Dry Powder: The Private Equity Podcast
For more than two decades, Michael Choe, the managing director and CEO of Charlesbank, has been questioning the industry’s approach to risk management.
You can listen to this episode of Dry Powder and catch future episodes by subscribing on Apple Podcasts, Google Podcasts, Spotify, or wherever you may listen.
“Whenever we looked at a traditional five-year LBO model,” Mike says, “we would say something like, ‘Well, the one thing we know for sure about this model is that it’s not going to be right.’”
Today on Dry Powder, Mike and I talk about a fresh approach to risk management. We’ll see how his team started discussing asymmetric upside and downside scenarios, from capital impairment to runaway success.
More important, we’ll see how a wider range of outcomes helps the investment committee break free from the base-case scenario and seriously consider the events that could make or break a deal.
“Every decision we make,” Mike says, “what we are noticing is that our team members are starting to use ‘fan of outcomes’ language to describe the decision.”
The Private Equity Podcast
In our podcast series, Bain's Hugh MacArthur interviews leading experts on the trends and opportunities that will redefine the private equity industry.