Global Private Equity Opportunities: European Tech, U.S. Efficiencies, and China’s Lead in Digitization

In this episode, we explore global private equity dynamics—from geopolitical risks in Europe to high-potential tech opportunities and operational efficiencies in Asia and beyond. Our guests dive into undervalued European tech assets, cross-border investment strategies, and how software, AI, and cybersecurity are transforming private companies. We also break down the CAT framework: Cybersecurity, AI, and Talent—and how they impact valuations and portfolio performance. Finally, we discuss digital fundraising, tokenization, and how digitization is reducing costs and unlocking liquidity for smaller businesses worldwide.

Whether you're investing in tech, real estate, or global markets, this episode is packed with timely insights and actionable strategies.

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Transcript

When you think on a global scale, Simon, is Europe less attractive right now than
Asia?
Obviously, it's deal by deal, but generally, what's the overall consensus for the
private equity market? I think it's an interesting time. I think if Putin does his
hostile European takeover, then the value of European assets is very low.
So it's very unclear. I think the Europeans are figuring out what to do and if
they do eventually pull together and come up with a sensible industrial policy which
is focused around clean energy and cheap energy, then they're in a very strong
position. But right now, they really haven't figured out what to do, so it's hugely
But that said, I mean, I was in Europe two weeks ago, the valuations of technology
companies there are ridiculously cheap compared to here. So if you can, I saw two
funds that are picking up European technology and then bringing them into the US. So
they're leveraging the cheap pricing and then coming into the more valuable market
over here. I mean, that's a great strategy. That's a great market.
This is a question that we often often asked, "What's the number one trend that you
might be seeing that 80 % of the market is missing?"
Go ahead, Gary. You start us off. Is this one right? Okay. I can't say that
everyone's missed it, but there's enormous opportunity in efficiencies and private
companies with information technologies. Let's say even as simple as an inventory
management system that can read 50 ,000 SKUs in two seconds and tell you what you
have in your store. We're about to invest in that type of company and let's say
that we're a private equity leverage company that's millions and millions of dollars.
So one thing going for the private equity world and the control transactions is
there's never been more opportunity to improve operations with really software and
applications. So I think that a lot of people thought about that, but what I think
they haven't thought about is the dimensions of those cost savings are enormous.
So then do you view that the market is typically undervaluing that opportunity in
general? It can. And when people, let's say, private equity buyers are looking at a
company and they know about that and a family owned business that doesn't know about
that, then they can offer more for the business 'cause they know what can be done.
So, and again, the inventory management, we know how many millions of inventory
dollars can be saved and that goes to the bottom line.
- John, I know you said one, but I'm gonna give you three. All right, You can
remember them with the acronym CAT, C -A -T, so cyber security, AI, and talent.
Cyber security is not about risk mitigation, but about value creation. There's a lot
of interest now in companies buying firms that have that cyber security already in
place, so this is something from the private equity world that we're really looking
into. On the AI side, it's not just about anything that's AI, but it's how are you
using AI? For operational efficiencies, as you said, but even from a PE perspective,
you've got a portfolio of companies, so how are you using AI to analyze your
portfolio companies? Can you use it to find operational efficiencies in one of them
that you can then translate over to another so that your full book of business
increases? T is for talent, and it's talent retention. We're finding that if you've
got a company that has a great culture and great leadership, where you're not having
a lot of regrettable attrition of great talent, you can get a premium on your
multiple for that. So, cybersecurity, AI, talent, it's Kat. - I like that,
that's great. - I do two of those things, well, not the first one.
Real estate's been slow to adapt AI, but we're definitely doing it, and we've found
a lot of efficiencies in doing it, and we're trying to be one of the leaders in
that and following others that we know in the industry to learn good ideas, but as
far as the things that 80 % aren't looking at, I don't have an 80%, but I'll tell
you two things that people, a lot of people aren't looking at, is that in some of
these high supply markets, which are real growth markets, you could buy newer
buildings way below replacement costs, and temporarily there's pain, there's a lot of
concessions and you're not going to make positive cash flow, but if you're in it
for value creation and for the long term you'll eventually get really good cash flow
and you'll create a lot of value in the multifamily and in student housing as you
talk about recessions and things like that, student housing has been recession
resilient in that everybody goes to school when there's bad times, there's not a lot
of jobs, people will stay in school and if you're at a major university, you're
gonna do well. - Yeah, I would say, I agree with all of you.
I think for me it's less, about 80%. There's just so much information that I don't
know if people are missing it. But I will say deal flow and access, I think is
something that a lot of people are missing.
And good companies, good deals, and good economics. I think that's something that
everybody can improve on. And so I mean, you know, if I check my email now, we
get so many different opportunities every day of what's quality and what's not. I
think being able to decipher and go through that process, I'm sure there's families
out there where I'm sure they know good trends, but how can we get good access to
deal flow funds and companies and good economics? I think that's something that
everyone can improve on. Yeah, I think the digitization of the finance industry,
which I think a lot of people have known about it, but because of SEC and other
government restrictions, it's been very slow historically in the US. But if you go
to other countries, places like China, for example, they digitized their entire
finance system 20 years ago. That brings in unbelievable efficiencies,
new products, new ways of doing things, which significantly changes the cost -raising
capital. So the finance industry-- - How would you take advantage of that mismatch?
- It's on the private exit side, there are much cheaper ways of raising money than
the current way with all the documents, the lawyers and everything else. If you can
tokenize assets, put them into a digital format and distribute through a digital
channel social media, which we've been doing outside the US now for 15 years. We
can do a fundraising and a listing on a digital exchange for less than $30 ,000.
You don't get a lot for $30 ,000 in the US.
Instead of the five to 10 % fees that people pay for raising money, we can pay 0
.1%. So that makes the access to money so much easier for particularly smaller
businesses, which is where there's a massive problem in terms of getting funding for
small companies. And then it brings liquidity. So because you've got liquidity, then
there's less risk. So even on custodian administration, we pay ridiculous fees to
lawyers and transfer agents here in the US. All of that should be digital and more
or less free.