Glenn Mincey was recently appointed national leader for KPMG’s U.S. Private Equity practice. Glenn joined KPMG in 2008 as a direct entry partner and has served some of our firm’s largest PE clients. Glenn also serves as our global tax leader for Private Equity.
The PE industry reached an all-time global high with $4.5 trillion in assets under management as of December 2019, and future growth projections estimating over $9 trillion in AUM by 2025.. Private equity firms continued to fundraise even during the initial months of the pandemic, with several of the largest firms raising and closing specialized funds dedicated to market dislocation. Others were able to deploy capital at even higher rates than 2019.
We sat down with Glenn to get his perspectives on how the PE market will fare in 2021 and what changes he expects to see.
Question: What is your outlook for the PE Market in 2021?
I am optimistic that it will be a good year for private equity. We expect the PE market to come roaring back in 2021. We are already seeing deal activity pick up, and we expect that to continue. We also expect many of the industries such as travel, leisure and retail to return, but the question will be, “In what form?” There will be a clear combination of technology into industries as they return. In addition, digital transformation is now cutting across all industries and that is going to create some incredible opportunities for the industry. KPMG will be there to support those efforts.
Question: What is the most significant change you have seen over the past year and that you expect to continue in 2021?
This past year has certainly put a spotlight on Diversity and Inclusion (D&I). While noticeable before, D&I has come front and center for mainstream private equity. I strongly believe that private equity firms are playing a crucial role by acting on societal issues, both from their own cultural standpoint as well as a value-creation standpoint. And we are seeing some great strides.
The fact that some of the larger PE houses have put diversity and inclusion standards in their performance reviews is truly significant.
We will look back and see that this was the time when Environmental, Social and Corporate Governance (ESG) and impact investing became more integral to the industry. If we ever needed an example of how environmental and social issues could impact our economic well-being, this past year has been a textbook case.
Several of our largest clients have announced $1 billion+ impact and ESG funds. While approaches may differ, the common theme is that the funds drive value for their investors and their business while also producing societal benefits.
Fortunately, KPMG has been at the forefront of impact investing. We’ve been working in this area for over 10 years and have the industry’s best people with knowledge in this space. Accordingly, we are a trusted advisor for our largest PE clients around all aspects of impact investing.
What other changes are you anticipating in the PE industry in 2021?
The industry hasn’t stopped during the pandemic, but certainly the opportunity to speak with clients or potential clients in person has dramatically changed. As we enter 2021, I believe we will begin to see more face-to-face meetings. When you are working on deals in the hundreds of millions or a billion dollars, meeting face-to-face is a differentiator. Meetings with clients will be necessary but not as frequent as before the pandemic.
The biggest challenge facing firms is creating new relationships in a virtual world. It’s easier to connect with someone virtually if you have already met them and have an established relationship, but it is obviously much harder for the new guys.
Question: Can you talk about the impact digital transformation is having on the industry?
We moved through 10 years of digital transformation in the past eight months. Consumers have become dependent on digital technology and apps and some of them may never go back to the old ways of shopping and managing their business affairs. One interesting change we have seen in PE is the traditional use of real estate transitioning to logistics to support the burgeoning delivery businesses. And obviously anything digital will be a significant growth area. For example, firms have purchased real estate to create studios to produce online content. Gaming is also another big growth area as consumers look for more entertainment outlets from home. Did you ever think you would see a stadium full of people or thousands online watching others play video games?
Do you have any final thoughts?
As I mentioned, D&I has become such an important subject all over the world, for our fellow Americans, the industry and KPMG. I am proud of the decisive actions our firm has taken by creating the Accelerate 2025 program aimed at driving meaningful change. It is this type of action that will bring people together, foster a more equitable culture and propel notable progress.
Be sure to follow Glenn on Twitter @MinceyGlenn. For media inquiries please contact Matt Weiss.