Episode 14: Ivan Peytchev - private equity reaches an inflection point

Catherine (00:05): Welcome to the Signal, a podcast presented to you by Third Bridge, the world’s leading investment research provider exploring how some of the globe’s most investible industries are facing upheaval and hearing some personal stories from third British clients. My name is Catherine Ford and I’m a journalist with a 20 year track record of reporting on a wide range of financial topics such as capital markets, developments and m and a.

(00:35):Joining me in this episode is Ivan Peytchev, a senior vice president at Brookfield Asset Management responsible for Brookfield’s long-term private equity strategy. Brookfield is a leading global alternative asset manager with over 750 billion US dollars of assets under management across private equity, renewable power and transition infrastructure, real estate and credit. The private equity arm of the business has over 120 billion US dollars of assets under management and invests globally across business services, industrials, technology, and healthcare sectors. Ivan will share his views on the private equity space with all its complexities, how to navigate some of the pitfalls and how he feels the industry is set to change in the future. So first of all, Ivan, thank you so much for taking the time to chat to me today. I’m really excited to take a deep dive into the private equity space, but before we start the conversation, can you introduce yourself to our audience in a few words, please?

Ivan (01:33): Of course. And first of all, thank you for having me, Catherine. Pleasure to be here today. So a little bit about myself. I’m immigrated to Canada when I was young grew up a couple of hours north of Toronto, Ontario, and in the midst of the last great recession, found myself working in New York and investment banking. I was covering financial sponsors and private equity firms and really got some interesting experience during the very turbulent times of that. The last global recession had an opportunity to meet and work with a number of different private equity sponsors and eventually found a great opportunity to move back to Toronto and join a leading North American private equity firm there where I spent about a decade focused on control investments in large companies spanning a number of different sectors. And then a couple of years ago in the midst of Covid, I decided to move to Brookfield where I joined the firm to help start a new strategy around long-term private equity investing.

Catherine (02:37): And we’re going to have a little bit of a chat about exactly that strategy. So first of all, starting a new job in the pandemic. That doesn’t sound like a particularly fun experience. Talk us through that one.

Ivan (02:48): We really believe that you get a lot out of being in the office and what that allows you to do from a team-based dynamic at work. And so very little of our covid experience, especially for the investment team, was spent working from home.

Catherine (03:03): Cool. So I move into private equity. What attracted you specifically to that particular asset class?

Ivan (03:11): Yeah, look, for me, it was really simple. I thought that private equity would give me the opportunity to learn from really smart people about how great businesses are run and what makes a good investment. And I really liked just the nature of the work. I thought that the work was buried, it allowed me to learn from different companies and different industries, figure out how they operate and find solutions to a number of unstructured problems both at the investment side of things and then when we own an investment, trying to find ways to create value. And I really thought coming out of business school there was a few opportunities to be exposed to business leaders at such a young age and actually have the ability to influence the strategic direction of a company. So I thought that was pretty interesting and I wasn’t disappointed.

Catherine (04:00):Now you said you were attracted because you wanted to work and learn from really smart people. That’s obviously one of the characteristics that we see generally across financial services and the financial space, but particularly in private equity. Talk us through some of the other characteristic that you think it requires to be successful in that particular space.

Ivan (04:19):Yeah, of course. I think the two most important characteristics are you need to be hardworking and you need to have a curious mind to succeed in this industry. The first one, working hard. I think it’s actually really easy if you’re doing something you enjoy and find the work rewarding. And so one of the things we do when we meet young professionals looking to break into private equity is we always really look to see if they’re interested for the right reasons, because we tend to think if they’re engaged and interested in private equity for the right reasons, they’re going to work hard, they’re going to want to work hard. The second one, curiosity is tougher. It really manifests itself in trying to understand how something works, always asking questions, trying to get below the surface, thinking about those second and third order questions that aren’t as obvious and really trying to look at things through a number of different perspectives.

(05:14):And part of that is really having that strong level of intellectual curiosity where you want to see and appreciate diverse perspectives. We find that the best investors are the ones that are curious to understand what others are thinking about and how others approach problems and frankly, looking for perspectives that are divergent from their own. And in fact, I find Third Bridge is a pretty good tool in our arsenal for that. It really enables us through the use of your expert networks to find and source various perspectives from different industry leaders all over across the world. I always like talking to a competitor and understanding why they think that they’re going to do a better job competing against a company we own or a company we’re looking at because it lets us be better competitors to them and it lets us think differently.

Catherine (06:09):Now we’re going to spend some time talking about sort of Brookfield’s investment philosophy, the tools that you use to assess potential investment opportunities, but I’d like to spend some more time with you before we do that. Now, you said private equity, you wanted to work with some really smart people, so talk to me about who inspires you, who are people around you that you look at and go like, wow, they make me want to work that little bit extra hard to get where I want to be?

Ivan (06:34):I don’t mean for this to sound trite, but it really is the people that inspire me and I think the people really goes threefold. One, it’s our investors. The investors that we work for are retired teachers, retired nurses. A lot of our investors are pension funds that manage capital. And so our first and foremost duty is to do good by them to create great returns and lasting value for them. Secondly, would probably be our own team members. All of our team members inspire us to do better. We challenge ourselves all the time. And the third one, really, the management teams and the people of the companies we’re invested in. We want to do well by them. We want to be long-term partners to them. We want to help them grow their businesses.

Catherine (07:28):Great, thank you very much. Now one of the things that we do when we speak to Third Bridges clients is ask them about a piece of advice that you’d give to younger listeners wanting to move into the private equity space or a piece of advice that you’d give your younger self. Is there anything that comes to mind?

Ivan (07:45):It goes back to what I mentioned earlier, Catherine, make sure you’re pursuing a career for the right reasons. Work hard, let your curiosity drive you, and obviously it helps to have a great attitude and be a team player. Private equity isn’t a solo sport. We rely on so many members of our team to execute on an investment and then make sure we’re creating value along the way and executing on our investment thesis. And I’d say maybe finally on that to be successful in private equity, you have to always remember it’s a marathon and not a sprint. If you’re only sprinting, you’re going to burn yourself out. You’re going to regret missing important milestones in your life outside of work and you’re not going to have a great time. So always think about the long term. It helps us in our careers and I think it helps us in running and managing the business as we invest in.

Catherine (08:36):Now you’ve been with Brookfield for two years. Talk me through what prompted that move specifically to that firm and what attracted you to this kind of asset manager?

Ivan (08:45):Yeah, it’s a great question. For a long time, I’d been thinking about doing something more entrepreneurial, having spent a better part of a decade at that time in private equity. And I really was thinking about as a next step looking to really build something and I’d been tracking Brookfield’s growth trajectory it, it’s been on an incredible growth tier and I really felt my own investing style and approach was well aligned with the firm. And then when an opportunity came up to join them and help build a new private equity strategy that leverage both Brookfield’s large global ecosystem and relationships and also its existing large scale private equity platform, I thought it would be a great fit and I just thought it was setting myself up for success.

Catherine (09:30):Now I want to hear a little bit about the business culture within the organization, but you’ve sort of led us into talk me through the investment philosophy. What are some of the things that go into your research processes when it comes to identifying potential investment opportunities, but also things like portfolio management?

Ivan (09:48):Yeah, sure. The thing that stands out to me most about Brookfield is it really is a collaborative and team-based culture. We do a great job aligning incentives to make sure we’re all rowing in the same direction. With that, we’ve actually done a great job balancing the scale and structure needed of a large global organization. We have SE 750 billion under management today, but also maintaining that entrepreneurial culture. So what we’ve done really well is stick to our knitting about around being value-oriented investors, focusing on cash flow, being contrarian thinkers, but also setting people up for growth and the ability to be more entrepreneurial. So there’s very few places I’ve seen where young driven people can be given a lot of responsibility and very challenging work assignments, but also in a culture where you have the support and you have the team to help you out if things get really difficult.

Catherine (10:52):Ivan, talk me through some of the research tools that you use to make those investment decisions.

Ivan (10:58):It’s a number of them. First off, it’s having an investment committee that spans our entire organization. So again, this goes back to that collaboration. We’re not siloed in those investment decisions just within private equity. We have leaders across infrastructure and real estate that are all contributing to that, and that allows us to see the bigger picture and think about the longer term and how certain aspects of just the global nature of our firm could impact some of these businesses. So I think that lets us avoid mistakes better. Frankly, it’s having that large asset base, right? When we look at a business within private equity, it’s really easy for us to call our real estate colleagues or infrastructure colleagues or get access to management teams all over the world to get differentiated and unique perspectives about whether this opportunity is attractive and if we’re missing anything.

Catherine (11:58):Ivan, you spoke earlier a little bit about expert networks that you use as part of your decision making process. Do you want to take a slightly deeper dive on that one?

Ivan (12:06):Having a deep bench of industry experts all over the world is very crucial and being able to get access to those experts in a very short period of time because frankly, the nature of our business is getting shorter and shorter and shorter to do the due diligence necessary to buy some of these large scale businesses. And so that tool is really invaluable to us.

Catherine (12:29):Ivan accompany your size and as geographically diverse as you guys are, must encounter some friction points within the organization. Talk me through what some of those might be.

Ivan (12:40):

I alluded to this a little bit before, but I think this is probably top of my list. It’s being able to continue our pace of growth and do it in a way that doesn’t see our D changing as a firm. And what’s made us great being that collaborative team culture being deep value investors, being contrarian thinkers, and I think we’ve struck a good balance, but it’s something we’re very, very focused on because we don’t want to stray from what’s made our firm great for the past hundred and 20 years nearly.

Catherine (13:12):There’s no denying that the private equity industry is having a fantastic run of it, making amazing investments. There seems to be no limit when it comes to fundraising. However, against that, we do know that there are challenges facing the industry as well. And so my question to you Ivan, is what are funds having to do to differentiate themselves in this space?

Ivan (13:32):It’s a great question. I really do think the alternative asset space as an industry has really seen itself mature over the last couple of decades that’s been just driven by the amount of capital that’s flowed into the asset class. And frankly today it’s just forced a lot of changes. The world itself has gotten more complex and firms really need today to be more sophisticated in their approach, to find differentiated ways to create value. And we’ve seen that manifest itself in all different ways, right? 10, 15 years ago, private equity firms could be generalists, but today they really need to build institutional knowledge. We’re shifting away from the legacy kind of star culture of a private equity shop and really finding that the firms that can deliver top core tower, top decile returns from fund to fund really need to have built that institutional knowledge, have a deep playbook that they can repeat and execute on and that can span from becoming very deep sector specialists that can span to being a firm with a very operational focused playbook and really different ways to create that differentiation. I mean, some private equity firms, we almost see them as quasi strategics in the sense that they can look at an opportunity and find cost savings or synergies the same way that a strategic acquirer can, and that’s very different than the approach of private equity firms a decade or two ago.

Catherine (15:07):So I’m against this backdrop that you’ve just described, which I think is fascinating. What does that mean for those large, almost conglomerate style structures that we see in private equity funds? How much niche will they become? Will they completely be extinct in 20 years and they will all be very, very focused? Or will we see something like a large private equity fund actually breaking up into individual pieces and have something that’s focused on emerging markets? You have something focused on a particular sector and you have something focused on a particular geography. What do you think the private equity fund of the future will actually look like?

Ivan (15:41):Well, first off, I do think we have seen a significant growth in just the number of private equity fund managers today. I think that we’re going to go through a wave of consolidation and a wave of change there in the next few years. You will see less funds in the market, but those funds will be larger, more well capitalized leaders that have a proven playbook, and I think that’s been a natural evolution, right? You’ve seen those leading funds come out with sort of sub funds that are focused either on a geography or on a specific sector. And the other thing you’ve really started to see is a bifurcation of asset classes based on risk. You know, see that in areas like infrastructure where very, very stable infrastructure, also known as core infrastructure has a very different return profile than a core plus or a value added infrastructure where there’s more operational risk.

(16:42):And we frankly started to see that more in private equity as well. Today we have private equity funds that are more focused on structured non-control investments. We obviously on the smaller side have growth funds and venture funds. This is one of the reasons we think long-term private equity is an opportunity is we’re seeing more and more opportunities that sit at the intersection between traditional infrastructure and traditional private equity have a different return profile and a different risk profile. That’s sort of the newest wave that we’re going to see is this bifurcation of asset classes based on risk.

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Catherine (17:55):Now let’s talk a little bit about the macroeconomic conditions that private equity funds have to operate in. I’m thinking about the recession, I’m thinking about the cost of borrowing, I’m thinking about the depressed equity markets. I’m thinking about the strengths of some of the strategic buyers that we’re seeing out there as competition for the private equity funds to do deals against all that. How is the industry doing in your opinion?

Ivan (18:20):Yeah, I think we’re at an interesting inflection point right now. The era of declining interest rates and cheap debt is over. This is going to drive some of that consolidation that I mentioned. We’re going to go to fewer managers, but those managers are going to have had a consistent track record and have stuck to their knitting and have been able to execute through past cycles and past recessions really well. I think it’s going to be good for the industry. I would say in the short term, the volatility and uncertainty we’re seeing just makes it very difficult to finance these acquisitions with debt. There’s large banas spreads between buyers and sellers. I don’t think sellers have quite readjusted to the market environment we’re in today. Prior to the Russia Ukraine crisis, we were looking at our cost of borrowing on a blended basis probably in the five to six, five to 7% range. Today those rates have shot up to 10% or more, and although we’re seeing some signs of stability now, I think the market is fundamentally changing longer term. What I’d say is rising interest rates is going to drive to different valuation expectations. I mentioned those bid as spreads between buyers and sellers. I think over the long term, if we are in a more normalized rate environment, the era of rising exit multiples just has to end.

Catherine (19:45):Now, against that backdrop, what are the kind of deals that are being done at the moment, and is that something that we see is going to be carrying on over the course of 2023 and into 2024, or will that again shift as the market stabilizes?

Ivan (19:59):What we’re seeing today is strategies like our non-control equity strategy is seeing a lot of interest. There’s a lot of great businesses that can’t get traditional financing in today’s market, and so they’re calling us and looking for solutions. The companies and businesses that are least affected by the current instability and recession risks are really, really good businesses that are run really well and are good candidates for our long-term private equity strategy. Those businesses can get financed in any cycle because they have a proven ability, raise prices in inflationary times, generate stable cash flows through a recession, and they’ve proven that time and time again. And so I think capital for those businesses should continue to flow in the near term.

Catherine (20:46):Now, you’ve spoken couple of times about this long-term investment strategy that Brookfield is pursuing. Talk us through the thought process that got you to that strategy, how you are implementing it and how it’s differentiating itself from other private equity strategies or the public markets. Indeed,

Ivan (21:03):For us, it really came from the realization that some companies are just really well run, have great management teams, and have the ability to generate stable and predictable returns over the long term. They just don’t need to be sold to a private equity firm every 3, 4, 5 years. And one of the benefits of our organization and our private equity team in particular is we have over 140 investment professionals all over the world. And in our main private equity strategy, we really look for ways that we can drive a medium term outcome, call it five to seven years, and companies that are in need of a step change. And that step change can manifest itself in a number of different ways. It can be a company that needs to do significant consolidation or deconsolidation within its space, repositioning a competitive or business model, a market environment that’s rapidly changing, meaningful operational changes that we need to drive in a company or even taking a orphan division of a larger company and creating a standalone entity out of it.

(22:13):Those are very active ownership focus areas for us, and we generate great returns by using our operational capabilities to drive step changes in those companies. And frankly, the traditional private equity model of aligning incentives and governance toward that medium term horizon, right management and the whole company sees the need for change and is incentivized towards delivering that change in a five to seven years. But what we had started to see is w, we kept finding companies in opportunities where it’s a great management team, it’s a market leading company with a high market share. It’s very stable and very durable, and those are businesses that we don’t want to be pressured to sell. And it really goes back to our heritage as an owner and operator. Before we were an asset manager, I mean Brookfield’s been around for 120 years. We’ve only been in the fund business for the last 20, 25 years. Before that, we would just buy great businesses and get the benefit of our capital compounding for as long as we thought that there were great opportunities.

Catherine (23:22):Now what does that mean though for your portfolio management team? I mean, obviously if you are, you’re buying a portfolio company and then you already have to think about, well, where is the exit going to be? That’s one way that you then have to manage the business, but if you’re actually saying, hang on a minute, we’re not going to flip it in three to five years, we’re actually going to stick with it for a little bit longer. Does that require a different kind of expertise within your management team? Does it require a completely different approach to value creation or is that something that you’ve been able to evolve naturally?

Ivan (23:53):It’s not an entirely different approach, but it is a slightly different mindset. So we still leverage the same operational expertise that we have in-house to help our partner companies create value, but whereas our traditional private equity strategy, it might be large scale value creation, large changes changing a management team because they need to have their skillset augmented. The nature of the value creation that we’re doing in this longer term strategy is continuous improvement driven. So it’s applying those same capabilities, but doing them from the mindset of just optimization and ongoing optimization. And frankly, that’s a lower risk approach to driving change within an organization, but it should deliver value over the long term in a similar way.

Catherine (24:41):But does it mean that you have a different relationship with a portfolio company? I mean, is it something where you take an even greater interest in the people within the organization and you take an even greater interest in sort of supporting them, developing them in a certain way?

Ivan (24:56):It doesn’t change the way we interact with people. Our management teams are our most important partners and our most important assets, and they’re so crucial to delivering value for our investors. So no matter what strategy we’re looking at, the management teams are critical to the success of our investments. Probably the most critical what it does do is it does force a different thought process and lens. One interesting thing we found is succession issues and succession changes that you really wouldn’t think about if you’re thinking about a 3, 5, 7 year horizon. Those discussions happen day one, and I think those are really good discussions to have talking to a management team and saying, well, what are we going to do in five to seven years when you want to retire and who in the company is going to be your successor? I think it’s very healthy to have those discussions early and a longer term horizon drives that.

Catherine (25:55):Talk to me about what makes a business lower risk and more stable. What are the key characteristics that you are looking for or looking at?

Ivan (26:05):Yeah, we call them exceptional companies here at Brookfield. Our private equity platform more generally has a pretty detailed playbook around how we assess business quality, and it starts very early in the investment process. Any business we look at, we first assess it to understand is this a good business, a great business, or an exceptional business? What we find very often is that what makes an asset exceptional is businesses with high market shares that are market leading businesses with a very durable moat. Businesses that have proven ability to generate strong and consistent returns on capital, and the management teams are a big part of that. We find that backing exceptional management teams is one of the key drivers of long-term growth. And so we really double down on that as part of the strategy. One other aspect, and it’s sort of when I look at the kind of businesses we look at and the blurring sometimes of asset classes between infrastructure and private equity, one of the things we like about businesses that we think are suited for the strategy is they tend not to exhibit single risk factors. So for example, there’s some assets more on the real asset and a infrastructure side where one factor will drive the outcome of an investment. So for example, if you buy a toll road and traffic trends completely change on, you have few levers to mitigate that. But what we like to find are great businesses where we have a number of different levers and those levers are in our control and it’s rare for us to find that. But when we do, those are the businesses we want to own for 10, 15 or more years.

Catherine (27:55):Let’s talk a little bit about the sort of investor profile. I mean, when you first came up with this strategy, was it something where you were able to go to your existing investor base and say, look guys, you’ve been investing in sort of a traditional private equity model so far, we’ve had to think about it, we want to do it differently. Are you on board or was it something where you felt you had to go to an entirely new set of investors?

Ivan (28:18):Part of it is an education process. One of the things we hear most often from large institutional investors is they’re sick and tired of seeing one business trade from one private equity firm to another private equity firm to another private equity firm, and they end up owning that business multiple times because they’re invested in multiple funds. It’s very, very inefficient. And so where we start with educating investors is you have two aspects of this strategy. We want to buy really great stable businesses. That’s the guiding north star for us because if you buy great businesses and they have the power to compound capital over the long term, that solves a lot of the problems. And so if we do our job right, we’re going to have a very high bar for NASA quality. But then you ask yourself the question, why hold it over the long term?

(29:10):Why put it in a longer term structure? And as part of that education, there’s principally three things giving ourselves a longer horizon. One allows us to benefit from long-term secular tailwinds that are really difficult to underwrite or predict in a shorter horizon. And if we know we’re going to own this asset for a shorter period, it’s really difficult to actually underwrite the benefits of that and we just say it’s upside for the next buyer. Giving ourselves the benefit of a longer term horizon allows us to actually benefit from these secular tailwinds. The second one is minimizing factors outside of your controls. So one of the things we really like to invest behind are businesses where we have controllable outcomes and we can drive our own future and drive our own investment thesis. If you’re buying a really great asset over the long term, more and more of your return is driven by factors that are in your control, which is that business’s ability turn great returns on its capital and less is driven by things that are outside of your control.

(30:20):For example, the exit multiple being higher than what you bought it at or the current state of the capital markets in the level of debt availability or even a recession coming in your investment cycle, you’re able to weather those events much better in a longer term vehicle like what the strategy affords. And look, the last is just minimizing friction costs. I mean, selling from one P firm to another every few years generates a lot of costs and a lot of distraction. A management team, if you think about a five year horizon, they might be spending 20% of their time either getting a business ready for sale or selling the business and you can execute on a lot more and not lose the strategic direction if you don’t have to think about selling your business every few years.

Catherine (31:09):But playing devil’s advocate here, I mean, are there any risks to this sort of strategy as well? Because I mean you saw, you talked about controllable outcomes and knowing the industry, knowing what’s on the horizon, I think the last few years have demonstrated that there are situations that you simply cannot predict against that backdrop. Is there any downside to a long-term investment strategy?

Ivan (31:32):Look, there certainly is an element of illiquidity and that can make it challenging for some investors. We do think it’s mitigated by the fact that really great businesses should be able to deliver access cash flow and allow for more frequent distributions to investors. So that helps mitigate that. But it is a consideration that an investor needs to think about. And we really think of long term private equity as is a quiver in the arsenal, a large institution, a life insurer who has longer term durations that they’re thinking about. Those are businesses that really like this style of investing, and they’re always going to be thinking about a mix of shorter and longer term alternative assets to meet their allocation requirements. And we think long-term private equity helps deliver that.

Catherine (32:20):Have there been situations where a potential investors said, no thank you. We’d rather go the short term route?

Ivan (32:26):There certainly has, and there always will be. It’s not a perfect solution, but we think for the right type of assets, this is the best solution that’s out there, both for investors and frankly for management teams. There’s a lot of management teams that we talk to that don’t love getting sold every three or four years. There is about a thousand companies across North America and Europe that have traded hands from one private equity firm to another in succession more than three times. There’s a lot of inefficiency there.

Catherine (33:00):Crazy, isn’t it? As an M&A reporter, I mean, over a 20 year career, there are some businesses that I’ve seen exactly that trade hands three, four times, and you do sort of think there must be another way of doing that. So thank you very much for illustrating the other way of doing that. Now, taking a step back and looking at the entire private equity industry, where do you see the biggest opportunity for investors and where do you see the biggest challenges when it comes to private equity?

Ivan (33:25):The biggest challenge facing our industry right now is that it can take some time before some of the mistakes and excesses of the last few years catch up with us. It’s going to be a long and painful road ahead for some look. An example of this is even with the market instability over the past year, we’re still seeing default rates at all time lows. The biggest opportunity is actually that in these times of market instability, we tend to see some of the greatest opportunities for us when it comes to finding great investments at attractive valuations. So we’re really looking forward to that and it’s been really interesting so far for us.

Catherine (34:07):So just to follow up on that one you’ve been in the space for quite a while. How much harder is it to find that perfect target these days than it was five or six years ago?

Ivan (34:17):It’s always hard <laugh>. It’s never easy. <laugh>

Catherine (34:21):Never

Ivan (34:21):Easy. It’s never, it’s easy. It’s never an easy route. And what we like about the space that we play is we tend to play on the larger end of the market, and we actually do see less competition because there’s just not that many private equity firms that can write very large equity checks. And so we think that that helps us a little bit, but it’s never easy.

Catherine (34:44):Now, as we’re coming to the end of our time, there’s one segment that we have on each of our podcasts, the one to watch where I ask my guest to tell me about the one to watch in their space. And that could be a specific company, it could be a specific market, it could be a specific development and opportunity. What from your perspective, is the one to watch?

Ivan (35:02):Well, I know what I’m watching right now is the Federal Reserve and the European Central Bank, and it’s not really their actions so much as paying close attention to the words they’re using when they talk about inflation and how they see the world. Those two organizations are driving a lot of change in the short term.

Catherine (35:22):Okay. Thank you very much. And as we come to wrap up the podcast, I’d like you to tell our listeners what is the most important thing to keep in mind when it comes to the private equity industry at the moment?

Ivan (35:32):I would say Cash is King. What this last cycle has really taught us is growth is important, but growth at the expense of profitability is really unsustainable. And in the long run, a business will always be valued based on the cash flows it generates for its investors. So its interest rates rise and return profiles of less risky investments like government bonds starts to increase. You have to be certain that either a company’s cash flow has to grow and keep up to compensate you for that, or you’re going to have to pay less for the asset.

Catherine (36:09):Cash’s King. That’s a lovely note to end on. Thank you so much, Ivan, for sharing your experiences and your insights. And thank you to all of you listening to this episode of The Signal presented to you by Third Bridge, the world’s leading investment research provider. Please rate review and follow up podcast Indeed. If you like it, tell a friend, find us at Spotify, apple Podcast, and wherever else you get your podcast from. And of course, at thirdbridge.com/signal for me, Catherine Ford. That’s goodbye. And until next time,