The limits of public procurement
Hartz begins with a frank analysis of public procurement markets, particularly in Europe and the USA. He points out that the performance of mid-sized companies in these markets has been disappointing. "The Russell 2000 hasn't moved in three and a half years," he says, noting that despite significant rises in major indices such as the NASDAQ, mid-market companies have not enjoyed the same success.
In Europe, and particularly in the UK, the situation is even more critical, with some companies down by as much as 20%. These figures illustrate how difficult it is for medium-sized contractors to thrive in public markets, creating a growing need for viable alternatives.
Private equity as a solution
According to Hartz, private equity is the ideal solution for entrepreneurs and medium-sized companies, those valued at between €1 and €1.5 billion. Private equity offers significant advantages over public markets, not least the total alignment of interests between shareholders and company management.
"Entrepreneurs and business owners can see the benefits of working with a shareholder totally aligned with them and able to help them with the resources we have available," Hartz explains.
Inflexion's Value Acceleration team, for example, provides crucial support in areas such as pricing and go-to-market strategies, cybersecurity, leveraging data and analytics, talent recruitment and ESG (environmental, social and governance) criteria, all of which are essential to building strong, sustainable businesses.
Medium-term opportunities
Hartz sees an excellent opportunity for private equity in the medium to long term, particularly in the mid-market segment. As public markets continue to underperform for these companies, private equity is well positioned to offer the resources and support needed to foster their growth.
The growing understanding of the benefits of private equity among entrepreneurs and business owners will play a key role in this dynamic. As this understanding develops, the private equity sector will not only attract more entrepreneurs, but also broaden its investor base, including high-net-worth individuals.
Long-term growth
"I believe that, in the long term, private equity is a growth market," says John Hartz. With growing awareness of the benefits it offers, this asset class is well placed for sustainable expansion.
This growth will be fuelled by Private Equity's ability to provide strategic and financial support tailored to the specific needs of medium-sized companies, an advantage that public markets often cannot offer. By attracting additional capital and helping companies navigate a complex economic landscape, private equity will play an increasingly crucial role in global economic development.
John Hartz spoke in his London office with Louis Flamand, Chief Investment Officer ofAltaroc.
