- Stay Alive to Thrive: Portfolio excellence sustains investment activity/playing offense.
Last week we wrote about the growing gap between private capital winners and losers. That will only accelerate as today’s winners emerge from the higher rate market. Experienced managers with healthy, high-quality portfolios can and will continue to play offense and take market share. Our own portfolio expanded nicely despite a marked decline in overall middle market M&A volume.
What goes into creating portfolio excellence? We put it into three operating principles:
First, diversification as a shield. It’s easy to talk about portfolio diversification (everyone does), but what does “diversified” really mean? Diversification must be evaluated across multiple dimensions: sector, deal structure, leverage profile, sponsor relationships, company model, and so on.