Luke Sarsfield

I’m a strong believer in the idea that leading is largely about building empathy. The job isn’t just helping others understand the mission - it’s helping them complete the mission and building alignment through personal context. To take it a step further, you can’t be empathetic if you aren’t curious. Curiosity drives us to ask deeper questions - those questions build empathy and, then, we become more aligned.

6

Reflecting on the enriching discussions at the recent PEWIN - Private Equity Women Investor Network CIO Roundtable in Boston. It was a joy to hear from panelists Letitia Johnson (Amherst College), Deb Shufrin (Colby College), Abigail Wattley (Williams College), and moderator Sarah Samuels, CFA, CAIA (NEPC, LLC). Some of my key takeaways: From the CIO perspective, alignment with the board is paramount. Portfolios experience ebbs and flows, emphasizing the necessity of a board committed to long-term strategies. Data underscores the repercussions of misalignment—allocators often undermine value by prematurely exiting positions for liquidity needs or reacting impulsively to market fluctuations. Across the board, CIOs prioritize firms that can articulate their competitive edge, foster sustainable organizations with top-tier talent, culture, and succession planning, and demonstrate agility in evolving markets. A robust LP base providing long-term support and institutional guidance is also crucial. Success isn't about funding billionaires—it's about supporting determined individuals committed to sustained success. Privates demand more than short-term commitment—they require a relentless desire to succeed over time. For a deeper dive into the role of CIO, I highly recommend The Counting House by Gary Sernovitz. #CIOInsights #PEWINRoundtable #InvestmentStrategies

31

Bloomberg recently spotlighted the risky practices that some PE firms are engaging in, like over-lending and NAV financing, which can mask underlying financial instabilities. You all know how I feel about this. At Tide Rock, we firmly believe that real value comes from operational excellence and sustainable growth, not financial engineering. Our strategy is rooted in investing to ensure that our portfolio companies achieve tangible results through disciplined and effective management.   It doesn’t make sense to me how many financial engineers and analysts PE firms hire who have never run a company. They spend their time on what they are comfortable with—financial manipulation—while we, as operators, dedicate our time to what we do best: growing businesses. This hands-on, operator-focused approach sets us apart and ensures that we deliver real, sustainable value to our investors. Our approach has consistently led to an average annual growth rate of 30+% across our portfolio companies.   If you're looking for a partner who prioritizes true operational excellence over financial gimmicks, reach out and find out more about how we work. #UnleveredBuyout

48

IPO market insiders, while cautious, are optimistic that the current trickle of companies going public will pick up steam. I recently shared some additional thoughts on this trend with Crunchbase. https://lnkd.in/gh75AxcU #ipo #ai #startups

63

1 Comment

We are at the intersection of legacy and innovation, where the futures of established baby boomer businesses hang in the balance. How do we blend traditional values with modern strategies to ensure these enterprises not only survive but thrive in the face of economic shifts? We want forward-thinking investors who are passionate about molding resilient, recession-proof businesses for the future. #InvestInLegacy #StrategicInvestment #FutureOfBusiness #InnovationInInvesting

27

2 Comments

Multiple expansion will play a more diminished role in driving returns for the foreseeable future. Cold Bore Capital Management is pre-positioned to drive organic growth in the new market landscape through investment in high-performing human capital, implementation of proven frameworks, and preservation of established legacies.

17

2 Comments

Divestment requirements have a very real cost. This reduces the ability of endowments and foundations to support their mission driven enterprises. As the list of divestment demands grow, at what point do the consequences outweigh the perceived benefits? Hiding at the end of this article is the below quote: Golden admitted the divestment had undermined Princo’s returns, saying the endowment “would have been better off” otherwise. But he pointed to a bigger concern: the pressure to “keep adding things to divest from”. “Fossil fuels are necessarily part of getting to where the overall economy needs to be [and] it would be impossible for the world to not use fossil fuels tomorrow,” he said. “Divestment is a pretty weak tool to change the economy.” https://lnkd.in/g3SeC8rg #energy #investing #vc

21

1 Comment

iCapital’s recent article says that “KKR has launched perhaps the most groundbreaking vehicle in the form of a conglomerate or operating company structure that owns and operates businesses alongside KKR private equity strategies and is available to accredited investors. The first-of-its-kind structure provides direct access to a diversified, fully drawn portfolio of KKR private and growth equity portfolio companies owned and operated across the globe.” Groundbreaking? First-of-its-kind? If by groundbreaking, they mean a model that Tide Rock has been successfully doing for over a decade with returns higher than any other PE fund according to Pitchbook, then sure, I guess it’s pretty cool. What's truly innovative about our approach is not just our structure, but also our performance—delivering strong returns by directly owning and operating a diversified portfolio. This model has stood the test of time! But, ya, welcome to the party! #unleveredbuyout

63

4 Comments

There's been a lot of discussion lately, & understandably so, on the lack of liquidity for LPs & what reckoning that may bring for fund managers (secondary fund anyone?!?). Many have characterized the IPO or M&A markets as "lukewarm" at best & before I saw this chart, I would have agreed. But this data surprised me. The number of M&A exits hasn't grown vs. the post-COVID mania of '21 & '22, but it's not declining either. The growth in exits in '23 & '24 is still ~2x or ~3x vs. '19 & '20! According to Peter Walker, of the ~42k startups currently on Carta only 288 were acquired in 2024, an exit rate of just 0.7% 😳. It's still just as difficult as ever out there, but there are reasons for optimism & a case to be made for resiliency if you look hard enough.

23

2 Comments

Hot off the press from my Cliffwater colleague William Dornbrook: Startups on Sale: The Opportunity in VC Secondaries This paper outlines our perspectives on venture capital secondaries, an asset class at an important inflection point for future growth. Structural changes in private markets, a growing need for liquidity from LPs, and near-term headwinds in the IPO market have led to increased investor interest in VC Secondaries. Amid this backdrop of highly motivated sellers and improving metrics for startup quality, we believe VC Secondaries are priced attractively.

72

2 Comments

Our latest article on the changing landscape of growth-stage business financing is out. As someone who's been watching the space evolve, it's interesting to see how new funding models are influencing the ecosystem. Excited to share insights from our experiences and discuss how these trends might impact future innovations.

26

2 Comments

🌟 Welcome back to Private Equity Periodicals, powered by Proxet! 🌟 ☕ Grab your coffee and join us for insights from Suzanne Yoon of Kinzie Capital Partners on the unique impact of lower middle market investing, Ares Management's standout IPO for Savers Value Village, and Ronin Equity Partners' strategic acquisition of Woodmaxx. You can also check us out on Spotify and stay ahead in the world of private equity! #PrivateEquity #Investing #Proxet #Podcast

12

PE - "Invest with operational value creation at the forefront" ( McKinsey & Company ) - invest with operational value creation at the forefront - bring best-of-breed capabilities to portfolio companies - everyone should understand and have a hand in improving operations - shift from “buy and hold” to “acquire, align on strategy, and improve operating performance” --------- #business #portfolio #pe #privateequity #valuecreation

27

3 Comments

PE - How to earn exceptional returns in the new environment and the next 10 Years in PE (from one of the top investors in the world) ---- "Sea Change" by Howard Marks, Co-Chairman of Oaktree Capital Management, L.P.: "Will asset ownership be as profitable in the years ahead as in the 2009-21 period? Will leverage add as much to returns if interest rates don’t decline over time or if the cost of borrowing isn’t much below the expected rate of return on the assets purchased? Whatever the intrinsic merits of asset ownership and levered investment, one would think the benefits will be reduced in the years ahead. And merely riding positive trends by buying and levering may no longer be sufficient to produce success. In the new environment, earning exceptional returns will require skill and ... in control strategies - will require *adding value* to the assets owned." Source: https://lnkd.in/ep5mSUWN ---- Takeaway: to earn exceptional returns in PE (control investments / buyouts), the key is to add real value to your portfolio companies. Here is one straightforward way to add value: capital-efficient revenue growth (& thus commensurate profitable EBITDA growth). #pe #privateequity #growth #investing #finance #business #tech #saas

25

2 Comments

Dan Primack of Axios has some choice words for VCs in this post. If you are an investor, LP or a founder raising money from VCs - worth the read. I tend to agree with Dan here and have some thoughts... 1) Private Equity is an ecosystem that relies on flow not a one-way transfer of assets. VC is semi-broken right now because no one wants to sell off a portfolio below performance targets. Could mean game over for the GPs. Seems like public, private and venture are all trying to remain optimistic while waiting for a drop in interest rates and an uptick in IPOs or PE buyouts to start the liquidity flow again but Fed and inflation data keep frustrating this kicking off. 2) VC have one core job as far as LPs are concerned....Create a magic black box that is a cash multiplier. Not a black hole! When and how early investments become liquid need to change also. 3) We have an 80 year old VC fund model that requires wild, best-case scenario power-law returns to generate the performance numbers the asset class promises to investors. This handcuffs GPs to staying in deals for a very long time as the early exits or lower deal multiples can drag funds performance and then their job security, fee structure, etc as I alluded to above. This also drives companies to "go big or go home" and operate with inherently more risk than stability. 4) Dan talks about the need for liquidity and to get back to the money flow. This is easier said than done as a minority investor. Incrementally easier if you and your co-investors are able to steer the company at the board level but its still "not your company" and the "market is the market" re comps/multiples and demand. 5) So - what can we, as an industry, do about this? We have to evolve. We have to have some hard conversations around the table and not let staid endowment funds and Goldman Sachs dictate how our industry looks at the future...feel like this becomes a new post or a series so I'll leave it here for now. #venture #VC #startups #privatequity

36

1 Comment

Family Offices & Venture Capital: The Shift From Direct Investments To Partner Funds This article hits the nail squarely on the head. Most family offices do not have the time, capacity or expertise to be top decile venture capital investors. Why is this important? Because top decile is the only place you make any money in venture. More family offices are realizing this and choosing to partner with top VC funds. F Partners Read The Full Article Here: https://lnkd.in/es3wapMy #singlefamilyoffice #familyoffices #familyoffice #privateinvestors #privatemarkets #vc

136

16 Comments

Check out some great insights below on IPO Market.

3

As a venture investor at M13, I often think about the shifting M&A regulatory landscape and its impact on the innovation my industry seeks to support. My goal is to drive towards a regulatory environment that fosters innovation and supports the growth of the venture investment industry, creating a win-win situation for both investors and consumers! Check out this piece on M&A and Innovation, where I debunk some common myths regarding this vital part of the innovation ecosystem. I’d love to hear your thoughts! https://lnkd.in/eV4MVTwv

39

5 Comments