Prediction Not checkable as stated
Salem: Increased Competition from SPACs Will Force Private Equity Returns Down
“And I think SPACs aren't going away. And so I think there's even more competition. So I just think there's just one overarching fact here is returns have to go down. They just have to.”
Assertion Supported
Salem: Providence cut thousands of idle workers at Eircom
“And so we had to get rid of thousands of workers who literally just weren't doing anything.”
Insight
Salem: If an investor knows more than their CEO, they backed the wrong CEO
“For me or Providence Equity, I always say, if you go into a board meeting, and you know more than the CEO, or you think you know more than the CEO, you got the wrong CEO.”
Assertion Not checkable as stated
Only three in ten operating partners at Providence were actually good
“And of the 10 operating partners, three were good, three were mediocre, four were not so good.
Not because they were bad.
They just didn't want to work.”
Prediction Not checkable as stated
Salem predicts private equity returns will inevitably dampen to single digits
“So I do think private equity will have a dampening of returns, meaningfully dampening, but when the 10 years trading at. Maybe if returns are only single digit for private equity, that's still good enough. I just think returns have to come down.”
Opinion
Private equity is a superior business to hedge funds given inside access
“Where a hedge fund is operating from the outside in, we're operating from the inside, and it's just a much better way to invest. I've always been a big believer that private equity is just a much, much better business than the hedge fund business.”
Assertion Not checkable as stated
Salem: Providence Consistently Beat New York PE Rivals by Being 'Nice Guys'
“Whenever I would go head to head with a New York Well-known private equity firm. We would always win because we were the nice guys.”
Opinion
Salem: Private Equity's Bad Reputation for Egos Is Partially Well-Deserved
“Private equity gets a bad rap because of the outsized egos. And the truth is, Some of it's well-deserved”
Insight
Salem: PE firms must grow to attract and promote young talent
“And I think the private equity firm that has outsized returns and stays at pick a number of billion dollars and never grows. It's hard to attract young talent because the older folks get a little embedded. And it's hard for the younger ones to break through. S…”
Prediction Not checkable as stated
Private equity will shift to longer hold periods and midterm carry payouts
“And I think over the next 20 years you're gonna see That change in private equity where You're going to own your winners longer, and you're going to find ways to pay out, in essence, carry halfway through the point, because people still want to get paid.”
Opinion
Blackstone effectively operates as a private equity index fund with good returns
“And then you have guys like Blackstone who just can raise money like no one else. And then they have some really smart people and they still have, you know, the best returns in the business, but they have good returns. And that a lot of people are happy to inv…”
Insight
Salem: Private Equity Is Shifting from EBITDA to Revenue Multiples
“You're seeing the same thing in private equity. Everything used to be a valuation based on EBITDA. We're slowly getting to valuations based on revenue. And the only reason why you do it based on revenue is because you can't do it based on EBITDA because there …”
Assertion Not checkable as stated
Salem: Year Up hires stayed 4-6 years at State Street versus 7-month elite grads
“And what we found is State Street would bring in these young year up kids and they would work their butts off and then end up staying for four, five, six years versus hiring the Boston College grad who would get trained, last for seven months and leave. And so…”
Insight
Salem: Having a sector-specialist angle in private equity consistently pays off
“And it was funny because no one thought being a specialist private equity investor was a good idea. And we were kind of the first to really be specialized. And I guess the one thing I guess we proved is having some kind of angle and investing really pays off.”
Insight
Private equity firms scaling over ten funds inevitably suffer performance dips
“When you go from fund one to fund 10, you're going to have a dip in there, and you can look at all the firms that have had those dips, And we were one of them.”
Assertion Contradicted
Salem: No Specialist Private Equity Firms Existed in London in 1999
“Back in 1999, there were no specialist private equity firms, and so we were fishing in a pond that was just ripe for pickings”
Insight
Salem: Secret to PE is investing maximum personal capital into own deals
“Really is the secret to private equity is to be able to invest as much money as you can in your own deals.”
Prediction Not checkable as stated
Salem: PE managers will increasingly partner as quasi in-house teams for mega-LPs
“You're gonna see, I think, people partnering with these big sources of capital and almost become in-house private equity teams for them, because every big asset allocator now wants to have their own private equity team, and so if they structure it the right wa…”
Opinion
Salem: Thoma Bravo took Providence Equity's specialization model to a new level
“So the Toma Brava. They are reincarnated Providence Equity. We started off as specialists. They took it to a whole new level, this to a whole new level.”
Assertion Supported
Salem: Prudential was the largest early institutional investor in private equity
“My job before Harvard Business School was working for Prudential Insurance Company, and Prudential Insurance Company was the biggest institutional investor investing in the very first private equity funds.”
Assertion Not checkable as stated
Salem: Providence Equity Owned More European Cable TV and Made More Money There Than in US
“We owned the most cable TV in Europe than anybody at the time, and we made more money in Europe on cable TV than we ever did in the United States.”
Assertion Not checkable as stated
Salem: Providence targeted $8B and received $18B in LP demand in 2007
“We went out to raise eight billion dollars. So the funds kept on doubling. And we had about eighteen billion of demand.”
Assertion Not checkable as stated
Salem: Providence did more deals with Goldman Sachs PIA than any other PE firm
“We did more deals with Goldman Sachs PIA, you know, private equity division of Goldman Sachs than any other private equity firm because they knew we weren't a threat.”
Disclosure
Salem: Providence Strategic Growth Employs 30 Junior Staff Cold Calling Targets
“We set up a group called Providence Strategic Growth. They have 30 young kids cold calling companies.”
