Happy Fri-yay, Hubsters! Aaron here, winding down the week with the Wire. Healthcare Heartbeat. I’ve been taking the opportunity of writing the Wire every Friday to include insights from sources throughout my reporting on PE-backed healthcare deals. For this edition of Healthcare Heartbeat, Robb Vorhoff, managing director and global head of healthcare at General Atlantic, shared his thoughts with me via email. In terms of valuations, he noted that we have yet to see a correction in the private deal market commensurate with the decline in public market valuations, noting that private markets usually lag public markets by six to nine months. “There was a huge amount of capital raised (at inflated valuations) over the last few years,” he said. “Many companies don’t need capital yet and are rightly focused on expense management to extend their cash runways, given the current market environment. The ultimate need for capital will be the catalyst to drive a private market correction.” To learn more about GA’s investment strategy, see the profile I wrote earlier this year for PE Hub’s healthcare spotlight series. Employee ownership programs. My colleague Carmela Mendoza from Private Equity International just published a piece about how employee ownership programs - which seek to build wealth among company workers and are gaining traction in the private equity industry – may affect returns for LPs. The story starts off by an event that took place back in May, When KKR’s co-head of Americas private equity, Pete Stavros, a long-time champion of employee ownership, had some news for staff at CHI Overhead Doors: on the headquarters’ factory floor, Stavros informed them that their pay-outs from an employee ownership program they had joined seven years prior would range from 1.5 to 6.5 times their individual annual salaries. The story goes on to ask: How does the dilution of investor’s shares affect fund returns? When it comes to public companies, there is evidence that employee ownership can lead to better corporate performance, Carmela reports. For example: Over the last 15 years, shares in employee-owned businesses in the UK, such as retailer John Lewis and design and engineering company Arup Group, have outperformed those in the FTSE All-Share Index, according to the UK Employee Ownership Index, which measures listed companies with more than 10 percent ownership by ordinary employees. Read the whole story here. ICYMI. Last week, another co-worker of mine over at Private Equity International, Adam Le, wrote about why rising interest rates may not mean lower returns on new deals. The industry appears to believe that muted returns will be temporary and that its ability to generate alpha in the long run is rooted in its ability to act as canny operators. Claire Chabrier, president of French private equity association France Invest and associate director at Amundi Private Equity Funds, told PEI that around two-thirds of returns in the French PE market are driven by value creation coming from sales and profitability growth in portfolio companies, Adam wrote. “It’s not leverage, it’s not multiple increase, it’s really that companies are growing when they are backed by private equity investors,” Chabrier said. “Two-thirds of the value creation comes from all the day-to-day jobs we make in a company, helping them to transform, to grow, to build up.” Read the whole story here. That’s it for this edition of the Wire. Wishing everyone a happy weekend. I will be kicking it in Jersey, playing basketball and going to the Yankees game on Sunday, so here’s hoping Aaron Judge (great first name, even better baseball player) does not hit No. 62 until I am in the building! MK Flynn will be back with the Wire on Monday. Have a great weekend, Aaron Read the full wire commentary on PE Hub ... | 