With a 20-year track record of supporting the strategic technology needs of private equity firms and their portfolio companies, Thrive offers a blend of managed services and consulting to ensure security, compliance, and performance. The firm’s President, Bill McLaughlin, outlines some of the significant changes in the PE space in the past year and the opportunities and challenges for tech in the next 12 months
PEW: Where do you see the most significant opportunities for growth in the coming year?
BL: From our perspective, we’re expecting to see a continued maturity in cybersecurity offerings that incorporate next-generation solutions both organically and through integrations with partners. Additionally, regulatory readiness assessments and tailored solution packages to meet compliance needs are both areas where we’re expecting a sustained increase in demand, given the current regulatory climate. Thrive has some mature, existing offerings to meet these needs and we’re constantly working to expand and improve to stay ahead of the anticipated market needs.
PEW: What has been the most significant change you’ve observed in the private equity industry in the past 12 months?
BL: Most recently (September 2023), the SEC finalising the Private Fund Adviser rule, which imposes enhanced client disclosure and auditing obligations. There has also been a significant decline in deal activity due to macroeconomic outlook which has resulted in firms sitting on larger than normal amounts of liquid capital. This condition is driving a trend toward more tactical investments in consolidated high-profile market sectors such as generative AI. Relatedly, we’ve seen an increase in vendor consolidation activity as many market-adjacent providers have developed attractive OPEX models to bundle and streamline services.
PEW: Are there any ongoing or planned regulatory shifts for private equity firms to be mindful of?
BL: The Private Funds Rule will have the largest impact on the PE market in the coming months as funds adjust (and in many cases expand) operations to achieve compliance. The finalised Rule is less aggressive than the original proposal, but still imposes additional and more frequent reporting requirements, which will result in increased expenses for many fund managers. The increased transparency stemming from this reporting and auditing requirements – which include informing all investors about “preferential financial terms” if provided to any investors in the fund – will most likely result in fundamental structural changes at some firms. Any funds that are RIA’s will also have to contend with the Cybersecurity Risk Management rule which is slated to be finalised this month. This rule imposes significant requirements around the cybersecurity and cyber risk management capabilities which has already triggered an increase in cyber technology investments and managed services across the industry. There are also new rules implementing changes to form PF disclosures, and proposed rules around outsourcing governance and ESG that may require additional resources for compliance in the coming months.
PEW: What opportunities do you see emerging for private equity firms in the near future?
BL: Value creation through increased workflow efficiencies and business process automation. Predictive analytics and automation capabilities are becoming more accessible through both established market leaders and start-up firms which enables market adopters to create novel competitive advantages. Many services are now available through low-infrastructure and SaaS models which provide increased ROI through expense reduction while maintaining (and often enhancing) service capabilities. We expect many firms will continue to adopt these models to streamline their operational financial models. Finally, we would be remiss to not mention generative AI which has enormous potential to fundamentally alter the market landscape. However, as security practitioners we must urge caution to anyone seeking to adopt or implement these solutions. Understand the business challenge you’re solving for first and then focus on data – both sensitivity of input and reliability of output.
PEW:What role can technology play in portfolio risk management?
BL: We’ve developed services to address the increasing demand for deeper cybersecurity assessment capabilities in both pre- and post-acquisition activities. Understanding the cyber risk posture and common vulnerabilities across the portfolio leads to more effective mitigation and value creation through capital preservation. We’ve also seen success in structuring cybersecurity solution deployment packages for entire portfolios which ensures all investments are protected by the same minimum standards from the fund perspective.
Bill McLaughlin, President, Thrive – Drawing upon his 20 years of MSP industry experience, Bill leads the company in its accelerated growth globally. BHeill is responsible for Thrive’s global sales, customer success, operations, advisory services and the M&A integration team. He also supports Thrive’s expanding global presence and clientele with the company’s extensive NextGen portfolio of managed cybersecurity, Cloud services and automation platform. Before joining Thrive, Bill held a senior leadership role at Kaseya, where he completed an expedited one-year IT Management software journey. Previously, as an EVP and CTO, he assisted in spearheading the growth of Atlantic Tomorrow’s Office, a provider of office automation solutions and one of the largest privately held technology companies in the United States. Bill also led several top-tier office technology companies, including NER Data Corp, Parts Now, and Allied Office Products. Bill actively supports several nonprofit organisations throughout New Jersey and the New York area. Bill is a Hackensack University Medical Center Foundation Board Trustee and the Co-Founder and Chairman of the Board for The Jillian Fund.