Investing with Advent International’s Tricia Glynn

Market Context & Industry Outlook

• Investors face a challenging environment defined by slowing economic growth, rising inflation, and geopolitical conflicts.
• Private equity has operated in a low-interest-rate environment for decades, leaving many CEOs and investors unexposed to significant downturns.
• Rising rates and macro volatility are expected to reduce competition, potentially benefiting fundamentals-based investors who can distinguish themselves.
• Supply chain issues and rising nationalism present uncertainties regarding the timeline for economic recovery.

Advent International Investment Philosophy

• Advent focuses on "growth at scale," operating as one of the largest independent private equity partnerships with offices in 12 countries.
• The firm's deal types are bifurcated into backing founders to inflect growth lines and unlocking growth through transformation or carve-outs.
• Tricia Glynn identifies three core pillars for investment success: prioritizing people and governance, employing a "fan of outcomes" approach, and building brands designed to outlast the investment horizon.
• The firm employs a "fan of outcomes" strategy that prioritizes downside control and the ability to create value in negative scenarios over predicting base cases.
• Advent maintains a long-term investment horizon, aiming for 3x to 5x returns while ensuring the survival and growth of management teams.

ESG and Climate Strategy

• Advent established an ESG center of excellence to guide accountability from investment onboarding through to exit.
• The firm leverages its 80 portfolio companies and 400,000 employees to drive decarbonization and sustainability initiatives.
• Specific ESG actions in consumer packaged goods include stripping secondary packaging and optimizing supply chains for sustainability.
• Climate challenges are addressed with granular, region-specific strategies, recognizing that disruptions in India differ from those in the US or Europe.

Digital Disruption and Technology

• Digital transformation at Advent has evolved from general technological insight to the implementation of data science at scale.
• The next frontier involves leveraging social selling, community engagement, and "live selling" technologies.
• Live selling generated $170 billion in China last year, with projections to reach nearly $500 billion this year, compared to the US where the market is still early.
• Advent facilitates global knowledge transfer, such as rotating talent between Hong Kong, Shanghai, and Vancouver, to adapt regional tech advantages like live selling to different markets.
• Clean beauty and other consumer trends are noted to be more advanced in Europe than in the US, illustrating asynchronous global development.

Talent, Mentorship, and DEI

• Glynn credits Bain Capital for proactively seeking senior women mentors when she had no female role models on the investment team.
• She emphasizes the importance of "good mentees" who know when and how often to leverage mentorship, viewing mentorship as a two-way relationship.
• Building relationships within the industry relies on non-transactional, human-centric interactions rather than immediate deal focus.
• Glynn challenges industry leaders to set aggressive 2030 goals for Diversity, Equity, and Inclusion (DEI), stating that incremental change is insufficient and "breaking glass" moments are necessary.
• She advises future leaders to chart their own paths after consulting mentors to ensure accountability and authentic leadership development.

Investment Mistakes and Lessons Learned

• Glynn identifies her biggest investment mistake as taking insufficient risk, noting her worst investment return was 2.2x over a 15-year career.
• This experience led to a realization that the industry requires underwriting risk properly and avoiding "playing scared."
• Her investment philosophy now emphasizes rigorous focus on a few key drivers of business value rather than getting lost in peripheral details.
• She reflects on her first investment, Sonera Systems (an enterprise hardware company), completed during her Goldman Sachs summer internship.

Forward-Looking Statements (2030)

• The private equity industry is projected to become significantly more data-centric by 2030, transforming investment making and management processes.
• Future success will depend on maintaining the "humanity" piece within increasingly data-driven operations.
• Glynn predicts that labor market dynamics will not revert to pre-pandemic norms, with winners being employers who build best-in-class cultures to attract talent.
• New business formation is expected to increase as the labor market and social contracts evolve.

Specific Deal Insights

• Glynn expressed a desire to have participated in Lululemon's IPO, citing her admiration for the brand and the footwear market.
• She identifies Peter Brook, the founder of Advent, as the investor she admires most for building institutional culture and legacy.

Recorded Date and Disclaimer

• The podcast was recorded on February 23, 2022; all market forecasts and price references correspond to that date.
• Goldman Sachs disclaims liability for investment decisions made based on the podcast content.