00:00It's been a really interesting time for the private equity industry. Global asset sales
00:04are down something like 20 percent in the first half of the year. And this pressure keeps building
00:08from LPs. We've heard from the likes of Scott Kleinman on this program saying funds are going
00:13to need to capitulate, that investors have lost their way. What finally does break the logjam
00:19that this industry is experiencing? I think interesting is a good word because there's so
00:24many different facets to what's going on that it's really hard to capture it. But for me,
00:29this environment is a great reminder that private equity was never meant to be a passive
00:35business. It is a very active business. And we had such a time of economic tailwind from, call it,
00:41post-GFC up through 21, early 22, that this more passive model almost unintentionally emerged that
00:48was pay really high prices for good assets, let them grow and sell them for more than you bought
00:53them for. Look, that's great when it works, but that only works in an environment with a lot of
00:59tailwinds. The environment we're sitting in right now has all kinds of complexity. And it's a great
01:04reminder that you really do have to very actively add value, create outcomes, be proactive, drive
01:12transactions. And that model can still be effective, but it's different than the way a lot of private
01:16equity was working for a long time. Does that mean that just some funds aren't equipped to adjust,
01:21that they were successful because they could live in this passive world? And now that the world has become
01:26active, it's hard to get back on track. Yeah, look, there's been a whole range of strategies out
01:31there. And it's hard to use a cookie cutter definition to define them. But for sure, the buy
01:37high, sell higher, I buy great assets, I just pay whatever I need to pay for the model. And a
01:43lot of
01:43that model accrued to software assets in many cases, not because it was specifically designed for
01:49software, but those were good assets that were growing and were trading at very high multiples.
01:53And so it was very applicable to that segment of the market. I think that business model has
01:57been challenged. What does your software exposure look like? And what have you been doing with some
02:01of those companies? Tech has been an important part of our business for a long time. I would say
02:05in that late teens, early 20s period, we really struggled with the valuations that were being paid
02:10for lots of different types of tech assets. We worked hard to try to find the ones where paying
02:15high prices was going to feel appropriate and justified. But to us, that was a smaller subset of the
02:20market. So it's been about 20, 25% of our activity. And it's performed well. But it has been different
02:26than the industry where it was closer to half the industry activity for a couple of years there.
02:30And another sector that Bain really excels at and you yourself have an expertise in is healthcare.
02:35And I was really shocked. I was looking at a report that global healthcare PE activity was an
02:39all-time high in 2025. Some of that might be because there were some big, large deals out there,
02:43like Hologic, for example. How do you see 2026 shaping up? Because it does feel a bit more quiet
02:49for healthcare private equity at this moment. Yeah, I think one of the reasons healthcare has
02:53been a great space for private equity in general, and certainly for our model, is it is a really
02:57complicated sector. So it lends itself to that kind of agile, hands-on, activity-oriented governance and
03:03the ability to really drive inflections in complicated spaces. But that's evolved a lot over
03:08the 30 years that I've been in the business. In the early days, it was a lot of healthcare services
03:12and the developing models there. A lot of that activity has really shifted to, I would say,
03:16really two big pillars of our focus. One is biopharma, where I think we're still in the early
03:21innings of an incredibly interesting innovation wave. And the other is healthcare tech, where the
03:26healthcare world for a long, long time was well behind many other industries in tech investment.
03:31But that's been changing rapidly. And the applicability of tech tools to the complexity of
03:37the data and the ability to really change patient outcomes in healthcare is incredible. So I think
03:41we've got a long way to run with that as well. I hear that too, and I just think, isn't
03:45that also
03:45being disrupted by AI? How big of a force has artificial intelligence been for healthcare IT?
03:51Look, it's still very early, but I'm incredibly bullish on the opportunity for AI to be a terrific
03:58tool for healthcare providers, but more importantly, for patients and the outcomes they can get.
04:03I think one of the questions that we're all grappling with as we think about how much can AI
04:07disrupt any given sector is, what is the right to exist for any business? And it does have some
04:12proprietary position in the market that lets it at least have the right to go try to be an AI
04:17winner
04:17versus a business model that's going to be disrupted by AI. I mean, nobody has any guarantees.
04:22But when you think about the proprietary private nature of healthcare data, if you have access to
04:27that data and then can layer AI tools on top of that to drive better efficiency, better health
04:32outcomes, that puts you in a really interesting place to go try to win. You still have to do the
04:37work
04:37to do it, though. Right. So it's one of these moats that everyone is searching for, a holy grail of
04:40that. Elsewhere in the world of AI, Bain has been one of the founding partners for this Open AI Deploy
04:45Co. This partnership you did alongside some of your peers. I know it's still very early days. It's only
04:51been a month. But have you gotten your hands on their FTEs, their forward deployment engineers yet?
04:55Are they starting to look around some of your port codes? What's sort of the latest on that?
05:00Yeah, look, it's all of the above. I mean, we're incredibly excited about the opportunity to try to be a
05:06winner
05:06in helping our companies deploy AI. Think about AI. Obviously, it's an important technology.
05:11You know, we don't think we have a right to win in being the inventors of frontier technology. That's
05:16not what we do. Where we think we do have a right to win, though, is in helping our businesses
05:20transform
05:21their operations to benefit from these technology tools. And we have 40 years of history helping our
05:26businesses grow, transform, and inflect. And that's going to be at least half the battle in deploying
05:31technology. So this kind of a partnership, I think, is going to be terrific in terms of being
05:36able to, you know, pour gas on the fire of all that inflection. But there's a long ways to go
05:40in
05:40terms of building out the people and the tools and the capabilities to really drive that at scale.
05:45Can AI be a source of alpha, though, for private equity? Because, you know, the business, as you're
05:49saying, you can't just be passive anymore. You need to find ways and tools to improve a business. But
05:53does AI give you that ability when so many people can get their hands on AI? It's not necessarily
06:00unique, the ability to, like, use open AI models within a portfolio company.
06:04Look, I think I actually agree. The AI tech is unlikely to be a massive differentiator. And I'm
06:09sure we'll see lots of leapfrogging in terms of models and tools and a lot of different,
06:13you know, interesting technologies developing. What we want to do is be the best at helping our
06:18companies deploy those tools. And in a lot of ways, that's no different than the way we've built our
06:22model for 40 years, which is, you know, people have always had lots of ways to transform and grow
06:27and improve businesses. We just try to be, you know, a little faster, a little better, a little more
06:31agile about it. You know, we want to do the same thing with deployment of AI. It doesn't mean we'll
06:35be the only ones who are good at it or great at it, but we think we can be amongst
06:39the best.
06:40By the way, do you see a lot of places to trim specifically with jobs and your port codes when
06:44you add this on? I mean, there's some in the industry who have been incredibly bullish saying,
06:48you know, we're going to replace a lot of human capital with some of the AI capabilities. Are there
06:52lots of places where you just need less people now?
06:55You know, the answer is I don't know yet. I mean, one of my colleagues who really leads some of
07:00our
07:00thinking in this likes to say it's the difference between reengineering and reimagining. Reengineering
07:06is taking what you're doing now and figuring out how you can do it a little bit more efficiently.
07:10And in those cases, there probably are opportunities to reduce headcount. But reimagining is saying,
07:15you know, we've got this incredibly interesting new technology. What if we should be doing business
07:20totally differently? And that might mean more people, it might mean less people,
07:23but it's going to be completely different. And so we're trying to pause and look at all of that
07:28before we just start, you know, shaving efficiency here and there. But I think we're going to see
07:31all of those play out.
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