September 25, 2017
As the world has become more connected and business regularly crosses borders, the nature and goals of deals have changed. Globalization brings more complexity, requiring a different approach to mergers, acquisitions and other transactions.
One growing need in this landscape is diversity – both across investment portfolios and among dealmakers. Different experiences and perspectives not only can improve the pursuit and execution of deals. They also can be crucial to charting a better growth strategy.
Diversity in deals will be the focus of a panel discussion at the upcoming 2017 Corporate Development Conference, Oct. 12-13 in New York. The panel will include Anita Balaji, Managing Director at The Carlyle Group, who focuses on buyout opportunities, privatizations and strategic minority investments in the consumer and retail sector. Balaji recently discussed her background and the importance of diversity on deal teams with Andrew Cristinzio, PwC US Private Equity Leader.
Andrew: To start, can you share a little about your background and experience in deals?
Anita: When I was a math and chemistry major in college, I realized that I really liked the analytical side of things. I knew there would need to be a strong analytical component in whatever career I chose.
I went into investment banking. As an analyst in Goldman Sachs’ mergers and acquisitions group, I appreciated being able to develop strong fundamental technical skills. But I also quickly realized that I was not a big fan of doing a lot of pitches and being far removed from the action in terms of actually making the decisions and having ownership and accountability for those decisions.
I went into private equity because that seemed to be the place where I could combine the analytical skills that I wanted to continue developing while leveraging my interpersonal skills in a career that was challenging, stimulating, and brought me closer to the action. I was in private equity for two years before going to business school. After that, I joined Carlyle’s consumer retail team in its flagship US Buyout Fund. That was about 11 years ago.
Andrew: What’s your perspective on how the consumer retail sector has evolved over the years?
Anita: We’re seeing a lot of disruption and innovation across every subsector within consumer and retail, driven by everything from changing demographic trends, such as the rise of millennials and how they interact with brands, to aging baby boomers and how they like to spend their leisure time and dollars. There’s also the rapidly changing ethnic makeup of the US, which obviously cuts across multiple subsectors.
The digital revolution has given consumers access to information anywhere and anytime. Increasingly, they’re swayed not just by friends and family, but also by celebrities and influencers. Lastly, there’s currently a sea change in the retail landscape in the US with competition from multiple angles, whether it is e-commerce or hard discounters. All of these factors are giving rise to significant disruption.
Andrew: With your point about the changing ethnic makeup of the US, let’s talk about diversity. What are some challenges and opportunities you’re seeing for women and minorities?
Anita: As a senior woman in private equity and as a working mom with two little kids, there aren’t a lot of people like us around. That’s certainly a challenge, but it’s also an opportunity because you really can stand out and make your voice and opinions heard as one of the very few women in a management meeting or in a boardroom.
I’d also say that women have an advantage in the sense that they bring slightly different perspectives to the table. A large part of what we do in private equity is assess management teams, form strong rapport with people and drive change through influence, which I think women do a particularly good job at.
However, one of the challenges that women face – aside from the fact that there’s just not a lot of senior women that folks can look up to – is the fallacy that it’s not doable to have both a family and a career in private equity.
There are more and more of us that are certainly trying to do it. The one major benefit of being a woman at Carlyle is that there are more of us here than at any other large private equity firm. Having role models has certainly been a huge source of strength for me.
Andrew: Diversity is something we think about a lot in a professional services firm in trying to create this similar dynamic. From your perspective, how important is it to have a diverse culture and leadership?
Anita: It’s exceedingly important, and I’m glad you brought that up. We’ve been focused on increasing the numbers of women and minorities within our associate pool and have had very good success there. For several years in a row, I think we’ve had at least 50% or more women and minorities among the pre-MBAs we hire. In addition to recruiting, we’ve also had development and training programs to retain those people. We’ve established a diversity council that’s made up of very senior folks, and we have employee resource groups for multiple cohorts of diverse communities within Carlyle. Importantly, we have real commitment to diversity from everyone throughout the firm, starting with the founders.
Also, one of the things we say in private equity is, “If you don’t track the metric, it doesn’t get focused on, and it doesn’t matter.” So within Carlyle’s US Buyout organization – maybe even within broader private equity – we’re now tracking on a quarterly basis what portion of our boards of directors are diverse. We believe that it’s important to have diverse perspectives. We also have a policy in place where, within a certain number of quarters after we make an investment, we evaluate the boards and management teams of our investments and put in the right people, which should include women and minorities.
Multiple studies show that companies and boards that are more diverse drive better outcomes for their shareholders at the end of the day. So this is as much a business proposition for us as it is a nice thing to have or a nice thing to say.
Andrew: What words of wisdom do you have for younger professionals who are just starting out in private equity? How can they be successful, and what should they be thinking about?
Anita: The first thing is that private equity is all about relationships. Start early and start young by leveraging your network. You might be surprised by how that mid-level person you met during a deal may end up running a business five or 10 years from now when you’re a managing director who’s thinking about sourcing deals. Relationships don’t just happen overnight, and you can’t let something lie for five or 10 years and then go back to it.
The second thing is maybe directed towards women and minorities. Don’t count yourself out of the game because you have some vision in mind of what your future role and future career might involve. If you’re enjoying what you’re doing, just put your head down and continue to do the work. You will figure things out, or things will get figured out for you.
I was lucky enough to be at Carlyle when I went through two pregnancies and two maternity leaves. In a lot of ways, I figured out the maternity leave policy and figured out what worked for me, including what worked for Carlyle and what worked for my portfolio companies. We’ve managed to make it work.
If you’re at the right firm and enjoy the work, the culture and the people that you’re working with, just keep at it. Don’t discount private equity as a long-term career, because it can certainly be very satisfying and fulfilling if you’re able to make it here long-term.
For the fourth consecutive year, PwC and The Conference Board are hosting The Corporate Development Conference, Transformational Dealmaking and the Road to Value Creation. Join us as leading practitioners share their insights and experiences for spotting opportunities for growth in today’s deal market. To receive a limited-time discount of 35% courtesy of PwC, please use promotional code PWC35 when registering. Register here.