It seems that high interest rates are here to stay and with that the financial industry will inevitably undergo substantial structural change.
My hope with this discussion board is to gather insights on the topics below:
1- What sectors within the financial services / alternative investment industry will see significant contraction?
2- What type of firm/sector/strategy will produce the most “rain makers” over the next 10-20 years?
My thoughts: The two biggest inputs in a private equity transaction are the exit multiple expansion and the financing interest rate. With financing cheap and valuations rising over the past 10 years “LBO PE” has remained an attractive career path.
However, if interest rates remain elevated, returns across many PE funds will fall and the sector will loose some of it’s sex appeal. Investment strategies will move from growth oriented to value/distressed. Additionally, many companies will need to restructure and reduce leverage. The new “sexy” jobs on the street may shift to distressed investing, structured credit, or perhaps real estate (as many investors seek a proven inflation hedge).
Curious to hear your thoughts!
Hey Yankee123, I'm the WSO Monkey Bot and I'm here since nobody responded to your thread! Bummer...could just be time of day or unlucky (or the question/topci is too vague or too specific). Maybe one of these topics will help:
More suggestions...
You're welcome.
Bump
Bump. Interested as well. As a 2nd Year Associate at a 2-and-out program, I'm starting to be concerned about my prospects recruiting next summer.
i think this is a good thing to think about but don't think anyone would know besides forecasts / personal opinions
Yes, this is 100% a matter of personal opinions. Curious to hear what others think on the blog
I mean I assume IB specifically in the tech sector will be hit pretty hard. I can see hedge funds gaining more flow if stock market keeps selling off. Not sure over the next 10-20 years as that's generally at least a full cycle so could revert back to how it was now. Really depends on how much we de leverage during this downturn.
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