Zhixun Finance and Economics App has learned that Mark Nachmann, head of Goldman Sachs Asset Management, has integrated industry leaders' consensus that acquisition business has passed a crucial point. He signaled that the era of long-term easy profit for private equity investment industry has been gone, and Goldman Sachs is digging deep and storing grain for the future more arduous work.

Nachmann said in an interview that the era of profit driven by financial engineering and "multiple expansion" has passed, and returns will come more from creating more profitable growth.

To this end, Goldman Sachs is introducing corporate power by hiring former Honeywell International CEO Darius Adamczyk to work with the bank's investment portfolio company to help solve operational problems. Even though the bank is known for poaching well-known consultants, it is not uncommon to hire a 58-year-old former CEO of a large industrial conglomerate.

Nachmann said: "It's a little unusual. He's a young, retired CEO who wants to roll up his sleeves and help out. This Wall Street company's asset management business manages private equity assets of around $140 billion and has more than 300 portfolio companies."

The private equity investment industry is fading out of a long golden age, which was helped by low interest rates after 2008. However, the new normal of rising interest rates has raised acquisition costs, depressed valuations and made it more difficult to sell portfolio companies with higher returns, at least without fundamentally improving operations.

It has to be said that private equity fund investors are beginning to feel uneasy and impatient. Nachmann believes that the game is over for operators who raise funds and sit back and wait for profits to roll in.

He said investors can no longer "bid the highest, buy the company, wait for multiple expansions, and then sell it." Fund supporters known as LPs (limited partners) are calculating recent transactions to identify which companies have achieved higher returns through profit growth and which have operated illegally through financial means.

Nachmann said: "When I talk to larger LPs, they think of some names. Some people are more eye-catching than others."

Scott Kleinman, one of the most senior executives at Apollo Global Management, warned at a recent meeting that "it won't all be okay" and investors should not expect the acquisition returns usually driven by market prosperity, valuation appreciation and financial engineering before 2022.

One indicator has become a representative of the satisfaction of fund supporters (such as pension systems, university donation programs and sovereign wealth funds), that is, distribution, which tracks the flow of funds back into pockets. This indicator is hovering at its lowest level in more than a decade, causing some institutional clients to be short of funds and unable to fulfill their missions and financial commitments to new investment tools.

Although Goldman Sachs has one of the highest alternative asset reserves, it is not commonly considered a major player in the industry. Goldman Sachs' investment bank usually attracts more public attention.

For many years, the bank has relied on its so-called "Value Accelerator" to pair companies with consultants who have expertise in these areas. The accelerator is led by a former CEO of Avaya and selects executives from companies such as Coca-Cola, Intel and HPQ. Nachmann said the key to future higher returns is to find good deals and focus on operational improvements.

Adamczyk managed Honeywell from 2017 to 2023. When he stepped down, Honeywell had more than 90,000 employees, about twice the number of Goldman Sachs employees. During his tenure, he strengthened the company's relationship with Goldman Sachs, which was viewed as a friend by CEO David Solomon and deputy John Waldron.

Solomon said in a statement: "We're delighted that he can join us. I have tremendous respect for his leadership and the value he created at Honeywell."