Becker Private Equity & Business Podcast: Detailed Summary
Episode Title: Economic Trends and Private Equity Insights with Rick Kes of RSM
Host: Chanel Bunger
Guest: Rick Kess, Partner at RSM
Release Date: June 2, 2025
Introduction
In this insightful episode of the Becker Private Equity & Business Podcast, host Chanel Bunger engages in a comprehensive discussion with Rick Kess, a seasoned partner at RSM. Rick brings his extensive expertise to the table, shedding light on the current economic landscape and its profound implications for the private equity sector.
RSM’s Focus on the Middle Market
Rick begins by outlining RSM’s strategic focus, emphasizing the firm’s dedication to the middle market—a segment that aligns closely with private equity investments.
“We focus on, you know, the middle market, which, you know, private equity tends to invest heavily in.”
[00:20]
He highlights that a significant portion of RSM’s operations is intertwined with private equity groups and their portfolio companies. This symbiotic relationship enables RSM to identify and capitalize on emerging trends within the private equity ecosystem.
Current Economic Trends Impacting Private Equity
Rick delves into the four main economic pillars his team monitors:
- Jobs Market
- Inflation
- Interest Rates
- Global Trade and Tariffs
1. Jobs Market
Rick addresses the evolving dynamics of the labor market, particularly the challenges and improvements in talent acquisition.
“For many of our clients, the talent part of the problem has sort of maybe become less of an acute issue.”
[01:30]
He notes that while sectors requiring highly skilled professionals, such as healthcare, continue to experience talent shortages, the broader market is witnessing a gradual easing in recruitment challenges. This shift allows companies to better execute their growth strategies, albeit with ongoing concerns in specialized fields.
2. Interest Rates
Interest rates remain a pivotal factor influencing deal flow within the private equity realm.
“Interest rates obviously still elevated beyond a point of where they were, you know, in the past...”
[02:15]
Rick explains that elevated interest rates act as a dampener on transaction activities, including mergers and acquisitions (M&A). The uncertainty surrounding future rate movements adds an additional layer of complexity for firms planning their investment strategies over the next 6 to 18 months.
3. Inflation
Inflation trends are another critical area of focus, with recent indications pointing towards a potential cooling.
“Inflation may be cooling a bit again.”
[03:00]
A decrease in inflation is beneficial for managing operating expenses and improving EBITDA margins, thereby positively influencing company valuations. This development offers a respite for private equity-backed businesses striving to maintain financial health amidst fluctuating costs.
4. Global Trade and Tariffs
Global economic factors, particularly tariffs and trade policies, are entering a new phase that warrants close monitoring.
“Now we're entering kind of a new era of things to kind of monitor. And that's obviously the global trade conversation around tariffs and other things of that nature.”
[04:10]
Rick underscores the dual impact of these global shifts, which can present both challenges and opportunities for private equity firms operating internationally.
Impact on Private Equity Deal Flow and Growth Strategies
The confluence of these economic factors creates a landscape of both restraint and opportunity for private equity firms.
“Most of our clients continue to be a little bit uncertain in terms of what the next 6 to 12 months looks like...”
[04:50]
Rick observes that many firms are prioritizing organic growth, focusing inward to optimize operations rather than pursuing acquisitions. However, he remains optimistic that changes in interest rates and global economic conditions could rejuvenate M&A activities, enabling firms to execute more aggressive growth strategies.
Future Outlook and Strategic Recommendations
Looking ahead, Rick emphasizes the importance of adaptability and strategic planning in navigating the evolving economic terrain.
“...enable the opportunity for inorganic growth through M and A, which will obviously fuel the private equity community at large to really be able to kind of execute on some of the growth strategies that they've had.”
[05:20]
He advises private equity professionals to remain vigilant, continuously assess economic indicators, and be prepared to seize opportunities as market conditions shift. By balancing organic and inorganic growth strategies, firms can position themselves for sustained success.
Conclusion
Chanel Bunger closes the episode by expressing gratitude to Rick Kess for his valuable insights, anticipating further updates as economic conditions evolve throughout the year.
“Rick, I want to thank you as always for joining me today and sharing your insights...”
[05:30]
This episode serves as a crucial resource for private equity stakeholders seeking to understand and navigate the complex interplay of economic factors influencing the market today.
Key Takeaways:
- RSM’s Strategic Focus: Emphasis on the middle market and strong ties with private equity groups.
- Economic Indicators: Jobs market improvements, elevated interest rates, potential cooling of inflation, and evolving global trade dynamics.
- Private Equity Impact: Current challenges in deal flow with optimism for future M&A activities.
- Strategic Recommendations: Balance between organic and inorganic growth, continuous monitoring of economic trends, and adaptability to changing conditions.
For those interested in deepening their understanding of economic trends and their impact on private equity, this episode provides a comprehensive overview delivered by an industry expert.