With the fast pace of change in the business world, executives can never stop learning. Even the most savvy leaders need and want to keep adding to their skill set to ensure their firms’ continued success.
Perhaps nowhere is this more true than in the private equity market. The private markets saw exponential growth in the past decade, both in the sheer number of professionals working in the industry as well as the amount of money invested, which is expected to hit $5.8 trillion by 2025. Yet the new economic era of higher interest rates is the latest factor that’s changing the art and science of making a deal.
Staying competitive in this multifaceted industry today requires much more than spreadsheets and deal-making prowess. “Private equity is about more than understanding the math on transactions. It’s a lot richer than that,” says Donna Hitscherich ’90, co-director of the Private Equity Program, Columbia Business School’s central channel for developing relationships and opportunities with the private equity sector, including the annual Deal Camp.
Today’s private equity professionals may work across numerous departments, responsible for everything from capital raising, due diligence, and documentation to ESG, investor relations, consulting, and more. “It is a lot bigger of an arc than many people realize,” says Hitscherich, who also is a lecturer in the Finance Division and faculty leader for the Sanford C. Bernstein & Co. Center for Leadership and Ethics. Yet the industry remains fairly opaque and not easily understood, she adds. What’s more, professionals enter the business with diverse backgrounds and skills, as there is not a single path into private equity.
To help executives stay at the top of their field in this new environment, CBS recently expanded its already strong line-up of executive education programs to include three online offerings in Mergers and Acquisitions, Leveraged Buyouts, and the increasingly connected Venture Capital and Private Equity markets. In these executive programs, today’s leaders will garner new insight and ideas that can immediately enhance their work and propel their careers.
Here’s a look at what each program covers:
With the worst of the COVID crisis behind us, growth is at the forefront of everyone’s mind. But when striving to add value, is it better to build or buy? To make that decision, it’s critical to have an understanding of the complexities of today’s mergers and acquisitions market. “Many executives do not appreciate that it’s a market, similar to bonds or the housing markets,” says Hitscherich, the program's faculty director.
The program, which starts in mid-December, delves into the fundamental principles of successful mergers and acquisitions, no matter the industry or locale or which side of the M&A you’re on. Executives in the class study deals from start to finish, coming away well versed in how to conduct a strategic analysis of the benefits and drawbacks of an M&A transaction. What are the milestones that must be reached to ensure success — as well as the potential risks? How are they different from a few years ago? For example, what are the obstacles to capturing synergies? What happens if the head of sales or the entire sales force walks out after the merger?
Modeling and other so-called hard skills provide the grounding for M&A analysis, but the program also emphasizes critical soft skills around leadership and collaboration.
“Modeling is a necessary component but only one component,” says Hitscherich. “What kills deals more than anything else is social issues, such as ‘Can the parties get along?’ There is a lot that goes on behind the scenes that is nowhere in an Excel spreadsheet.”
Over the past decade of low interest rates, enthusiasm for building credit skills waned. However, with interest rates up and the days of cheap money behind us, executives must be smarter and more thoughtful about how they allocate capital. “Just paying down debt will not feed the bulldog anymore,” says Hitscherich.
Instead, leveraged buyout (LBO) transactions will require higher returns to be successful, making growth through operational improvements critically important. Increasingly, private equity professionals are in the weeds with a portfolio company’s executives, scrounging for ways to add value. The possibilities are vast, such as using technology to improve data and analytics, outsourcing non-key functions, expanding geographical reach, streamlining processes, taking advantage of scale through existing relationships or companies, or improving customer service and resource allocation.
Co-directed by Ellen Carr, an adjunct professor with more than two decades of experience as a high-yield bond portfolio manager, the program will hone instincts and skills by breaking down real-life examples of deals that succeeded — and some that flopped.
In an untraditional pairing, this class explores the fundamentals of both venture capital and private equity. While the School’s MBA students typically focus on one topic or the other, introducing both subjects in one program helps streamline the offerings for executives.
The pairing is quite logical because the line dividing the two specialties has been gradually blurring. Private equity firms are increasingly going into venture capital and vice versa, says Hitscherich. As private equity firms have grown bigger, and with deals harder to come by, they are investing in younger companies in earlier stages of growing their businesses. On the flip side, venture capital groups are starting to invest in new technologies around the globe at a later stage in the business cycle than was previously typical.
Hitscherich co-directs the program along with CBS Professor Angela Lee, founder of the investing network 37 Angels, which has evaluated more than 15,000 startups and invested in more than 75. Together they examine what makes for a good investment in each of these industries and how to value each type of transaction.
Leading the Way in Executive Education
Thanks to the online format of these new programs, busy executives around the globe can participate, creating a dynamic, cross-cultural experience. “We have always felt that one of our competitive advantages at Columbia has been our diversity, beyond the traditional profile of what private equity looks like,” says Hitscherich. Another advantage is that each completed program counts toward the 18 credits necessary to earn a Certificate in Business Excellence from CBS.
Hitscherich notes how private equity has evolved over time, from bit player to leading role. “When I started my career, private equity was a buyer of last resort,” says Hitscherich, who previously worked as a corporate lawyer and an investment banker. “Now, that is laughable.”
Today, private equity is an undeniable force, making fluency in this market an essential skill for executives. And that’s precisely what these CBS programs offer executives in every industry and time zone across the globe.
If you would like to find out more about these programs and CBS activities relating to private equity and venture capital, please see CBS Executive Education, the CBS Private Equity Program, or the CBS Entrepreneurship Center.