The private equity industry is more than aware that the good times can’t last forever; sooner or later, the market will turn.
What should a chief financial officer be doing to prepare their firm and its funds portfolio to withstand a downturn? Blackstone CFO Michael Chae shared his thoughts with us at the Private Equity International CFOs & COOs Forum 2019 in New York.
“Look at where you have exposures, concentrations of risk,” he said. “Because what you’ll find is in a downturn, the macro forces can overwhelm the micro forces, and you’ll find out your portfolio can behave in a certain way, and you want to anticipate that.”
He also advised CFOs to step back and “see the forest for the trees.”
“Look at patterns in your portfolio, look at trends, and really have a mindset of not looking just backwards or at current performance, but what’s around the corner and what is that information and data telling you.”