What led you to a job in private equity?
Pure chance. I started in investment banking with Deutsche Bank – I was there for four years and I enjoyed the financial and the analytical aspects. I also really liked the relationship aspect, but in banking generally you move from deal to deal and you don’t have… continuity – at least at the junior level – on the relationship side.
In my last year at Deutsche, I worked in the corporate brokerage department, which is a bit more relationship-focused because every publicly listed company [in the UK] has to work with a bank as a corporate broker, as an adviser. There you get assigned certain clients [and] you speak on a pretty much daily basis with the CFO of a public company.
I came across an ad one morning in the Financial Times – old-school hard copy. This was back in 2007. I didn’t really know what fundraising or investor relations was, and I didn’t do anything about it. But then I worked on another IPO that was going to fail and I think I sent in my CV at 4 o’clock in the morning.
A few weeks later, I interviewed with my former mentor and colleague [who] is now retired, [former managing partner of Advent International] Will Schmidt. He was very engaging and talked about what fundraising involves, what investors are and the whole process, and that intrigued me. Ultimately, you jump a little bit into the dark, but you also get lucky. In this case, it exceeded my expectations.
Which pertinent piece of advice from Schmidt stuck in your mind?
He had such infectious enthusiasm for his job, and when you go out and interview with somebody very senior who’s done this for… 20-plus years at that time, you sort of go away and figure out, “Okay, I want to figure out why – what’s behind that?” You still probably don’t really understand what the role exactly entails, but it does make you reflect.
So equally, when I speak with investors [or] potential future new hires, it makes such a difference if the person sitting across the table clearly likes their own job. I think that can also inspire the interviewee to give it a go if they are uncertain if finance is for them, if private equity’s for them.
We always assume private equity is this asset class that everybody wants to go into, but in this environment and where the younger generation has so much choice between tech companies and other offerings, we also need to be a bit more conscious that we need to market private equity as a good asset class to join.
Advent International GPE X closed on its $25 billion hard-cap in May after six months in the market. Advent Tech II also reached its $4 billion hard-cap in December after six months. How did you get the fundraises over the line so quickly?
Ultimately, it comes down to the relationships you have – the long-term relationships you’ve been building – and very clear communication around the process that is the fundraise. Also, sticking to your knitting when it comes to the strategy that you deploy and ultimately deploying the funds that you’re raising so that LPs, when you’re coming back to market, know exactly what you as a GP stand for, what to expect, what you’ve delivered – and also [you need to do] a good job in delivering.
In our case, we had a record year of distributions in 2021 – [it was] about five times the average distributions before that for the prior four or five years. So that has given LPs a huge amount of confidence in the strategy and in how we are operating as a GP.
It is also an element of timing, and I will also acknowledge that we were fortunate, ultimately, in the timeline. Sometimes you have to acknowledge that times are trickier. Then it’s probably also a dialogue with the investors. Do you slow things down a little bit? Do you pause? Do you come back a few months later when there’s a little bit more certainty in the market? It’s all around communication and really thinking through what is best for you, what is best for the investor, and [what is best] for the whole relationship.
What do you think private equity will look like in a decade?
I’m on the positive side. I think it’s got a lot more growth in it and I suspect it will be at the same, if not a faster, pace than we’ve seen in the last 10 years.
The reason for that is, one, the asset class has performed extremely well. Pension funds and other constituents that have invested in the asset class have been rewarded with good returns. Those stakeholders are now under even more pressure to deliver… good long-term returns on their portfolios. The other [reason] is there’s a lot of creativity in this industry. Who would have thought that the secondaries market would have the size it has today? I suspect there will be a lot more creativity in all types of deal-doing and structuring going forward.
The one requirement to my prediction is that there’s a degree of streamlining [needed in] how we operate in this asset class. For example, as investors diligence to re-up for their funds, they still go through huge internal processes. I do wonder if one impediment to growth is potentially that we need to review… how these re-up processes run, or even new investment processes.
Also, the data: we as a GP have the most fulsome data room available out there, with every type of analysis you can imagine, and yet we still get some dedicated templates that an LP would like us to fill in. You do wonder if, as an industry, we couldn’t agree on some standardised reporting.
On the efficiency side, something has to happen, because it’s a lot of work for a lot of stakeholders… We do wonder if it could be done in a slightly more efficient way.
Johanna Barr is managing director and global co-head of limited partner services at Advent International. She is primarily focused on fundraising and investor relations activities in Europe, the Middle East and Asia