Investment industry titans urge need for strong human connection

March 11, 2021

David Kaplan, Co-Founder of Ares, Director and Partner of Ares Management Corp, and Co-Chairman of Ares Private Equity, along with Vikrant Sawhney, Chief Administrative Officer and Chief Operating Officer of Blackstone

President Judy Olian and Professor of Finance Osman Kilic spoke with private equity leaders David Kaplan, co-founder of Ares, director and partner of Ares Management Corp, co-chairman of Ares Private Equity Group; and Vikrant Sawhney, chief administrative officer and chief operating officer of Blackstone, regarding the risks and rewards of the private equity industry.

Many are unaware of the rapid growth of the industry and the available jobs within its multitransitional process, they agreed.

“We wake up every day with the investments we have in companies, trying to make them better, grow them, be good stewards of those assets and a partner to the management team,” said Kaplan when asked about responsibilities in the industry.

Both speakers, Kaplan and Sawhney, stressed how important it is to identify a sector that you are attracted to. They explained that this sector should be one you see having potential, one that can be profitable and cash generative if fueled by passion and commitment.

“I think it’s about being upfront, identifying what are the good neighborhoods thematically top down and what are the sectors that you believe will have strong secular tailwinds and where can you create the most value,” Sawhney explained.

Kaplan and Sawhney additionally covered the issue of inflation and the concern that it could negatively impact one’s success in the field of private equity. They addressed this by introducing the idea of duration.

“If you buy high-quality businesses in good sectors and you're taking a five-to-seven-year view, now you can get lucky or unlucky on the currency, but it will not be the driving force of a multi-year illiquid investments,” Sawhney stated. “Have a short duration, whether a credit bet or a currency bet, it can be all of the driver of return, but when you're taking a multi-year view it will not be the main driver.”

Identifying themes and good neighborhoods that are worth time and investment is essential in the industry, Sawhney said. It is a lengthy process but one that can only make the return on your investments more meaningful and rewarding in the end.

“Growth and investment in the life sciences area globally is profound and this is a mega trend and what's happening in drug discovery precision medicine is really significant for all of us as humans and one of the ways that we've invested in that space is being a very large owner of life science office space,” explained Sawhney while connecting the field to the current pandemic.

Both speakers addressed the attached public fear of lack of need for office space now that individuals can work from home and how that will impact the industry.

“Me personally, I believe that there's no replacement for in person team building and team deployment, and I think we are going to see some return to what was pre pandemic, we will never be the same on the work from home environment, but it won't be as radical as maybe some are projecting, in my opinion,” said Kaplan while addressing the concern.

Although life will ultimately be different post-pandemic, there is something invaluable about personal collaboration and connection within a work-place setting.

Sawhney urged students to be proactive and use their professional resources to put a foot in the door of the private equity industry.

“LinkedIn is a very, very powerful tool to build bridges and conductivity and what happens is, unfortunately, the demand for these jobs far exceeds the supply of jobs, and so you, you need to have something that differentiates you something about your experience,” said Sawhney. 

Now, more than ever, with so many left unemployed, it is important to offer a unique selling point when pitching yourself to a business or organization.

Although both speakers recognize the risks of the industry and the time and energy that is invested into it, both speak highly of the rewards.

“The greater high is when through your and your team's effort, you create a better company and you're able to realize that value and validate all the work you did so that's the ultimate sort of I think, feeling of success,” Sawhney said.

David Kaplan

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The Way Forward: The Risks and Rewards of Private Equity – Is This the Industry for You?

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