Work for the future or be left behind
Interview conducted by Jean-Damien Marie, Global Co-Head of Investments at Barclays Private Bank
Adam Said is CEO and co-founder of ACE & Company, a global private equity group headquartered in Geneva. He talks to us about the private equity market, the global economic transition, the importance of reinvention in businesses, and the opportunities for companies doing business in Switzerland.
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Adam, why do you believe private equity has become so popular with investors?
The economic transition that we're going through globally is behind the growth in private equity. Every sector is being challenged. Whatever business you're in, you should be reinventing yourself, or at least have plans to reinvent yourself over the coming decade.
Change happens all the time, but there are periods of great change – and I think we're in the midst of one of those periods. The rise of private equity is actually the rise of industries needing private capital to transform themselves due to changes in the economy. And I think that's here to stay, at least for the foreseeable future.
What are your thoughts on this trend of the private market being a regular asset class? What does this mean for investors?
First, I'm slightly cautious about this, because I believe that private equity is a phrase people often don’t fully understand. Say I buy a small or medium-sized enterprise in Geneva, am I in private equity, or am I business owner? We have to be very careful about how we define private equity.
Second, my key message to private investors is to consider working with an adviser. There are professionals in the industry who have been doing this for decades. These individuals have strong relationships with banks, know how to deal with governance, and understand how to put operating plans in place.
I also see too many private investors doing single deals. A single transaction might expose you to idiosyncratic risk or unexpected geopolitical events. Having a portfolio approach can help you stay diversified in the illiquid private markets.
What lessons should businesses take away from the challenging times of the pandemic?
Flexibility and agility can be hugely beneficial during a challenging period, as is maintaining discipline on execution and risk management. COVID-19 was kinder to companies that were agile and part of the solution. Those that did tremendously well were the ones that took the opportunity to innovate. Conversely, the pandemic accelerated the downfall of companies that were not willing to evolve.
If you are not working for the future, you are going to be left behind. To me, the COVID-19 story isn’t over and I believe it’s going to have a bigger impact over the next five years than it has over the past two. During this period, I’m expecting to see the real profound impacts on businesses, both negative and positive.
So, for example, people are talking a lot about the future of work. However, we don't yet quite understand how this will drive business’s successes in some ways and hold them back in others. That said, all these changes really excite me, because they will result in plenty of divergence, and divergence means opportunities for investors.
ACE & Company has its headquarters in Geneva. What, in your view, are Switzerland’s greatest assets?
I'm a big fan of our country. From a personal perspective, I was born and raised here. I went to the US for my studies but decided to come back home. I think Switzerland has inherent strengths that differentiate us from the rest of the world. Having three languages and cultures that permanently clash with each other is something that reinforces us as a nation.
Looking at the quality of our universities, our professors are incredible. I don't think there's a single sector where we don't have one of the top 10 schools in the world. Our talent pool is also remarkable. We should try to retain these individuals, and encourage them to build businesses here.
Conversely, the administration ecosystem in Switzerland could be more supportive. We have great universities, but beyond that, the speed in response could be more proactive. We need some sort of national and cantonal strategies to alleviate the burden on individuals or enterprises.
And what about Switzerland’s diversity?
Because of its central location in Europe, diverse population, and proximity to other major economies, Switzerland can be a great test market for entrepreneurs looking to scale up their business. If your business does well in Switzerland, you haven’t only tested your products in one small market of seven million people, you also have a sense of how they will perform in France, Germany and Italy. It’s a difficult market and consumers are very picky, so if you can succeed in Switzerland, you will probably be well-placed to succeed elsewhere.
Do you see Switzerland as a forward-looking country?
We’re great at making progress in Switzerland. While the US and the Anglo-Saxon world might prioritise wholescale change in business and reward disruptors in their industries, Swiss companies prioritise enhancing existing models, which can then push progress.
Progress is incremental to what exists already and so industries that need constant progress excel in Switzerland. I believe this is why we have so many great healthcare companies. The deep-tech sector is also particularly interesting in Switzerland, because of the calibre of our scientists and their research.
You also find that mega companies are created, and settle here. These organisations are given the time to grow through a permanent innovation cycle, rather than being under constant pressure to act as a disruptor.
For an economy to thrive, it needs both the innovation of change and the innovation of progress. We've probably overemphasised the importance of change during the past 500 years, and underestimated the value of progress. However, we've seen that shift through COVID-19, with both businesses and customers calling for more sustainable innovation.
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