Carlyle’s new advisor sees more discipline in consumer PE

Carlyle’s newest operating executive, Michael Silverstein, who has specialised in consumer and retail for almost four decades at The Boston Consulting Group, said investing in the sector was ‘very aggressive’ in 2016.

The Carlyle Group’s newest operating executive, Michael Silverstein, expects private equity firms focused on the consumer and retail sector to exercise better discipline in their investments in 2017, he told Private Equity International.

He will split his time between Chicago and New York, a Carlyle spokeswoman said.

Silverstein, who was most recently senior partner and managing director specialising in consumer and retail at The Boston Consulting Group’s Chicago office, said that consumer and retail companies fell into two groups. They would either understand the consumer behaviour and generate great results, or miss the trends and suffer low growth and low returns.

At BCG, he worked with packaged goods companies, retailers, restaurants and travel companies, according to a spokeswoman.

“It’s become a very aggressive landscape,” he told PEI. “The difference between the winners and losers is extraordinary.”

He said 2017 will be a lot like 2016 in the sense that companies with great strategies focusing on consumer behaviour will have an exciting year.

“Growth requires innovation, merchandising, visual energy and a willingness to invest for activation,” he said. “In the coming year, private equity will become much more disciplined.”

Silverstein will retire at the end of 2016 and join Carlyle as its 22nd operating executive, beginning on 2 January 2017, according to a statement from Carlyle released on Monday.

Silverstein told PEI he expects to work with Sandra Horbach, who was recently named Carlyle’s co-head of US buyouts, and Jay Sammons, Carlyle’s managing director and head of the global consumer and retail team.

He added that he will aim to help advise some of Carlyle’s 39 existing consumer and retail sector portfolio companies, possibly joining the board of one, and he plans to leverage his network of contacts in the sector to identify potential investment opportunities.

Last week, for example, he was already with the Carlyle team meeting with three potential portfolio companies in the sector.

Silverstein said he had spoken with various private equity firms, but chose Carlyle for its focus on growth-oriented investments in the sector that overlapped with what he wanted to do post-BCG, he said.

“Advising Carlyle on this sector feels like a natural extension of what I’ve been doing,” he said.

Silverstein spent several decades at BCG, which he first joined in July 1980, according to his LinkedIn profile, where he worked with multinational packaged goods companies, retailers, restaurants and travel companies.

In 2010 he was named a BCG Fellow, a title given to top professionals at BCG who innovate ways to create value in industry-specific businesses.