be real trouble for the overall broad U.S. economy. Again, that sort of 4.7 to 4.8, depending on who you want to listen to. And if I just pull up my Bloomberg right now, we're well below that at about a 4.28.
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
But it's come up significantly, 10 basis points, 12, 13 basis points just over the last few days, given some of this uncertainty around tariffs, at least as of this recording. So You know, we have room to go before it's troubling, but it's increasing. And this does not bode well for the cost of capital, does not bode well necessarily for dealmaking.
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
And that's just a quick note on that, Scott. That's so important, too, as we're thinking about and analyzing any of the macroeconomic data or anecdotes or whatever we're looking at is that the direct impact is is so important to understand, right? But that's really just the table stakes. And you've got to think through what is the second, third order effect of this, right? So yeah, you're right.
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
If more money continues to flow into treasuries or more money continues to flow into private credit, what does that do for public markets? What does that do for the attractiveness of IPOs? What does that do for other asset classes? You know, the real money is made on the analysis of those second and third order effects exactly as you outlined. Such a great point.
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
dealmaking and around investment decisions when there is no clarity or very little clarity on the breadth and depth and scope and frankly timing of tariffs. We've had many, many clients and sponsors take another look at deals, shelve investment, push things off because they're just waiting for more information. And we're seeing that uncertainty reflected in real time in the
Becker Private Equity & Business Podcast
Tariffs, Uncertainty, and the Deal Market: Insights from Matt Wolf of RSM 3-12-25
in the tenure which has been on an absolute tear it's an it's an indication of the cost of capital right so we have not only do we have more uncertainty in the sort of overall business investing community and the deal making environment but the cost of capital is increasing right so the the cost of making the wrong decision is increasing and we have sort of the second and third order effects
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
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
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
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
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
Some people, at least leaders, sort of intuitively understand this. But just to see this absolute explosion in the number of suppliers and customers that companies are working with now compared to 2005, again, as much as a nine times increase, depending on how you want to slice it. I think really kind of drives home this incredibly complex operating environment that we're all working to navigate.
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
And that's what we're watching.
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
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.
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
Yeah, I mean, it's fascinating. I completely agree. And the other element of this is now business decisions change. We're seeing clients, we're seeing operating teams, operating partners, management executives more closely manage those solutions, their technology stack, their vendor relationships. Can we trim the number of vendors, the number of solutions? How does that streamline our operations?
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
But there's so many second and third order or second and third sort of derivative almost decisions that are impacts that go along with that, right? So, okay, if we reduce the number of vendors we're using in our technology stack, that probably has positive implications for our risk management, internal audit, our risk management framework, right? We're, you know, we're
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
fewer entrance points to kind of manage. Maybe on the supply side, hey, we're reducing our number of vendors, reducing number of SKUs, but what if one of them goes bankrupt or one of them has supply issues? Where do we want to pay for redundancies? Where do we want to accept additional risk and have additional point solutions and have additional suppliers? What does that look like?
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
It's made that analysis more complex. And then on the customer side, I think everybody would say, every operator, every CEO, every leader would say, oh, yeah, we have some difficult customers. We have some difficult clients that just don't make sense for us. They're off strategy. We really shouldn't devote resources there. But you know, push comes to shove.
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
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
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
And if the goal is to keep dollars coming in the door, it takes a special sort of culture and leadership and frankly, an investment to say, no, despite the potential short-term pain, we are exiting this segment. We are exiting this business. We are, you know, separating from these clients. It's a very difficult thing to execute on, even if we, we know and we, um, we view it.
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
The other element of the study that's been going on that I think is also really interesting is the sort of capital per employee. We looked at Russell 2000 companies, excluding financials and real estate. And what is sort of the capex per employee? And that has increased significantly as well. 2,940 grand per employee 2024, almost $330,000 per employee.
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
We've seen sales per employee increase as well, well above GDP growth. So we're seeing investments in productivity. We're seeing these investments in complexity. to generate those returns. But the whole decision space around how do we manage this complexity, even if we know it's a problem, it's still a very complex problem to navigate in its own right. So it kind of makes your head spin, really.
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
But at least we sort of know where we stand, hopefully.
Becker Private Equity & Business Podcast
The Increasing Complexity of Business & What it Means for Investors with Matt Wolf of RSM 2-12-25
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.
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
2025 Healthcare Private Equity Deal Trends 2-11-25
Yeah, I completely agree. And I'm hearing the same right from my perspective, my clients as part of the thing I would add to is that, you know, we kind of saw this story during the last administration. And there was a, you know, would be a bevy of executive orders or pronouncements or whatever people would really say. work hard to understand, internalize, try to react to them.
Becker Private Equity & Business Podcast
2025 Healthcare Private Equity Deal Trends 2-11-25
And then a day, a week, a month later, it fizzled into nothing. And so that's part of what we're trying to caution this time around again, as well as like, yes, it's important to pay attention to this, especially if, you know, we talked about home health, right?
Becker Private Equity & Business Podcast
2025 Healthcare Private Equity Deal Trends 2-11-25
They're very much at risk for some of these Medicaid sort of discussions, and it's going to affect different investors, different leaders in different ways. but we want to take it with a grain of salt. I mean, it's several full-time jobs to keep attention to everything that's happening.
Becker Private Equity & Business Podcast
2025 Healthcare Private Equity Deal Trends 2-11-25
Thanks, Scott. Matt Wolf. I lead the healthcare and private equity group for RSM. RSM is really the largest consulting firm focused on the middle market. I help lead our healthcare space there. And I'm also one of our healthcare senior analysts.
Becker Private Equity & Business Podcast
2025 Healthcare Private Equity Deal Trends 2-11-25
So I spend a lot of my time working with our economists and other analysts to study what's going on in the macroeconomic environment and what's going on in healthcare and putting together our data-driven perspective on that to share with our clients or people serving our clients and really anybody who will listen to me. So excited for the conversation today.
Becker Private Equity & Business Podcast
2025 Healthcare Private Equity Deal Trends 2-11-25
Yeah, I mean, a lot of the same as Bart and Holly, and I'll add some numbers to it, right? Because I get asked all the times, I'm sure my colleagues on the panel do, of what do you think deal volume is going to be this year? What's it going to be next year? What is that going to look like? And I'm really more interested in the shape of it and what it looks like and what are we going to have?
Becker Private Equity & Business Podcast
2025 Healthcare Private Equity Deal Trends 2-11-25
And it's specifically a distinction between deals in providers, companies that take reimbursement risk, and don't, right? We're seeing this shift away, as Holly sort of alluded to and mentioned, of sponsors wanting to still invest in healthcare, but not in reimbursement risk. Right now, according to Bloomberg data, we have about $250 billion of dry powder in healthcare buyout funds in the U.S.
Becker Private Equity & Business Podcast
2025 Healthcare Private Equity Deal Trends 2-11-25
These funds, you know, they'll invest in other industries too, but a stated interest in healthcare. They're raising another $140 billion of healthcare buyout funds over the next handful of years. And to Bart's point earlier, now we, according to some pitch book data I was looking at, 55% of private equity-backed healthcare providers have a five-year or longer hold period from their lead sponsor.
Becker Private Equity & Business Podcast
2025 Healthcare Private Equity Deal Trends 2-11-25
So there's going to need to be a changeover. We've seen since the Fed started lowering rates in September that the actual private credit financing rates to get a deal done hasn't changed. The 10-year, 20-year has increased since September. The interest rates are not going to come down. The multiples are not going to go up.
Becker Private Equity & Business Podcast
2025 Healthcare Private Equity Deal Trends 2-11-25
These will be transacted, and we've seen in a lot of conversations I've had, deals we've seen of sponsors moving from provider deals, but they want to stay in healthcare, investing into health technology, healthcare services, healthcare consulting firms. They want a piece of that pie, but not the direct reimbursement risk. watching that shift, I think will be really interesting.
Becker Private Equity & Business Podcast
2025 Healthcare Private Equity Deal Trends 2-11-25
And I think it'll create buying opportunities for sponsors that remain committed to a healthcare reimbursement risk. And they have the operating, the deal teams to really execute on that because it's, it's a difficult thing to do and it's only going to become more complicated, but we'll see sponsors really specialize in it. And I think they'll be able to make some good deals.
Becker Private Equity & Business Podcast
2025 Healthcare Private Equity Deal Trends 2-11-25
Absolutely. Absolutely. And every day we see fewer and fewer holdouts that are expecting that 2021 multiple on their exit. There's still some out there, but it's a new environment. It's a new regime. Craig, a couple of the core trends that you're watching currently.
Becker Private Equity & Business Podcast
The Rising Challenges of Middle Market Businesses with Matt Wolf of RSM 2-27-25
is going to be really tough right we talk a lot about how you know with the the increased cost of capital we don't really have the margin for error for for making you know sub-optimal capital allocation decisions of you know companies to buy systems to implement processes to improve we got to really be dead on from that perspective and it's just more complicated to make those decisions now nine times more complicated to manage supply chains
Becker Private Equity & Business Podcast
The Rising Challenges of Middle Market Businesses with Matt Wolf of RSM 2-27-25
And the other element of that is who's going to do it, right? I mean, not only is the actual sort of knowledge kind of capped, right? There's only so many people who have years or decades of experience in a given industry. You know, unemployment remains around 4%. The labor force participation rate is really high. So as we try to add value and execute on this, we can't
Becker Private Equity & Business Podcast
The Rising Challenges of Middle Market Businesses with Matt Wolf of RSM 2-27-25
can't always find the exact sort of human resources and talents that we're looking for to navigate this. And we're going to have to turn to more technology, artificial intelligence to help just help make sense of this increasing complexity. So again, the first tidbit of that is up on the Real Economy RSM blog.
Becker Private Equity & Business Podcast
The Rising Challenges of Middle Market Businesses with Matt Wolf of RSM 2-27-25
Thanks, Chanel. I'm really fascinated. A colleague of mine at RSM, Scott Reamer, has been doing some really interesting research on the overall complexity of middle market businesses across industries. He published a tidbit of the first bit of that research today on our economics blog. I've been working with him a little bit on it.
Becker Private Equity & Business Podcast
The Rising Challenges of Middle Market Businesses with Matt Wolf of RSM 2-27-25
And we're continuing to dive into various measures of complexity of managing middle market businesses. But the research so far has been fascinating. And as I said, I don't think directionally it will really surprised many people, but certainly the magnitude surprised me. Nine times more complicated to manage supply chains now for middle market businesses across industries than it was 15 years ago.
Becker Private Equity & Business Podcast
The Rising Challenges of Middle Market Businesses with Matt Wolf of RSM 2-27-25
So an absolutely An absolute increase. Pretty staggering stuff. And I think, you know, in those challenges, certainly will come opportunities, right? And we've seen sponsors narrow their investment thesis, find those right operating partners, really focus on where they can drive value in navigating that complexity.
Becker Private Equity & Business Podcast
The Rising Challenges of Middle Market Businesses with Matt Wolf of RSM 2-27-25
And I'm confident that they'll be able to deliver outsized returns for their LPs if they're able to execute on that. So, Changing environment as always. And this latest little tidbit of research I think is really worth checking out for anybody interested.
Becker Private Equity & Business Podcast
The Rising Challenges of Middle Market Businesses with Matt Wolf of RSM 2-27-25
Thank you.
Becker Private Equity & Business Podcast
The Rising Challenges of Middle Market Businesses with Matt Wolf of RSM 2-27-25
We found that over the past 15 years or so, the supply chain for middle market companies has become about nine times more complicated to manage, right? So it's whatever sort of baseline complexity existed in 2009 is now, it's nine times more complex than it was then, which I think is really, really fascinating. And I think intuitively it makes sense, right?
Becker Private Equity & Business Podcast
The Rising Challenges of Middle Market Businesses with Matt Wolf of RSM 2-27-25
I mean, we understand that just the nature of business has become more complicated. Consumer demands have become more, significantly more complicated and managing all that finding and creating and expanding a niche to add value in the sort of global marketplaces has really become complicated.
Becker Private Equity & Business Podcast
The Rising Challenges of Middle Market Businesses with Matt Wolf of RSM 2-27-25
And so I don't think the direction should surprise anybody, but, but certainly the magnitude nine times more complicated to manage these businesses. And I think for, for sponsors and management teams working to, to navigate that complexity, um,
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
precipitously you're able to scale more with less over time and this is a pretty significant factor and so you know this new model that came out that has everybody talking again about ai or the export controls working what does this mean for nvidia what does it mean for facebook you know it's important to note that yes it was developed more cheaply but it doesn't score as well as the leading models
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
And it's sort of falling on this expected cost curve of sort of cost reductions that we would expect to see really across all technology. So, you know, I think everybody can just maybe take a deep breath and realize that it's not necessarily the competitor that that is being touted as it's falling on the cost reduction curve.
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
Now, what does this mean from a more, you know, I'm not going to talk about export controls, any of that, but from a business perspective, what I think, though, is really interesting is this cost curve, right? Because we've been, and the reason it's not being talked about now is, you know, these GPT, these large language models have been around only for a couple years, really, in the public's eye.
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
Thanks, Chanel. So, you know, as of this recording, it's been an interesting news cycle with Deep Seek's launch of their R1 recursive learning model or related learning model. And what does this mean for the future of AI and export controls and, you know, mega scalar tech prices and all of this? And it's been a fascinating discourse to watch.
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
we don't have experience with the cost curve. We're used to the biggest, most expensive, highest performing model. And what the sort of realities of the economics of developing new AI models and the fact that over time you can more cheaply scale a new model that doesn't surpass the current benchmark, but can perform pretty well, what that means is we'll begin to see more purpose-built AI models.
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
As the costs come down, certainly it doesn't mean that Microsoft or other companies are silly for spending tens of billions of dollars, right? As the costs come down, they'll just spend more resources to do things even faster. That's what the leading companies in this sort of AI race will do. But for everybody else, it means that We expect to see more purpose-built models.
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
So instead of an AI, large language model, generative AI model that kind of is pretty good at doing a lot of things, we might begin to see, we expect to begin to see more models that are really good at doing a specific thing. you know, so maybe a specific or a set of specific tasks or functions for a healthcare provider or for a energy utility, right?
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
And so we'll begin to see more purpose-built models because as the cost of scaling models comes down, the economics of creating purpose-built models that, you know, can't help you code or help you you know, write a cover letter for a resume, but can help you optimize cooling and power usage in a data center, those will become more economically feasible. And I think that'll actually be very, um,
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
Disruptive isn't the right word, but transformative for those industries. We'll see these very specific purpose-built models. And that's the real thing to watch, I think, for most leaders, most investors is where are these newer purpose-built models coming into my space, into my industry or industries? And what does that mean for the future of my company's
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
um that'll be really interesting to watch we'll still see the hyperscalers spending an insane amount of money to build and develop these you know cutting edge models because there's just so much economic value add that those models can deliver that it almost doesn't matter how much money you you spend at it we're only limited by the actual technological limitations of the the chips that scale these models
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
That's one end of the spectrum or the bleeding edge of development. But again, for everybody else, what the DeepSeek R1 model demonstrated is companies will be able to develop models that are pretty good, not cutting edge, pretty good at a fraction of the cost. And at those economics, we can expect to see more specific purpose-driven models
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
AI models related to specific tasks or functions in given industries. And I think that will be very transformative in its own right.
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
And I think there's a lot of nuance that has been missed in sort of the national discourse. financial news publications, and I thought I might just spend a few minutes talking about it, you know, from our perspective, my perspective, which is, again, I think a little more nuanced and based on the AI researchers that I've been reading and follow and study.
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
Thank you.
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
And I think the advent of this model is of the deep seek model is noteworthy only really because it came out of China. It's not surprising that a company was able to develop an AI model as cheaply as they did. However, the stated price of $6 million is not right. It was significantly more than that. But
Becker Private Equity & Business Podcast
DeepSeek and the Future of AI: A Nuanced Look at Cost Curves and Purpose-Built Models with Matt Wolf of RSM 2-2-25
We've seen with the development of AI models, similar to the development of other computer transistors, processors, memory, where the cost falls down.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
So between the positions being long in the tooth and looming debt refinancings on a lot of these companies, we expect to see a high amount of turnover of these assets. But we expect that many of it will be at potentially lower multiples, right?
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
A lot of these companies that were built or bought in the era of zero interest financing and now the kind of economics of those deals aren't really working. They're just not going to command the multiple that the sponsors need them to. But they have to get transacted again. They just have to be turned over. They got to return money to LPs, even if it's not at the IRR they want.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
They got to focus on new funds. And, you know, one of the things that we're watching that I'm specifically watching is.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
Yeah, thanks, Scott. You know, the exit environment, we expect it to be very busy this year, we and others, right? You know, portfolio companies have been held for too long by most funds. We've seen, you know, NAV loans, continuation vehicles, other things like that sort of on the periphery.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
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.
Becker Private Equity & Business Podcast
Private Equity Exits and the Evolving Role of Family Offices with Matt Wolf of RSM 2-15-25
But by and large, there's a significant amount of assets that we expect to be traded hands this year because the sponsors need to focus on new investments. And yeah, they're not... That 20% cut of the carry on exit, they've been holding out, hoping for multiples to return, for financing to get better, closer to what it was in 2021. It's just not going to happen.
Becker Private Equity & Business Podcast
IPO Uncertainty: Market Volatility and Capital Trends with Matt Wolf of RSM 3-14-25
And that's brought equity prices down, certainly. Another one would be the uncertainty around tariffs and which tariffs will go into effect at what magnitudes when. Nobody really knows. There doesn't seem to be sort of a cohesive strategy or roadmap on tariffs. to answer really any of those questions.
Becker Private Equity & Business Podcast
IPO Uncertainty: Market Volatility and Capital Trends with Matt Wolf of RSM 3-14-25
And we're seeing retaliatory tariffs across the globe on these, and that's creating a huge downward pressure on equity values and in equity markets, which will delay, deter, defer, cancel IPOs, certainly. IPOs generally need a robust
Becker Private Equity & Business Podcast
IPO Uncertainty: Market Volatility and Capital Trends with Matt Wolf of RSM 3-14-25
Yeah, thanks, Chanel. So, you know, we're watching capital market flows, of course, and particularly with lately looking at the actual public equity markets and what it might mean for IPO opportunities.
Becker Private Equity & Business Podcast
IPO Uncertainty: Market Volatility and Capital Trends with Matt Wolf of RSM 3-14-25
equity market you know the individual companies looking to go public will need obviously strong sustainable growth stories to sell investors but they also sort of need the uh tailwind of strong strong equity market strong equity valuations and they're just not there so we expect that you know companies will continue to look to private capital private equity private credit as they look to expand and navigate these challenges but um at least so far where we said as of this recording
Becker Private Equity & Business Podcast
IPO Uncertainty: Market Volatility and Capital Trends with Matt Wolf of RSM 3-14-25
Equity markets are down back to September, August of 24 lows. And that does not bode well for companies and investors that are looking to tap the, you know, an initial public offering in 2025.
Becker Private Equity & Business Podcast
IPO Uncertainty: Market Volatility and Capital Trends with Matt Wolf of RSM 3-14-25
Thank you, Chanel.
Becker Private Equity & Business Podcast
IPO Uncertainty: Market Volatility and Capital Trends with Matt Wolf of RSM 3-14-25
As we look at the S&P 500 as of this recording, we're back down to 55, 45 or so, essentially erasing the gains that public equity markets have made since the Fed began cutting rates back in September. Sort of a coincidence, I guess, but Markets are back down. There's a bunch of factors for this. It's very important as companies look to raise potential IPOs.
Becker Private Equity & Business Podcast
IPO Uncertainty: Market Volatility and Capital Trends with Matt Wolf of RSM 3-14-25
A lot of sponsors, a lot of companies have been looking to 2025 to be the year that the window, the IPO window would reopen and there'd be another way to access capital. But, you know, falling indices are not a good sign. And they're coming down for, like I said, multiple, multiple factors. So really, maybe in no particular order, you know, 2024 is
Becker Private Equity & Business Podcast
IPO Uncertainty: Market Volatility and Capital Trends with Matt Wolf of RSM 3-14-25
we saw a lot of solid growth given kind of a weak comparison to 2023, right? So we saw gains in 2024 given the, again, the weak or typical easy comp of comparing growth, 24 over 23. Well now, you know, showing growth over 24 is a much higher hurdle. So there are some fundamental sort of growth issues with a lot of companies not meeting targets or revising targets.
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.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
Well, from the moment I met Paul Reubens, he said to me, I want to direct my own documentary. But everybody's telling me I shouldn't do it, and I don't understand why. And I said, well, I'm here to meet with you about me directing the documentary. And that dynamic didn't go away.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
We were a little competitive in the process because Paul was somebody who totally separated himself from his alter ego, Pee Wee Herman. And I was sort of asking him to bring those two things together. So he was a little rebellious in the interview.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
What's your agenda? My whole pitch to him is I want to make a portrait of an artist. You know, he wanted to really set the record straight and overcome some of the controversies from his arrest. And I said, well, you know, that's the easy part. The harder part is to really look inward. Who are you really as a person who the world doesn't know, even though your character is so iconic?
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
You know, I think Paul felt comfortable talking about his artistry and less comfortable talking about the controversies that surrounded it. But he was determined to overcome those controversies. So I was there to help him do it, but he really wanted creative control. It was a little like his Achilles heel. And so we were at odds. And some time went by where we weren't working together.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
And it was only at the end, before Paul died, that I was able to talk to him, and he wanted to move forward. I didn't know what was going on behind the scenes.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
No idea at all.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
There was a time where we weren't working together. We were trying to find a path forward, and we couldn't. But fortunately, I was able to talk to him toward the end, and I could tell something was up. But I had no idea of the gravity of it. I was supposed to do a final interview with him the week after he died.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
Yeah, it changed who I am as a kid.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
I grew up on Pee Wee's Playhouse. I wouldn't have been able to put words to it, but I think its message of radical acceptance and creativity, it changed who I am.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
So it was thrilling to be able to work with Paul and to kind of be in his mind.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
Somewhere in between, I think there was a barbed element to our conversations, but it was also fun.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
You know, it wasn't really about me. I mean, Paul was wrestling with himself to tell his authentic story. And I was just there bearing witness to the whole thing. And we had an incredible time. It was really fun doing 40 hours of interview. But it could be tense. It could be competitive. And he could be slippery and rebellious.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
But when he snapped into storytelling mode, he was one of the most riveting people I've ever spoken to.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
I mean, it was the largest responsibility I've ever been given in my life.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
No, but I knew that what happened between us and the circumstances in which the film was being finished was part of the story. So I had to pivot in that regard and also to recognize there were things going on that I didn't know about while we were making the film. But at the end of the day, I wanted to make a portrait of this singular artist and that didn't change.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
I don't know. I can't speculate what Paul would have done.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
He can't speak for himself, so I think he would be happy that people are excited to learn his story.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
You know, I learned what it's like to be the subject of a documentary and how scary we are when we come and film you. Yeah. You know, like, I got some new perspective about how it feels to be on the other side of the camera because Paul was so forthcoming about it, and I had a lot of empathy for it.
The Daily Show: Ears Edition
Saudi Arabia Gives Trump the Royal Treatment With McDonald's & a Mid-Meeting Nap | Matt Wolf
I mean, Paul had issues of control because he was a brilliant artist and all artists are controlling, but he lost control of his narrative in the media. Of course, he was going to be skeptical or cautious around a younger filmmaker like myself.