government Archives • NMS Consulting

Uncertainty Over the Infrastructure Package for U.S. Private Equity

Arthur Mansourian — Fri, 20 Aug 2021 10:17:30 +0000

While private equity giants will remain steadfast on their hunt for massive infrastructure projects, an opportunity exists in investing capital into lower-middle-market infrastructure projects and partnering with local governments.

Biden’s biggest legislative victory since taking office. However, it remains an uncertainty if the hundreds of billions raised by US private equity to rebuild the country’s infrastructure will directly benefit from the passing of the bill.

The public-private partnerships that have been created have struggled to gain traction over the past decade as the country’s infrastructure has continued its decline. The 2,700-page Senate bill attempts to address this by directing local and state governments to consider these public-private partnerships. As an example, part of the infrastructure bill requires municipalities seeking federal funding for any project over $750 million to perform a cost analysis on a private partnership. However, the bill does not require that local governments create any public-private partnerships. This could result in the US private equity firms that have raised billions of dollars over the past decade to rebuild the country’s roads, utilities, bridges, and etc., being in a position of limited investment opportunities in which to deploy their capital. With that said, the bill still needs to pass in the House of Representatives before being signed into law.

Without any debt, infrastructure investment is needed in the United States. The country’s infrastructure received a “C-“ grade in 2021 from the American Society of Civil Engineers, with the estimate that it would cost almost $2.6 trillion to implement the necessary repairs and improve to a “B” grade.

Many private equity firms have focused their investment attention to infrastructure deals as they are often immune to volatility experienced by equity or fixed income investments, coupled with the fact that the often multi-decade contracts provide steady returns.

For state and local governments, the decision to partner with private equity is not always obvious. Governments are able to access the $4 trillion municipal bond market for financing, providing them with a greater level of control, and allowing them to keep more of the project profits. However, they are also solely responsible for any cost overages.

Private equity investments in public utilities have not always yielded the anticipated returns for private equity firms either. In 2014, electricity company Energy Future Holdings filed for Chapter 11 bankruptcy protection as a result of its inability to sustain operations due to more than $40 billion in debt. The company was taken private by KKR, TPG, and Goldman Sachs’ private equity arm in 2007, in a deal valued at $45 billion. With these firms losing a combined $8 billion of their invested capital, it was one of the largest leveraged buyouts to ever fail. The Wall Street Journal reported that it was the eighth largest bankruptcy in the history of the United States.

In 2017, Blackstone announced the launch of a $40 billion infrastructure fund, and that the Public Investment Fund of Saudi Arabia would be investing 50% of the fund, or $20 billion. Surprisingly, the Blackstone fund has seen challenges in hitting its capital raise target, having announced in their fourth quarter earnings call of having raised around $14 billion (less than 50% of the target).

While the private equity giants will remain steadfast on their hunt for massive infrastructure projects, there is clearly an opportunity to invest capital into lower-middle-market infrastructure projects and to partner with those smaller local governments.

About the Author

Trevor M. Saliba, Managing Partner and Global Head of Private Equity, M&A and Strategy

Mr. Trevor Saliba is a sought-after strategic advisor to a global client base, working with clients at every stage of the private equity, investment and M&A lifecycle. In addition, his Strategy practice advises clients on post-transaction closing matters related to post-merger and growth strategies. Previously, he also served as Chairman and CEO of NMS Capital Advisors, a subsidiary portfolio company of NMS Capital Group and a Los Angeles based boutique investment banking firm that specialized in mergers and acquisitions, cross border investment transactions, private equity and asset management advisory services to public and private clients throughout the world.

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Interview with Aykut Cakir | Insights | NMS Consulting

Arthur Mansourian — Wed, 15 Sep 2021 22:54:13 +0000

The official interview with Aykut Cakir, Managing Director, Senior Partner, and Head of MENA Region at NMS.

NMS Consulting, Inc. (“NMS”) announced on the 14th of September that it released its first official interview with Aykut Cakir, Managing Director, Senior Partner, and Head of MENA Region, at NMS. The session was conducted by Sophia Binder, Marketing Associate at NMS. Mr. Cakir tells us about his role at NMS, his leadership style, how he defines long-term goals for a business, and so much more.

To watch the interview, please click here.

About Aykut Cakir:

Mr. Cakir has worked for major Fortune 500 companies such as Procter & Gamble, Roche Pharma Group, and John Deere. He has 28 years of experience in Operational Finance, Accounting and in General Management with international business experience including in the USA, Europe, Middle East and Turkey.

Aykut holds a Bachelor’s degrees in Finance and Economics from the University of North Carolina. He also teaches, Financial Analysis, Project Management, and Decision-Making classes part-time at the Beykent University. Lastly, he’s published an internationally accredited article on “Financial Perspective on cost of Palliative Care.”

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Dr. Ferkan Celik Joins NMS Consulting as a Managing Director

Arthur Mansourian — Tue, 17 Aug 2021 07:05:21 +0000

Dr. Celik is a sought after advisor in academia and in the private and public sectors.

Dr. Ferkan Celik is a sought after advisor in academia and in the private and public sectors. Prior to joining NMS, she has worked with and advised multiple governments throughout Asia and has held senior positions within the Turkish Ministries of National Education, Industry and Trade, and Family and Social Policies. In these roles, she directly oversaw the creation, development, planning and implantation of many successful public and private-public programs, including the governmental program design and launch of more than 32 ministerial projects and 80 R&D centers.

Previously, Dr. Celik served on the Board of Directors of a Turkey based management consulting firm and was appointed as the Founding Partner and Chief Executive Officer of its research and development services division. In this role, she successfully completed the establishment of the Technology Transfer Office, the establishment of more than 150 R&D Centers, and 12 Turquality projects.

Prior experience also includes serving in Founding Director roles at Okan University and Yeditepe University for their Teknopark programs. She was directly responsible for the founding of the Technology Transfer Office which focused on university-industry cooperation within the organized industrial zones throughout Turkey.

“We are very excited to have Dr. Celik join NMS,” stated Aykut Cakir, Senior Partner and Head of MENA Region at NMS. “Her background and experience are a perfect fit for the needs we are seeing from clients in the Middle East and Balkan regions, specifically for project management and public-private mandates. We are excited to be able to cater to more organizational needs, and to provide solutions for growing organizations in Turkey and in the Middle East as we continue to expand our team in the region.”

Ms. Ferkan Celik, Managing Director and Partner at NMS stated “At NMS, I will be able to contribute to the growth of the company in the Balkan, Middle East and North Africa regions, particularly with project management, program design, and developing strategies. I have always been passionate about helping companies identify the best solutions for problems and roadblocks they are experiencing, and with NMS’ staff, we will together be able to offer a wide range of skill sets and problem-solving techniques to clients.”

Trevor M. Saliba, Managing Partner and Global Head of Private Equity, M&A and Strategy at NMS added, “I wish to welcome Dr. Celik to NMS Consulting and commend Aykut and the entire Istanbul team. The Istanbul team has exceeded all initial planning expectations for both new client mandates and now with the appointment of someone of Dr. Celik’s caliber to our global team, we are seeing the positive impact NMS Consulting is making in Turkey and the surrounding region.”

To view the original press release, please click here.

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Creating the Government of the Future | NMS Consulting

Arthur Mansourian — Thu, 23 Sep 2021 18:00:39 +0000

Emerging technologies provide the government with opportunities to use new tools to address old issues. Artificial intelligence, blockchain, analytics, robots, drones, and clones have all quickly gone from fiction to everyday tools.

We have reached a critical point in the evolution of government. Last year will be remembered for many significant reasons, such as the COVID-19 pandemic, the economic downturn, social and political unrest, and a US presidential election that brought up lots of legal concerns. However, it was also a time when governments at all levels began to lay the groundwork for changes to the way they serve its citizens.

Government’s response to the pandemic resulted in many grand experiments that occurred in a relatively short amount of time. Things like telehealth and telework became commonplace, and many things became virtual, such as court hearings and classes. However, the pandemic isn’t the only thing driving things to change. The pace of technological advancement has increased drastically, the expectations from the public regarding transparency have risen, and the trust in government has decreased. And there is now a need to meet significant challenges such as climate change, changing demographics, and reducing the friction caused by the economy and businesses needing to restructure. Ironically, government was created to resist such rapid changes, and now it is being called up to make changes to how it operates, how it serves its citizens, and how it makes its policies.

In the past, most technological advancements have helped make current processes better, faster, and cheaper, but it was slow to evolve. Today, however, certain technologies can make completely new approaches that were never thought possible, and do so quickly. Rapidly changing technology is transforming the way people live, how our society operates, and how businesses get things done. It is creating large shifts in human behaviors, from growing crops to medical advancements in diagnosing diseases. Societal factors and technology have evolved together over time, with technology prompting things that improved lives. Events such as the invention of the automobile and the introduction of the birth control pill have sped up changes to the pace of life, as well as societal norms around sexuality and marriage, respectively.

However, that innovation can create new challenges. Cybercrime and disinformation can bring about new risks, and technologies like drones and artificial intelligence, along with innovations in biotechnology, will probably require regulation. While self-driving cars can enhance mobility, it also could bring about hacking concerns. Others could bring on economic disruption.

Change generally requires governments to adopt technologies previously used in the private sector. Tech adoption in the private sector is a significant leading indicator for changes that are seen in the public sector. While it may take a while, governments have a pattern of adopting proven technologies, regardless of where they came from. However, with the current rate of change in technology, the time it takes to adopt those technologies will need to significantly decrease.

While technology offers government opportunities, it hasn’t been the reason behind large shifts. More significant factors that do effect change are economic pressures, demographic and social shifts, and external global changes. As these factors create the most transformational changes, they are indeed often assisted by technology.

Protecting the importance of public institutions, while simultaneously helping them to adapt to the needs of today’s world, will allow leaders to shape the future of government. Technology is behind many of the changes that are taking place in government, so leaders need to understand how it can create greater value. They need to be able to handle the details of redesigning many processes, and understanding what that would mean for the larger organization. They should also be able to engage and motivate the current workforce to commit to pushing their organizations forward to the future.

The key behind technology and today’s innovations is their synergistic power. To be sure, technologies like the internet, 5G, and analysis of big data are very powerful engines of change on their own. However, very often they are used in combination with each other, and the total is greater than the sum of their parts. Many of these technology combinations can be used in things such as precision medicine, universal translation machines, surgical military strikes, law enforcement, and more. However, the danger is that without faster government evolution, technology could get ahead of policy, and good technology could be used in possibly harmful ways.

Of course, people don’t quickly decide to embrace new philosophies. These changes take over when old philosophies don’t fit what is currently in place, or when hanging on to an old philosophy produces unfavorable results. It is then that public perception will adapt to all of the forces coming together in a future that demands change. Luckily, there is evidence that some of the new philosophies are taking hold in up-and-coming trends in government. They can serve as quality guides on how policies, organizations, and behaviors can change. However, keep in mind that making these shifts into the new normal will be a huge challenge, both culturally and institutionally. Regardless, the pandemic has showed us that government can change, and do so very quickly, when necessary.

About the Authors

Aykut Cakir has worked for major Fortune 500 companies such as Procter & Gamble, Roche Pharma Group, and John Deere. He has 28 years of experience in Operational Finance, Accounting and in General Management with international business experience including in the USA, Europe, Middle East and Turkey.

Arthur Mansourian has a 12-year track record as both a management consultant and investment banker, advising clients on valuation, capital markets, structured financing, mergers, acquisitions and divestitures and general corporate strategy.

Mr. Mansourian served as Vice President while at NMS Capital Advisors, when the company achieved cumulative sales growth of over 5,100% with annual compounded sales growth in excess of 120% from 2012 to 2017.

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