Private Equity E Book

Private Equity E-Book
By Theo O’Brien
Theo O'Brien is the author of Private Equity Blogger and the 20,000 member Private Equity Investment Group
network. This book is a collection of over 350 free blog articles. This E-Book will be updated frequently with
new articles and in a more accessible format. Private Equity Blogger will continue to expand as a resource for
those interested in buyouts, venture capital and all other areas of private equity.
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The Federal Deposit Insurance Corp proposed tough guidelines for private equity firms to buy failed banks.
The FDIC announced Thursday a plan that calls for private equity groups to meet strong capital requirements and commit to long-term
investments, in order to purchase the collapsed banks.
The proposal requires private equity groups to consistently maintain strong capital in the banks, "specifically a Tier 1 leverage ratio of
15 percent, for three years. They would also generally have to maintain the investment in a bank for three years." Additionally, private
equity groups must provide a "contractual cross guarantee," in which a firm that owns two banks allows the healthier institution to
provide aid for the weaker. Private equity groups would also be discouraged from lending credit to their own investment funds, affiliates
or portfolio companies. Furhermore, private equity groups owning banks would need to major disclosures about their ownership
structure, giving regulators greater insight as to who is running the investment.
Bank regulators on the FDIC's board argued openly over the guidelines with some officials saying that such tough measures will only
scare off private equity investors, a much-needed source of capital for troubled banks. While alternative investors may be the saving
grace for the banks, as traditional sources of capital have failed to rescue them. But bank regulators are nervous that allowing private
equity groups to buy banks may be less secure than with traditional investors that are subject to strict regulation by the SEC.
Yet other regulators, like Comptroller of the Currency John Dugan feel that opening up to private equity investors will help the banks.
He says, "I do fear that the current articulation of the proposal has standards that go too far. There is real money and real capital that
can provide savings to the deposit insurance fund." On the other side of the fence are those who defend the strict guidelines, like FDIC
Chairman Sheila Bair. She argued that the requirements are necessary for ensuring the stability of the banks but admitted, "I'm not
sure we have it right here, but we do have a solid document."
Private equity firms have already started to move into the banking sector. Carlyle Group, Blackstone Group (BX.N), WL Ross & Co.
and Centerbridge Partners decided to invest $900 million toward rescuing Florida's BankUnited.
Quotes from Reuters
Tags: Private equity banks, private equity FDIC, private equity investing in banks, alternative investments in banks, banking regulation,
FDIC Regulation private equity, buyout FDIC banks
Link to This Resource: FDIC Private Equity
http://privateequityblogger.com/2009/07/fdic-private-equity.html
Private Equity Service Provider Directory
Private Equity Service Provider Directory
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Below please find a list of firms which provide services within the private
equity industry. Contact Theo O'Brien at Theo@PEblogger.com to be added to this directory.
Auditors & Accounting Services
Fund Administration Services
Marketing and Sales Consultants & Resources
IT Consultants & Technology Services
Attorneys & Lawyers
Tags: Service provider directory, Private Equity Service Provider Directory, private equity attorneys, private equity accountants, private
equity auditors, private equity marketers
Link to This Resource: Private Equity Service Provider Directory
http://privateequityblogger.com/2009/07/private-equity-service-provider.html
Mechanical Trading Systems by Richard Weissman
Mechanical Trading Systems
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Richard Weissman introduces the reader with a
process-driven approach to trading. In addition to the development of mechanical trading systems, the significance of trader
psychology is discussed throughout the book. Mr. Weissman calls it the framework of ―reprogramming the trader.‖ He provides a clear
understanding behind the conceptual development of mechanical trading systems as well as demonstrates possible mistakes by
system developers and ways to avoid them. His main lesson for the reader is that flexibility enables traders to succeed in all kinds of
trading environments.
Dispelling Myths and Defining terms
In this chapter the author emphasizes more on mathematical technical analysis than classical technical analysis. He also explains why
mathematical way of analyzing is an ideal component for mechanical trading systems than fundamental or interpretive analysis and
thus claims this as an apt method for generating profits
Mathematical Technical Analysis
Introduces the two basic flavors of mathematical technical indicators which are mean aversion and moving averages. The chapter also
explains how these indicators can be transformed into comprehensive trading systems through the inclusion of various risk
quantification parameters such as volatility bands and percentage value of trading instrument.
Trend Following Systems

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By going through this chapter one can figure out how even a simplistic of the systems can produce a respectable rate of return while
enduring relatively moderate worst peak-to -valley drawdowns in equity. The reader can also understand why certain asset classes
tend to trend more than others
Mean Aversion Systems
Examines why certain asset classes display a greater propensity toward mean aversion than others and includes examples of no
directionally biased mean aversion systems and mean aversion systems that employ a trend following filter.
Short term Systems
One can understand what short term volatity really means by going through the concepts of swing and day trading. It helps the reader
to explore what unique personality traits are needed to overcome the same.
Knowing Oneself
Provides the reader a comprehensive review of major categories of trader types (trend following, mean aversion) as well as the typical
time frames (long term, day trading, swing) in which they operate. Helps the reader to identify the flaws in trader psychology. Once the
reader has identified their innate trading personality, a step by step transformational process via utilization of different types of
mechanical trading system and psychological tools is outlined
System Development and Analysis
This chapter examines some of the benefits and limitations of mechanical trading system, optimization studies, development of trading
system philosophy statements and the pros and cons of various methodologies for measuring trading system performance. It also
looks at the downside to system development and how to resolve these problems: data curve fitting, parameter curve fitting, data
integrity issues and slippage.
Price Risk Management
Discusses the various price risk management methods such as stop loss and volumetric price risk management .Coverage of
volumetric price risk includes both Martingale and anti-Martingale position sizing techniques such as frictional position sizing and value
at risk. Other techniques covered include the study of worst-back tested peak-to-valley equity draw downs, static volumetric tests,
stress testing and system losses as a percentage of total equity under management. Finally the chapter examines the psychological
aspects of price risk management and shows how utilization of mechanical trading systems can aid in fostering confidence during
drawdowns.
Improving Rate of Return
In this chapter the author discusses how can one improve the overall rate of return by using these three methods
· Addition of various low or negatively correlated assets such as foreign exchange, crude oil and futures
· The staggering of parameter set trigger levels for the same system
· Combination of mean aversion and trend following systems within a single trading account
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Discretion and System Trading
This chapter examines how a trader‘s knowledge and experience can be utilized within the framework of mechanical trading system
Psychology of Mechanical Trading
Here the author relates the link between mechanical trading systems and transformational psychology, explaining in detail issues such
as self worth, single-mindedness, discipline ,nonattachment to result‘s of one‘s actions and realizing of old emotional patterns.
Related to Mechanical Trading Systems by Richard Weissman
Tags: book review, Mechanical Trading By Richard L.Weissman, Mechanical Trading systems, Richard L.Weissamn, Technical
analysis
Link to This Resource: Mechanical Trading Systems by Richard Weissman
http://privateequityblogger.com/2009/07/mechanical-trading-systems-by-richard.html
Due Diligence Experience
Due Diligence Experience
Value of Experience in Private Equity Due Diligence
Carried Interest has a great post on the value of experience during due
diligence. While private equity due diligence has made great strides in recent years, with the current package including much--if not all-
-of the following aspects:
Market and strategy analysis by a consulting firm to test and validate the commercial thesis behind the investment
Financial and tax review by an accounting firm
Legal review
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Insurance analysis
Environmental risk assessment
Management team background checks and capability review by an HR consultant.
While such a due diligence package is more effective than what used to pass for investigation, you cannot overlook the value of having
an experienced veteran of the private equity industry considering the deal. As GP of Carried Interest writes:
McKinsey may do a great job of mapping out the market structure, analysing segment profitability, testing growth assumptions, and so
on. But there's nothing like having a recently retired CEO by your side when you tour the factory, interview customers, or hold question
and answer sessions with management.
He'll be the person who notices that the overhead cranes in the workshop belong in a museum and need to be replaced immediately.
Or warns you that a major supplier has been bought by the competition and will probably cut off distribution. Or remembers that this
particular company always had a problem keeping good sales reps.
I think it's hard to understate the importance of returning to your basic due diligence in addition to all of today's due diligence, especially
that which is outsourced to other specialized consulting firms. By bringing a person with years of experience in buyouts, you
supplement your due diligence research with another perspective on the deal.
Tags: Private equity due diligence, private equity research, private equity experience, private equity firm due diligence, due diligence
experience
Link to This Resource: Due Diligence Experience
http://privateequityblogger.com/2009/07/due-diligence-experience.html
Private Equity Attorneys & Law Firms | Lawyers
Private Equity Attorneys & Law Firms
To add your firm to this directory please email us at Theo@peblogger.com.
Tags: Private Equity Attorneys, Private Equity Law Firm, Private Equity Legal Help, Private Equity Fund Formation, Private Equity
Startup Resources, Private Equity Lawyer
Link to This Resource: Private Equity Attorneys & Law Firms | Lawyers
http://privateequityblogger.com/2009/07/private-equity-attorneys-law-firms.html
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IT Consultants and Technology Services
IT Consultants and Technology Services
Tags: Private Equity Technology solutions, private equity software, private equity back office products, private equity software tools,
private equity software companies, private equity IT
Link to This Resource: IT Consultants and Technology Services
http://privateequityblogger.com/2009/07/it-consultants-and-technology-services.html
Private Equity Marketing and Sales Resources
Private Equity Marketing and Sales Resources
Tags: private equity marketing, private equity sales, private equity marketing tools, private equity investors, private equity investor
databases, private equity investor directory, private equity marketer
Link to This Resource: Private Equity Marketing and Sales Resources
http://privateequityblogger.com/2009/07/private-equity-marketing-and-sales.html
Private Equity Fund Administration Services
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Tags: private equity fund administration, private equity fund administration services, private equity fund independent administration,
private equity operations outsourcing
Link to This Resource: Private Equity Fund Administration Services
http://privateequityblogger.com/2009/07/private-equity-fund-administration.html
Private Equity Auditors & Accounting Services
Private Equity Auditors & Accounting Services
Tags: private equity auditors, private equity auditing, private equity accounting services, private equity accounting firms, accountant for
a private equity firm
Link to This Resource: Private Equity Auditors & Accounting Services
http://privateequityblogger.com/2009/07/private-equity-auditors-accounting.html
Admiral Capital
Admiral Capital
NBA Star David Robinson's Admiral Capital Group
One of the great players in the NBA heads Admiral Capital, a private equity group that just acquired its first company,
Centerplate Inc. David Robinson was a dominating presence during his 14 years as the San Antonio Spurs' center and now he has
entered the private equity industry.
Robinson earned the nickname "the Admiral," a nod to his service with the U.S. Navy--though he actually held the rank of Lieutenant,
Junior Grade. His private equity firm adopted his nickname and Admiral Capital Group even adheres to what it calls "the Admiral
Approach" toward its business. An essential aspect of business is presence and standing at 7 foot 1 inch with two NBA Championship
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rings, he must be a towering figure in negotiations.
David Robinson is one of several professional athletes that have put their salaries to work in private equity. Most pro athletes want to
make a difference in the community and a profit, too; private equity seems to answer both desires. The Deal adds this selection of
notable athletes that made the transition to private equity:
Former NBA Hall of Famer Earvin "Magic Johnson is one of the most successful, with his private equity fund Canyon-Johnson Urban
fund, which invests in under-served urban areas.
Former New England Patroits quarterback Drew Bledsoe founded Bledsoe Capital Group, a venture capital and private equity group
primarily focused on emerging clean technologies.
Former San Francisco 49ers quarterback Steve Young was a co-founder of private capital firm Sorenson Capital, which focuses on
small-to-middle-market buyouts. He's currently a managing director at Huntsman Gay Global Capital, which was founded by billionaire
industrialist Jon M. Huntsman and former Bain Capital executive Robert C. Gay. - Gerald Magpily and George White
David Robinson will be inducted into the NBA Hall of Fame in September of this year, along with Michael Jordan.
For other private equity tracker profiles follow this link.
Tags: private equity athletes, private equity david robinson, david robinson admiral capital, admiral capital group, robinson buyout,
admiral capital centerplate
Link to This Resource: Admiral Capital
http://privateequityblogger.com/2009/07/admiral-capital.html
Private Equity Business School
Private Equity Business School
Private Equity is Popular Choice for B-School Grads
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The private equity job market is highly competitive and while few firms explicitly
require applicants to have an MBA, it certainly improves your chances of being hired. A recent survey of private equity firms in Europe
and the U.S. reveals that 52% of the executives at the partner level or above held an MBA. That more than half the executives hold a
Master's in Business Administration is pretty conclusive evidence of the value of graduate-level education.
Another survey by Financial News showed that private equity is an increasingly popular destination for MBA graduates. In a survey of
five leading MBA schools, the number of graduates taking jobs at private equity firms has more than doubles over the last six years.
The study looked compared graduates from Harvard Business School; Stanford Graduate School of Business; the Wharton School at
the University of Pennsylvania; the U.K.'s London Business School; and Insead, located in France and Singapore.
The number of Harvard MBA graduates moving into the private equity and venture capital industry rose significantly from 2003, when
only 8% of grads chose private equity, compared to 21% of last year's graduates. The rise in graduates selecting investment banking
was much lower with only a 2% uptick over the same time period. Stanford's Graduate School of Business showed a corresponding
pattern with a 10% increase from 2003 to last year's graduates and only a 1% lift for investment banking.
The results of the survey suggest that graduates believe they can make more money working with a private equity firm. Other reasons I
have heard for choosing private equity are the challenge and hands-on experience you receive working in the industry, as well as the
high-caliber of professionals working at private equity firms. With so many graduates from top business schools flooding the industry,
the talent at big and small private equity and venture capital firms is noticeable.
Apax Partners OKC held the highest percentage of partners with MBAs at 77% of its partner-level executives. Top private equity firms
Kohlberg Kravis Roberts and Blackstone Group had high proportions of MBAs among their senior staff too, with 61% and 63%,
respectively.
For more information about a career in private equity, please see our resource Private Equity Jobs
Related Articles to Private Equity Business School

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Private Equity Jobs
Private Equity MBA
Private Equity Positions
Survey Results from EfinancialNews
Tags: Private equity mba, private equity news, private equity graduates, private equity students, private equity mba graduates, private
equity business school, private equity mba schools, business schools for private equity
Link to This Resource: Private Equity Business School
http://privateequityblogger.com/2009/07/private-equity-business-school.html
Private Equity Directory
Private Equity Directory
Directory of Private Equity Firms
In order to expand the resources offered through Private Equity Blogger, we are launching a Private Equity Directory of firms. Our
team has been working to collect and organize a professional directory of private equity contacts. If you would like to have your private
equity firm listed in the directory, please send an e-mail to Theo@peblogger.com.
Who Should Purchase the Private Equity Directory?
If you are new to the private equity industry, purchasing the Private Equity Directory is essential for those looking to connect with
private equity firms for networking or business proposals. Even those who are established in the private equity world will benefit by
adding this database to their list of contacts. The Private Equity Directory is a valuable asset to any private equity professional.
We will be updating this blog with more information as it becomes available.
Tags: Private Equity Directory, Private Equity Firm Database, Private Equity Firms Directory, Private Equity Groups Database, Private
Equity Group Directory, Private Equity Funds Database, Private Equity Funds Directory
Link to This Resource: Private Equity Directory
http://privateequityblogger.com/2009/06/private-equity-directory.html
Sri Lanka Investments
Sri Lanka Investments

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Private Equity Investments in Sri Lanka
Sri Lanka has just ended a civil war that engulfed the island nation for more than a quarter of a century.
Despite the turmoil, a private equity firm is seeking to raise $150 million for a fund investing in Sri Lanka. Roman Scott, chairman of
Calamander Capital Limited, believes that "the Cinderella story of Asia. Like all Cinderellas, Sri Lanka is the prettiest girl although she
works in the kitchen infested with rats."
The Wall Street Journal conducted an interview with Mr. Scott about his private equity firm's decision to invest in Sri Lanka. When
asked how he is adjusting to the political risk in a war-torn country he noted that over the last six years has grown faster than all the
nations in the Association of Souteast Asian Nations except Vietnam (during a civil war, no less). He added that the Tamil Tiger rebels
have been mostly wiped out and therefore pose no threat of reviving the civil war. He does worry about what the economic policy will
be though.
Mr. Scott also said that he is trying to attract a diverse group of investors with no more than a third of the limited partners coming from
the United States and Europe. He says they will be particularly targeting institutional investors and high-net worth individuals in India.
Scott believes Indian investors have a unique understanding of Sri Lanka's story, as India's economy is closely connected to Sri
Lanka's.
He justified the choice to invest in commodities saying:
"The demand for soft commodities in Sri Lanka is dependent on Asian demand. For example, demand for rubber is tied to Asian growth
and future global growth, and is less tied to Wal-Mart. Demand for tea, for example, is more fundamental. If you have a cup of tea in
the morning, the demand is resistant to recession and consumption doesn‘t change much. Demand for building and construction
products remains strong in Asia, especially as much of the Asian governments‘ economic stimulus packages goes into construction
projects."
He believes he can create value because almost every company in Sri Lanka is inefficient and poorly capitalized. According to Scott,
some firms are using machinery that is a century old and even powered by steam engines. He believes that his private equity firm can
bring these underdeveloped companies from the 19th to the 20th century, adding value without the need of much leverage. His exit
strategy relies on trade sales to bigger companies in the Asian region.
For the whole interview see the WSJ Story
Tags: Sri Lanka investments, investing in sri lanka, private equity sri lanka, sri lanka private equity investments, sri lanka economy, sri
lanka capital
Link to This Resource: Sri Lanka Investments
http://privateequityblogger.com/2009/06/sri-lanka-investments.html
Private Equity Blogger.com Archives
Private Equity Blogger.com Archives

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Tags: Private Equity, Private Equity Articles, Private Equity newsletter, Private Equity Resources
Link to This Resource: Private Equity Blogger.com Archives
http://privateequityblogger.com/2009/06/private-equity-bloggercom-archives.html
Michael Jackson Private Equity
Michael Jackson Private Equity
Michael Jackson's Dealings with Private Equity Firms
When looking through the news today, I was surprised to see the headline, "The Pop Star and the Private
Equity Firms" in the New York Times. While the passing of the pop legend is a loss to the music world, it is also a financial loss for a
couple private equity firms.
Michael Jackson was of course known for his eccentricities and he is also known to have spent large chunks of his fortune on such
extravagances as the star's private amusement park Neverland Ranch and "computerized Marvel comic-book characters bigger than
life." These types of expenses added to the debt Jackson amassed over the years. Neverland Ranch would have been foreclosed, had
a private equity group not stepped in to purchase the debt.
In 2003, the private equity firm Fortress Investment purchased some of Michael Jackson's loans that he had borrowed from Bank of
America and which he had been failing to repay. However, Fortress had similar problems with Mr. Jackson and in the winter of 2005
the firm threatened to call the loans because of his delinquency. Despite a restructuring of his finances settling the dispute with
Fortress, Jackson's financial troubles persisted and it seemed that Fortress would foreclose on Neverland Ranch. Luckily, Colony
Capital, another private equity firm, decided to purchase the loan from Fortress. This action prevented an auction of Michael Jackson's
property.
Up until the end of his life, Michael Jackson continued to accumulate millions of dollars in debt. Although Neverland Ranch is a
valuable piece of real estate that has shifted hands as a result of his financial troubles, Jackson's greatest wealth--and therefore his
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best collateral--is his stake in Sony/ATV Music Publishing. He owned a massive portfolio of thousands of songs, including more than
200 by Beatles Paul McCartney and John Lennon.
Full NYT article
Tags: michael jackson neverland ranch, michael jackson investments, michael jackson foreclosure, michael jackson colony capital,
michael jackson fortress
Link to This Resource: Michael Jackson Private Equity
http://privateequityblogger.com/2009/06/michael-jackson-private-equity.html
Capital Raising Strategies and Best Pracitces | MP3 Audio Download
Last week I gave a speech entitled, "Top 5 Fund Marketing Best Practices" in Boca Raton at a conference put on by Marcus
Evans.
Today we are making the first 25 minutes of the speech available via MP3 Audio File Download. This file may be uploaded to your
Ipod, saved to your computer or emailed to others on your team. Please always consult with expert compliance and legal advisors
before putting in new marketing strategies or materials into place. To receive the download link for this resource please complete your
name and email address below:
Top of Form
Capital Raising Resource Alerts
Name:
Email:
Submit
Bottom of Form
Tags: private equity fund marketing, private equity investors, capital raising for private equity funds, richard wilson speech, hedge fund
marketing audio file download, alternative investment marketing
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Link to This Resource: Capital Raising Strategies and Best Pracitces | MP3 Audio Download
http://privateequityblogger.com/2009/06/capital-raising-strategies-and-best.html
Top Private Equity Deals
Top Private Equity Deals
The Top Five Private Equity Deals of 2009
The first half of 2009 was particularly disappointing for those in the private
equity industry. The buyout business so far this year can be described by an extremely small number of deals executed and a minimal
average deal size.
Private equity dealflow plummeted to a 17-year low from January 2009 to the end of this month. Private equity deals so far this year
amount to $22.4 billion--that is an 82% drop from the first six months of last year. These deals made up only 2.6% of overall Mergers &
Acquisitions activity this year, the lowest percentage since the first half of 1998.
According to Thomson Reuters, the following is the list of the top five global deals for 2009 to date:
Target Buyer Price
Oriental Brewery [INTBB.UL] KKR $1.8 bln

IndyMac Bancorp (IDMCQ.PK) JCFlowers, others $1.55 bln
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Votorantim Celulose e Papel BNDES Participacoes $1.35 bln
New City Residence Lone Star $1.1 bln
Wood Mackenzie Charterhouse Capital $903.2 mln
Tags: Private equity deals, buyout deals, top private equity deals, private equity 2009, private equity quarter 1
Link to This Resource: Top Private Equity Deals
http://privateequityblogger.com/2009/06/top-private-equity-deals.html
Limited Partner Relations
Private Equity Investor Relations
Advice for Improving Private Equity Investor Relations
It's often the case that General Partners are at one of two sides of the Investor Relations spectrum. Either the
GP wishes to improve their Limited Partner relations, but doesn't know how to go about revamping this area; or the GP is damaging
their limited partner relations and totally oblivious about it. So, even if you believe that your team is satisfying your limited partners, it's
worth looking reviewing. Fortunately, Denise Palmieri at peHUB specializes in investor relations and offers her seven tips for improving
limited partner relations. I've added my own thoughts on the advice:
1. Start Over: Reexamine the way you communicate with your Limited Partners. Ask yourself: "How do you communicate with them?
Do you actually talk with them or is it simply a reporting function and you only actually speak with them when you need their renewed
investment for the next fund?" Limited Partners will respect the fact that you are taking steps to improve your relationship so don't be
afraid to directly ask them what you can do to strengthen their trust in you. Take that feedback and work to address it, you will do
further damage to the relationship if they tell you what you can do and you ignore it.
2. Commit Your Time and Effort: If you are serious about limited partner relations then you have to incorporate this area into your
routine by setting aside regular time to build the relationships. Palmieri suggest going beyond required reporting and the annual
meeting, and keep up informal communication with your investors. Limited Partners know what you are required to do and by doing
more than that minimum you are showing that you care about them and their input. Emphasize the idea of a partnership--after all, that
is what you and your investors are--and by keeping them involved in the decisions you promote this relationship and removes some of
the shroud from your operations. You can also benefit from hearing the LPs perspective, and some LPs may contribute their network of
contacts and experience to the partnership.
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3. Be Honest and Forthright. As Palmieri puts it, "Don‘t play hide the ball or sugarcoat bad news." GPs can do irreparable damage to
their Limited Partners relationships by being dishonest or covering up failures. Limited Partners may look past poor performance but
lying about it can expand what would have been a minor setback. Lesson: be honest and direct with your Limited Partners.
4. Offer Sincere Appreciation. Any top performing fund can use a little humbling and nothing can take you down a peg as losing a
valuable client because you put other aspects above LP relations. Even if your fund is bringing great returns, you should never lose
sight of who gave you the money in the first place. Your fund may be doing great now, but that might not be the case next year and you
need a strong relationship to keep those Limited Partners with you through thick and thin. So show your appreciation for their
investment, loyalty and advice.
5. The Grass is not Greener. Although you may have other Limited Partners that you can turn to, it's often easier to work toward
satisfying your existing investors and building that relationship. It's important to balance finding new investors for your next venture and
keeping your current ones happy. Limited Partners won't appeciate you neglecting their current committment because you're working
on impressing the next group of investors.
6. The Buck Stops Here. There are a lot of factors that combine to produce poor returns to investors, but inevitably a share of that
responsibility falls on you. Palmieri notes, "Humility and self-reflection goes a very long way in an industry filled with uber-confidence
and differentiates you from the blame-layers." Limited Partners should know that there is never a fund that will always produce high
returns every quarter. Simply explain what happened, say you're sorry and try not to make excuses.
7. Flexibility is Survival. When negotiating terms with your investors, put yourself in your Limited Partners' shoes. Try imagining your
reaction if a prospective portfolio company asked for those terms. Really, your role as an investor in portfolio companies is similar to
your Limited Partners to your fund. "Flexible relationships with mutually aligned interests are the ones that survive in all conditions."
Going the extra mile with your clients can really make a difference in retaining your investors. Taking concrete steps to improve your
Limited Partner relations is crucial in a time when investor confidence in General Partners is so weak.
To read the full article click here.
Tags: Limited partner relations, limited partnerships, private equity institutional investors, private equity investors, alternative investors
Link to This Resource: Limited Partner Relations
http://privateequityblogger.com/2009/06/limited-partner-relations.html
Private Equity Green
Private Equity Green
Environmental Sustainability in Acquisition Valuation
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As companies move toward more environmentally sensitive ("green") initiatives, it stands to reason that many
private equity firms are promoting these types of changes in their portfolio companies. An interesting story by the WSJ adds to this that
private equity groups are even taking the environment into consideration when acquiring a company.
The increase of environmentally-conscious regulation and the uptick in environmental groups watching over companies makes a firm's
green policy an essential consideration for a private equity firm examining an possible acquisition. From huge buyout firm KKR to the
smaller privat equity group Riverside Company, buyout shops are adding an emphasis on the environmental policies of potential
targets.
Dean Nelson, chief executive of KKR Capstone, explains ―We have an investment committee process where deal teams bring ideas to
the investment committee and built into that valuation process is this piece on the environment.‖ KKR is incorporating environmental
sustainability into its 100-day program for newly acquired portfolio companies.
One anecdote that shows how a company's "greenness" factors into valuation by private equity firms is KKR's acquisition of Texas
utility TXU Corp. The company was being criticized by Texas regulators and environmental groups because of its environmental
practices--notably its plan to create 11 new coal-fired power plants. To address the company's environmental problems, KKR hired the
Environmental Defense Fund to find ways to fix the problems. This shows how environmental policy is a big concern for buyout shops
pre-acquisition. KKR led the buyout of TXU Corp. with TPG and Goldman Sachs and completed the deal in 2007.
Similarly, Riverside Company considers both operational and strategic opportunities that improving environmental sustainability may
provide when evaluating a possible acquisition, says Paul Farrow, a sustainability consultant with the firm. "On the strategic side, the
firm could consider new markets for a company, like energy saving devices. In operations, it looks at cost savings that moves like fuel
conservation or waste reduction could have." (WSJ)
Tags: Private equity green, private equity environment, private equity environmental sustainability, buyout green, private equity
investment green, portfolio company green
Link to This Resource: Private Equity Green
http://privateequityblogger.com/2009/06/private-equity-green.html
Venture Capital Forum
Venture Capital Forum
Audio from the Venture Capital Forum
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Dan Primack of PeHUB the audio from a venture capital forum that he moderated a couple months ago.
The conference is invite-only for technology entrepreneurs and investors. Panelists included: Brad Feld (Foundry Group), Josh
Kopelma (First Round Capital), Jo Tango (Kepha Partners) and Eric Hjerpe (now with Kepha, but an official free agent at the time).
The panelists shared some interesting insights such as telling which firm they'd join if their's didn't exist, Josh comparing troubled
portfolio companies to train fires and Brad's argument that the survival of venture capital as an asset class is mostly irrelevant to his
business.
Here is link to the audio for Venture Capital Forum Audio
Tags: venture capital forum, venture capital conference, private equity forum, private equity conference, private equity
Link to This Resource: Venture Capital Forum
http://privateequityblogger.com/2009/06/venture-capital-forum.html
Private Equity Fund Investors
Private Equity Fund Investors
Barometer of Private Equity Fund Investors
Three quarters of private equity investors expect distributions in their portfolios to decline in the next year. This is the
most pessimistic estimate since the Global Private Equity Barometer began surveying limited partners in 2004. Private equity investors
expect to net considerably less returns on investments. The report found that 37% of limited partners now report overall net returns of
16% or more from the asset class, compared with a high of 45% of LPs in Summer 2007.
The most troubling finding, I thought, was that "for the first time in years, a significant number of private equity investors are planning to
decrease their target allocation to private equity – 20% of LPs plan a reduced allocation in the coming year." That compares to about 3-
6% in previous Barometers. On the flip side, private equity investors remain committed to the asset class generally. 80% plan to
maintain or even increase their target allocation in the next 12 months. However, the expected flight of LP's from private equity is
worrying for private equity firms fundraising.
General Partner-Limited Partner Relations
One third of limited partners expect to reduce their number of general partner relationships. Similarly, 84% of limited partners have
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declined to re-invest with one or more of their existing GPs over the last 12 months--almost twice the number of LPs who refused re-
investing in the summer of 2005. This suggests a major decline of investor confidence in their general partners.
Many limited partners appear to be using the economic downturn to their advantage, seeing the poor performances by many private
equity funds as a bargaining chip in negotiating terms. "Around four fifths of LPs believe the terms and conditions of buyout funds
worldwide will become more favourable to them over the next two years. Two thirds (65%) of LPs foresee more
favourable fund terms for venture funds." Also, about a tenth of private equity limited partners are expected to default on capital
commitments--with defaults concentrated mostly in North America.
For the full report click here.
Tags: Private Equity Barometer, Private Equity Fund Investors, Private Equity Limited Partners, Private Equity General Partners,
Private Equity Partners, Private Equity investments
Link to This Resource: Private Equity Fund Investors
http://privateequityblogger.com/2009/06/private-equity-fund-investors.html
Private Equity Regulation
Private Equity Regulation
Private Equity Council Supports Obama Regulation
The Private Equity Council has issued a statement supporting the Obama administration's proposed
overhaul of the American financial system. The proposed regulation requires advisers to private equity, venture capital and hedge
funds whose assets are greater than a undetermined amount to register with the Security and Exchange Commission (SEC). Although
the Private Equity Council does not believe that the private equity industry creates systemic risk but it does agree to further scrutiny on
private equity firms.
The Private Equity Council does not necessarily represent the views of all private equity firms but with impressive industry members it
signals some support for a controversial regulatory plan. Council members include such leading private equity firms as, Apollo Global
Management LLC; Bain Capital Partners; The Blackstone Group; The Carlyle Group; Kohlberg Kravis Roberts & Co.; and TPG Capital.
The following is the statement from the Private Equity Council:
―The goals of financial regulatory reform should be to restore confidence in financial markets generally and the credit markets in
particular, and to protect our financial system from the kind of meltdown that has devastated the global economy. We believe that the
Obama Administration has crafted a plan that can accomplish these objectives.
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―The plan calls for private equity firms to register as investment advisers with the Securities and Exchange Commission. We support
this proposal, even though it will result in new regulatory oversight for many private equity firms.
―While we and most experts agree that private equity firms do not create systemic risk, we also support the concept of data collection
from market participants and we look forward to reviewing more detailed proposals as the legislative process unfolds.‖
Tags: private equity regulation, private equity regulations, private equity tax, private equity obama, obama regulations, private equity
industry
Link to This Resource: Private Equity Regulation
http://privateequityblogger.com/2009/06/private-equity-regulation.html
Brazil Private Equity
Brazil Private Equity
Citigroup Invests $500 Million in Brazil Private Equity
Citigroup Inc. is going to invest up to $500 million in Brazilian private equity. This decision comes after the
New York-based firm sold stakes in several companies including Brasil Telecom Participacoes SA.
Paulo Caldeira, the managing director for the $3.4 bil Citigroup Venture Capital International fund, commented on the investments in
Brazil. ―It is a time that you need to watch out what is there. There are lots of investments that can be made there, valuations have
been revised, but you need to watch out in terms of the preservation of the value.‖ Caldeira also said that Citigroup is looking at
investments in Brazilian agricultural business, services, infrastructure, financial services and entertainment; but he did not name any
companies.
The global credit crisis has forced Citigroup to exit its primary investments in Brazil, selling its shares in firms including: Brasilia-based
Brasil Telecom Participacoes, Telemig Celular Participacoes SA and Amazonia Celular SA, Companhia Docas do Estado de Sao
Paulo, known as Porto de Santos, and Metro Rio, the operator of the Rio de Janeiro subway system, according to Caldiera. Those
investments were made by Citigroup's Venture Capital Investment Brazil Fund.
From Bloomberg:
―Watch out for exits also,‖ Caldeira said, adding that the market for initial public offerings in the country dried up after dozens of
companies went public in 2007. The fund is interested in strategic sales, he said.
Citigroup is also looking at distressed companies, or those being sold at a discount, such as sugar and ethanol producers and mills. ―It
is tough, but it is where you can get incredible returns,‖ Caldeira said.
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Brazil, Latin America's biggest economy, IPOs have declined significantly from the global credit crisis; with only four IPOs last year
compared to 64 in 2007. No Brazilian firms have gone public this year, according to recent data.
Tags: Private equity Brazil, Brazilian Private Equity, Brazil Venture Capital, Brazil Private Capital, Citigroup venture capital, citigroup
private equity, citigroup venture capital fund, private equity fund
Link to This Resource: Brazil Private Equity
http://privateequityblogger.com/2009/06/brazil-private-equity.html
Private Equity Ethics
Private Equity Ethics
Reevaluating Your Private Equity Firm's Ethics Policy
With an administration in office that seems keen to crack down on private equity and hedge funds and such
high-profile alternative investment scandals as Bernard Madoff and the New York placement agent investigation, private equity firms
may do well to reexamine (or create) an ethics policy. It seems that greater scrutiny toward the industry is less a question of whether it
will happen than it is when will it occur?
Private equity has enjoyed considerable freedom until recently. Larry Beaupre, who represented private equity firm Proskauer Rose
LLP at an online ethics seminar, puts it "The private equity industry, in terms of regulatory scrutiny and media scrutiny, has up to this
point led a fairly charmed life." However this may be coming to an end and Mr. Beaupre suggests a strong ethics code, "that charmed
life is under threat. Now is the time to get a policy in place, and learn to live by it so when that scrutiny comes, you‘re ready for it."
Panelists for the ethics seminar noted the significance of having a policy on placement agents, in light of the recent probe into how
private equity funds obtain funding through such intermediaries. From the WSJ:
General Partner Frank Angella of Grove Street Advisors LLC said his firm is reviewing its ethics policy and may well begin asking more
questions of its general partners about their use of placement agents. ―We focus on conflicts of interest and financial conflicts, but
placement agents [have] not historically been something we looked at,‖ Angella said.
Firms were advised to reevaluate their use of placement agents now, rather than waiting for regulations. To do this, private equity firms
are advised to create a diligence file that explains how and when they met the agent, what led them to select the agent and any
expenses incurred with a particular fund. Although the placement agent scandal originated in New York, other states are following suit
in drafting tougher rules for the use of intermediaries and private equity firms should be aware of their state's policy and required
disclosure. Updating your ethics policy and staying current with new regulations are key steps in keeping pace with the changing
industry.
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Tags: Private equity ethics, private equity ethics code, private equity ethical, private equity pension funds, private equity placement
agents, private equity tips
Link to This Resource: Private Equity Ethics
http://privateequityblogger.com/2009/06/private-equity-ethics.html
Private Company Valuation
Private Company Valuation
Private Equity Video: the Valuation Problem
The problem for many private equity firms is not financing but rather it is getting buyers and sellers to accept a price. This valuation gap
is a major obstacle in executing deals especially in the lower rungs of mergers and acquisitions. This valuation problem is explained by
an interview by the Deal with Joel Papernik, a partner at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC.
One way to overcome the obstacle, Papernik suggests, is for sellers to sell only assets or equity rather than the whole company in the
short term, in hopes that the price will rise later. He advises having a "price reset" where the company is sold at a minimum price and
then reconsider the valuation at another time later down the line compared to a set price index. Papernik concludes that it may take as
long as ten years for valuation to return to normal and dealmaking to return to what it was in the boom only a couple years ago.
Tags: Private equity valuation, private equity valuation method, private equity company value, private company future, Joel Papernik,
Private Equity Videos
Link to This Resource: Private Company Valuation
http://privateequityblogger.com/2009/06/private-company-valuation-private.html
Private Equity Bank
Private Equity Bank
As Banks Fail, Private Equity Picks Up the Pieces
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Banks have been failing at a quickening pace with already more
failures this year than all of 2008, and that was a rough year too. Although private equity firms can take on a bigger stake in banks than
they once were allowed by regulators, many small banks are being bought up by private equity groups. It's not just small banks either,
for example the Carlyle Group and Lightyear Capital are close to finishing a deal for Silverton Bank, a $4.1 billion failed bank in
Georgia.
It seems the floodgates have opened with the loosening of regulation on private equity firms buying stakes in banks and the "piles" of
uninvested capital. As Josh Lerner of Harvard Business School put it, ―the logjam has broken." Another factor in the uptick of private
equity investment in banks is the increase in bank failures (see Economist graph below) that give private equity firms a lot of options to
work with. Normally, one could expect the larger banks to rescue the small lenders from collapse but those big banks are mostly too
capital-constrained to oblige. And even those who may have the equity to buy up the smaller banks, like JPMorgan Chase have taken
federal money and have to use their recent returns to pay back taxpayers.
Private equity firms have jumped on the opportunity. The Economist explains the strategy, "to snap up a small bank, healthy or not, and
turn it into a vehicle to scoop up failed local rivals." However, there are significant obstacles for private equity firms. One is simply the
risk involved in purchasing and investing in failing banks. Many of these banks still hold toxic commercial-property loans that are going
bad at a disturbing rate. "American banks‘ loan-loss reserves are falling ever further behind actual losses and now cover just 70% of
the total, according to Moody‘s, a rating agency." But private equity firms are adapting by investing only once the bank has been seized
and negotiating that the government carries most of the burden in loss-sharing agreements.
Perhaps the biggest barrier is the legal restrictions barring private equity firms (or any "non-financial" entity) from carrying out a
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takeover of a bank. Unless a firm wants to become a bank-holding company and assume the extra regulation it requires, a private
equity group must settle for a maximum stake of 33%. But through "club" deals, private equity firms can cooperate to purchase a bank,
as long as regulators see to it that the firms aren't working together after the deal.
Regulators have laxed some restrictions on private equity firms investing in banks--probably out of necessity as the number of failing
banks continues to rise.
...regulators have reluctantly ceded some ground to the barbarians at the banks‘ gates. They can now, for instance, appoint more
directors without this being deemed to constitute control. Clubs of investors are being pre-cleared so they can pick up bank charters
quickly when opportunities arise. The Office of the Comptroller of the Currency, which regulates nationally chartered banks, has even
developed a ―shelf charter‖, which such groups can secure in advance of deals. It has already handed out two. The Federal Deposit
Insurance Corporation, which handles failed banks and is expected to release new guidelines on private-equity investment soon, has
also softened its stance. Sheila Bair, its chairman, believes buy-out firms should be considered eligible bidders if they show they can
run a bank prudently and are ―good corporate citizens‖.
Whether the Federal Reserve, which holds the opinion that only firms monitored as banks should control a bank, will loosen its stance
or not remains to be seen. But it is clear that private equity is gaining a larger stake in the future of banking.
Source
Tags: Private equity, private equity regulation, private equity timothy geithner, private equity monitor, private equity economy, private
equity economist
Link to This Resource: Private Equity Bank
http://privateequityblogger.com/2009/06/private-equity-bank.html
Private Equity Overhang
Private Equity Overhang
Private Equity Firms Reach Record Capital Overhand
Private equity firms reportedly have $400 billion in capital that is not being invested. The overhang,
the gap between funds raised and equity invested, has reached a record high in 2009. According to Pitchbook Data, the capital
overhang increased by more than $141 billion during 2008 with the global economic crisis causing investment activity to decline by an
estimated 60%.
Private equity firms have accumulated capital increasingly since the beginning of the crisis in the latter half of 2007. In 2007, buyout
firms actually had a negative capital overhang of $55 billion, meaning firms were investing more equity than they had raised that year.
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Since then, however, the gap between funds raised and equity invested has widened significantly with the capital overhang bouncing
back up to from -$55 billion in 2007 to +$141 billion in 2008.
Tags: Private equity overhang, capital overhang, definition capital overhang, private equity data, private equity report, private equity
capital investment
Link to This Resource: Private Equity Overhang
http://privateequityblogger.com/2009/06/private-equity-overhang.html
UNC Kenan Flagler Private Equity Fund
UNC Kenan-Flagler Private Equity Fund
Students Manage Million Dollar Private Equity Fund
It's hard to find a silver lining in the tough economy right now, but for
students at the University of North Carolina Business School, it is a learning opportunity. UNC Business School students have the
unique opportunity to operate a private equity fund seeking to generate real returns to limited partners.
The UNC Kenan-Flagler Private Equity Fund is operated by a 12-member student management team. And this isn't a small
responsibility, holding more than $1.3 million of committed capital under management, students have to manage all aspects of the
fund. Students raise capital, source deals, perform due diligence, make investment decisions, and then present their decisions to a
faculty/advisory investment committee and a board of directors. The students rely, in part, on the UNC alumni network to help source
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deals and already have partnered with other private equity firms across the country. The average deal size for each transaction is
between $20 million to $125 million in enterprise value and the fund can invest between $100,000 to $150,000 of equity capital per
investment transaction.
The students are working in an adverse environment but they have been able to capitalize on lower valuations. In fact, they have
already successfully completed several investments in companies in the medical and technology fields that they hope are more
recession resistant and will bring higher growth than other sectors.
―We are grappling with complex decisions amid a widened scope of risks and considerations. We have broadened our scope of due
diligence and are benefiting from lower valuations and a 5-6 year investment horizon to our LPs,‖ said Michael Kopeikin (MBA Class of
2010), fund director. ―We are committed to returning the best return given realistic values, co-investing with top quartile fund managers
on leading transactions and thinking about how traditional exit strategies are changing. We are leveraging each members‘ expertise
and the expertise of our LPs to get our investments right.‖
Kate Kitsopoulos (MBA Class of 2009), fund managing director explains the learning experience, ―Lower valuations are benefiting deal
variety to the fund as we capitalize on the business support from firms with UNC ties and alumni through increased information and
access to companies to make the right deals. The ability to understand how to deploy our capital effectively has become even more
important in the current economic climate. We continue to see solid opportunities and will take full advantage of investing through the
down cycle.‖
Fund I will be fully committed by the third quarter of 2009 and students will begin to raise Fund II next fall that will be open to qualified
investors that are friends and family of the UNC community. To learn more about the students' fund you can visit their website.
Tags: Private Equity UNC, UNC Kenan Flagler Business School, Private Equity Students, Private Equity Funds, Private Equity
Education, Private Equity Economy
Link to This Resource: UNC Kenan Flagler Private Equity Fund
http://privateequityblogger.com/2009/06/unc-kenan-flagler-private-equity-fund.html
Private Equity Comeback
Private Equity Comeback
Is Private Equity Posed to Make a Comeback?
The private equity industry has suffered during the financial crisis, and as Julie Macintosh of the Financial Times says "things can't get
much worse." The following CNBC video explores the question of when will the inevitable comeback occur, or has it already started?
Experts are pointing to Treasury Secretary Timothy Geithner's plan to have public-private partnerships purchase toxic assets, giving
private equity firms an opportunity to invest in struggling businesses. Click the image to watch the video:
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Tags: private equity, private equity videos, private equity comeback, private equity valuation, private equity geithner, private equity
ppip, private public partnerships
Link to This Resource: Private Equity Comeback
http://privateequityblogger.com/2009/05/private-equity-comeback.html
GSMA
GSMA
GSMA Mobile's World Innovation Summit
In June 2009, the HiT Barcelona World Innovation Summit will host leaders of technology and
innovation to share the latest developments, opportunities and challenges in the Telecommunications, CleanTech and HealthCare
industries.
For two days, attendees will have the opportunity to learn from experienced keynote speakers including notable academics, global
business executives and leaders working in various tech fields. The GSMA Mobile Innovation Summit attracts more than 400 senior
executives, leaders, and speakers, representing all facets of the mobile innovation ecosystem, including mobile network operators,
venture capital, innovators, mobile industry suppliers, and major brands.
The event is sponsored by the world's largest mobile trade association, GSMA, whose members serve 82% of the world's mobile
customers. If you'd like to attend the event or would like to learn more about it, please visit the event website here.
Tags: GSMA event, GSMA, Groupe Spécial Mobile, Global System for Mobile communications, mobile technology, technology
investing, investors events
Link to This Resource: GSMA
http://privateequityblogger.com/2009/05/gsma.html
Information Technology Support & Management Services
Information Technology Services
Below please find a listing of firms which specialize in providing information technology services to hedge funds and investment firms.
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Network Doctor keeps your information systems running smoothly and efficiently. We are your IT
department and trusted technology advisor. Our team of system engineers are experts in maintaining network infrastructure for hedge
funds and investment advisors, understanding the industry‘s compliance requirements and the necessity for maximum up-time.
Network Doctor is recognized as being of the highest caliber by our clients and by industry leading hardware and software
manufacturers. Network Doctor services include network design, build-out, support, and management, as well as 24x7x365 coverage,
proactive maintenance, server monitoring, business continuity/disaster recovery planning, penetration testing, security audits, data
protection/backup services, and document management.
Network Doctor is headquartered in Englewood Cliffs, NJ and services clients in New York, New Jersey, Connecticut, Los Angeles,
Chicago and Miami.
To set up an appointment or for more information, contact Warren Finkel at 201-735-7263 or at Warren.Finkel@networkdr.com or visit
us on-line at www.networkdr.com.
Tags: Information Technology Services, Information Technology Support Services, Information Technology Management Services, IT
Services for Hedge Fund Managers
Link to This Resource: Information Technology Support & Management Services
http://privateequityblogger.com/2009/05/information-technology-support.html
Private Equity Startup Event | Managers Needed
Private Equity Startup Event
We are putting together a panel for an investment fund startup up event scheduled for June 18th,
2009.
We are looking for a private equity fund manager who would like to be on a panel sharing startup stories with other small hedge fund
managers. We are looking for tips on forming a fund, raising capital, hiring talent and wearing multiple hats while running a private
equity fund business.
If you are a private equity fund with less than a 5 year track record and under $100M in assets under management please email me
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directly at Richard@HedgeFundgroup.org.
Tags: Private Equity Fund Startups, Private Equity Event, private equity, Starting a private equity firm
Link to This Resource: Private Equity Startup Event | Managers Needed
http://privateequityblogger.com/2009/05/private-equity-startup-event-managers.html
Private Equity in Asia
Private Equity in Asia
Asia-Focused Private Equity Fundraising Surges
Private equity funds focused in Asia defied the financial crisis, raising capital at record levels in 2008. The funds
raised increased from US$40.1 billion in 2007 to US$48 billion in 2008. Despite the big boost in fundraising, deal volume for Asia-
focused private equity funds is very low compared to a year ago.
The total deal volume for private equity firms in the Asia Pacific region was US$2.18 billion in the first quarter. This is significant
compared with the same period a year earlier when deal volume totaled US$10.24 billion. Thomas Britt, partner at Debevoise &
Plimpton LLP in Hong Kong, explains that firms are waiting for a good deal to come along. Britt said, "Companies see this as a once in
a generation buying opportunity. They feel like time is on their side so there are not numerous bidders."
The Wall Street Journal has more:
Asian private equity players say they're busy eyeing deals but that valuations, while lower, still have a way to go down. Deal sizes have
gotten smaller - partly a reflection of lower prices. The average private equity deal size was US$62 million in the first quarter, compared
with US$70.14 million in the first quarter last year.
...Funds are also getting pressure from investors to hold off from drawing capital for investments. That means even funds that spot
good deals in the market face difficulties accessing enough capital to make investments.
Pension funds and endowments have been squeezed by losses incurred by the downtrodden markets. The largest U.S. public pension
fund, the $179.2 billion California Public Employees' Retirement System, or Calpers, has asked private-equity firms to ease off on
requests for additional capital it had previously committed to deliver. More recently, TPG allowed investors of its US$4 billion Asia fund
to reduce commitments by 10%.
Instead of deals, fund managers in the region say they've been spending more time working with companies already in their portfolios.
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Firms such as Kroll report more demand for post-transaction investigations as private equity firms check up on companies in their
existing portfolios. Speaking at the Private Equity International Forum conference in Hong Kong last month, X.D. Yang, managing
director at Carlyle, and Yichen Zhang of Citic Capital, estimated they've been spending about 70% of their time looking at new deals,
compared with 90% a year ago.
Tags: Private Equity Funds, Private Equity Asia, Asian Private Equity, Asian Private Equity Funds, Private Equity Asian Pacific, Private
Equity Fundraising
Link to This Resource: Private Equity in Asia
http://privateequityblogger.com/2009/05/private-equity-in-asia.html
Private Equity Institutional Investors
Private Equity Institutional Investors
Private Equity Institutional Investors Willing to Wait
Private equity investors are willing to wait at least a year or

two before selling, according to the latest investor survey.
Preqin, Inc. has conducted a survey of private equity investors and found that most are willing to wait at least a year before turning to
the secondary market. Of the 568 private equity institutional investors that were surveyed, 11% said they wanted to sell their stake on
the secondary market. Of those who are looking to sell on the secondary market, just 10% plan to sell immediately; 43% want to sell
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within the next 12 months; and 47% expect to sell in 12 to 24 months.
Private equity investors--especially the larger partners like pension and endowment funds-- typically commit for the life of the fund. But
the economic recession and plummeting asset values is hurting the investors' portfolios and forcing some investors to sell their
interests in the fund--even for a much lower price.
Investors considering selling their shares are "being put off" by the big gap between asking prices and net asset values which has led
many potential buys and sellers from making a deal on the secondary market.
Preqin commented, "Only those with an extremely distressed portfolio will be willing to exit investments at today's prices."
Source
Tags: private equity market, private equity valuation, private equity investors, private equity institutional investors, private equity
secondary market, private equity preqin
Link to This Resource: Private Equity Institutional Investors
http://privateequityblogger.com/2009/05/private-equity-institutional-investors.html
Carlyle Group New York
Carlyle Group New York
Carlyle Group Settles with New York in Pension Scandal
The Carlyle Group will pay $20 million and reform its practices in order to settle with New York's state
attorney general Anthony Cuomo. The inquiry centers around the use of middlemen by private equity firms and hedge funds to secure
investments from public pension funds.
Under the settlement, the Carlyle Group agrees to discontinue its use of intermediaries to gain access to public pension funds
nationwide. Also, Carlyle must reduce its contributions to politicians who oversee pension funds. In return, Mr. Cuomo's office will not
penalize the firm or any of its executives. The deal aims at reforming the interactions between private equity and hedge funds with all
public pension funds.
Mr. Cuomo said of the settlement: ―This is a revolutionary agreement. I believe it totally changes the way people operate: It ends pay-
to-play, it bans the selling of access, it puts the political power brokers out of business.‖
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Christopher W. Ullman, spokesman for the Carlyle Group stated, ―We are pleased to announce today that we have reached a
successful resolution with the attorney general and strongly support his efforts to implement reforms that usher in a new era of
transparency and accountability into the pension fund investment process.‖ (NYT)
For more information on the investigation please see this article.
Tags: New York Attorney General, Anthony Cuomo, New York Pension Fund, Pension Funds and Private Equity, New York Pension
Fund, Carlyle Group Pension Fund, Carlyle Group New York
Link to This Resource: Carlyle Group New York
http://privateequityblogger.com/2009/05/carlyle-group-new-york.html
Venture Buyout
Venture Buyout
Understanding "Venture Buyouts"
Venture buyout is a relatively new term (apparently coined by Harvard Management Company's Peter Dolan)
which describes what some consider an emerging new asset class that combines elements of venture capital and private equity
buyouts. A venture buyout firm seeks to fill a void by investing in middle-stage companies that traditional buyout funds and venture
capitalists pass over.
Venture buyouts can be seen as an alternative to venture capital that is invested in startup companies trying to expand because a
venture buyout somewhat sidesteps the early stage of a business and takes over an existing small company. This is also an alternative
to traditional large buyouts because it requires less capital and targets more entrepreneurial companies.
A venture buyout fund typically collects capital from limited partners to buyout a small later-stage company. The targets are similar to
the firms that venture capitalists invest in but the venture buyout is unique because it seeks to "carve out" a startup business like a
private equity buyout while maintaining the entrepreneurial aspect of venture capital. The venture buyout may buy up a smaller
company and try to increase its value and to turn it around by fixing management or operations problems.
Some venture capitalists have turned to the buyout model to diversify their portfolio with a more established middle-stage company, to
counter its high-risk entrepreneurial ventures. While buyouts typically hold a company for about 5-7 years, a venture buyout would try
to improve the business in a much shorter time. Although the venture aspect means that venture buyouts have some risk, the funds
typically use less leverage than a large buyout because the buyout targets are smaller companies. Also, venture buyouts groups--
because they are relatively small compared to the large buyout firms-- will usually take on less companies in their portfolios than larger
private equity buyout firms would.
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Here is a video from Yahoo Finance about venture buyouts:
Tags: venture buyouts, venture capital, venture capital buyouts, venture capital investing, venture buyouts tech, venture buyouts
definition, venture capitalists buyouts, venture management buyouts
Link to This Resource: Venture Buyout
http://privateequityblogger.com/2009/05/venture-buyout.html
Blackstone Group Investment
Blackstone Group Investment
The Blackstone Group's Recovering in Q1 2009
The Blackstone Group, one of the largest private equity firms, can be seen as a barometer for the
private equity industry. The firm has weathered almost a quarter of a century in private equity although this recession has proved
difficult for even the most experienced private equity groups. Blackstone Group appears to be recovering although it still posted a
negative economic net income.
Considering that in the last quarter of 2008 the company posted a net economic income loss of $827 million, it is good news that the
Blackstone Group (BX) only had a $93 million loss in 1Q 2009. Another positive sign was the total segment revenue of $48 million in
the first quarter this year, a big boost from -$621.4 million in the previous quarter. Net fee related earnings from operations improved by
32% from the first quarter of last year to this year. During the same period of time, adjusted cash flows from operations went from $-4
million in Q1 2008 to positive $75 million in Q1 2009.
Like many of the major private equity firms, Blackstone also seems to be sitting on a good deal of cash with $776.3 million in available
cash and $400.1 million invested in liquid Blackstone funds.
Source
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Tags: Private equity, blackstone group, bx, blackstone, blackstone group llc, blackstone group report, blackstone group 2009,
blackstone group stephen schwarzman, blackstone group investment
Link to This Resource: Blackstone Group Investment
http://privateequityblogger.com/2009/05/blackstone-group-investment.html
Private Equity Fundraising in April
Private Equity Fundraising in April
Private Equity Raises $30 Billion in April Surge
Here is just a quick bit of good news: last month private equity firms raised about $30 billion in new capital commitments. This is a
strong showing by private equity firms--helped in large part by secondary funds--in an otherwise dismal beginning of this year. In the
end of April, private equity funds focused on fund-of-funds contributed significantly to the fundraising boost. Here is the data for the big
fundraising push at the end of April:
As the Deal points out, this is especially good news for leveraged buyouts which have seen a decline in capital from their usual sources
(pension funds and endowments). The money pouring into fund-of-funds offer a viable funding alternative for future LBO funds. The
largest funds-of-funds were closed by Siguler Guff Co. LLC, Morgan Stanley Investment Management and Abbott Capital Management
each raising vehicles of $2.4 billion, $1.14 billion, and $1 billion, respectively.
Here's another look from Deal Pipeline showing the biggest deals in April 2009:
Again, the fundraising boom in April was mainly powered by

the very active secondary market. With the uncertain economy and many investors suffering major losses, private investors are now
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more willing to sell their stakes in private equity and venture capital at a significant markdown. Private equity could do with a few more
months of fundraising like April.
Tags: Private equity fundraising, private equity april 2009, private equity economy, private equity secondary market, fund of funds,
private fund of funds
Link to This Resource: Private Equity Fundraising in April
http://privateequityblogger.com/2009/05/private-equity-fundraising-in-april.html
Family Office Directory | Contact Details of Family Offices
Family Office Directory
How to choose a directory of family offices:
When selecting a directory or database of family offices to purchase there are 4 points to consider or investigate before making
a purchase. By following these tips you will avoid purchasing something built for a different audience, working with information that is
largely outdated or receiving data which has not been thoroughly prepared for commercial use with Excel or common CRP systems.
Top 4 Tips for Family Office Directory Selection
1. Length: Many family office directories come with 400 to 1,500 total contacts. In the last year how many firms has your team had time
to effectively reach out to? 400? 800? Do you only speak with family offices while marketing your products? While it may be nice to
obtain a directory of 1,000+ family offices make sure you don‘t pay too much for a database built for a Fortune 500 company instead of
a small team of 3-5 marketing and relationship development professionals. Often times just 300-900 contacts may be more than
enough to expand your firm‘s reach within this industry
2. Statistics Matter: Ask the owner of the family office directory for the percentage of contacts which come with email addresses AND
phone numbers. Many databases have poor data quality and only 60-70% of their contacts even list a single email address for the firm.
Look for 80-90%+ of listings to have both an email address and phone number for each firm.
3. Price < $1,000: Hiring professionals to efficiently use a database of family office contacts can be expensive; don‘t spend more than
$1,000 on your directory of family offices. It does take hundreds of hours to build a great product within this space but any firm selling
such a product could make you a deal and sell a version of the database to you for $700-$900.
4. Check the Source: Who is providing the database of family offices? It is a firm which naturally speaks with family offices day-to-day?
Can the professionals behind the product provide advice on how to approach family offices and HNW wealth management firms? The
quality of the organization behind the product can often give you clues as to how valuable their end family office directory product may
be. A quick example: The Family Offices Group is a family office networking association of 5,000 plus professionals. Due to their day-
to-day contact with family offices and the firm‘s history in raising assets from family office investors they know how to create a valuable
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directory of contact details on firms in the industry.
- Adriana
Adriana Albuquerque is the Managing Director of the Family Offices Group and responsible for developing the associated directory of
family offices. To learn more please see FamilyOfficesDatabase.com.
Related To:
Family Office List
Tags: Family Office Directory, family offices directory, directories of family offices, directory of family offices, family office, family offices
Link to This Resource: Family Office Directory | Contact Details of Family Offices
http://privateequityblogger.com/2009/05/family-office-directory-contact-details.html
Stephen A. Schwarzman
Stephen A. Schwarzman
Video: Blackstone Group's Stephen A. Schwarzman
Stephen A. Schwarzman is the chairman and co-founder of the Blackstone Group. It is not often that private equity leaders will speak
for over an hour with university students, but this is the second video of Mr. Schwarzman in this setting. He talks about the challenges
of heading a major private equity firm in the current financial crisis. Mr. Schwarzman also provides career advice for his Yale student
audience.
Tags: Private equity videos, private equity stephen schwarzman, stephen schwarztman, steven schwarzman, stephen schwarzman
blackstone group
Link to This Resource: Stephen A. Schwarzman
http://privateequityblogger.com/2009/05/stephen-schwarzman.html
Facebook Valuation
Facebook Valuation
Private Equity Firms and Facebook in Valuation Talks

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Facebook, Inc. is talking with private equity firms about the possibility of
another round of fund-raising. The social networking site is said to be looking for funding from several private equity firms including
Providence Equity Partners, General Atlantic, Bain Capital, and Kohlberg Kravis Roberts.
The discussions are described as casual and no term sheet has been drawn up. According to the Post, the private equity firms and
Facebook, Inc. are having trouble agreeing on what the company is worth. Facebook believes its value is somewhere between $5 and
$6 billion while private equity groups see it as much lower--about $2 and $3 billion.
Facebook COO Sheryl Sandberg said, "We absolutely do not need to take money. We might take money, but it doesn't mean we need
to." Although Sandberg denies that they need capital, some sources have suggest that's not exactly true:
"Facebook is looking for dumb money, but there's none of it out there anymore," said one source who was approached by the
company.
Added another source, "It's a new era and funds, even growth funds, are being much more conservative with their investments." The
Post
People familiar with Facebook's funding situation said that the firm's attempt to raise new capital has brought tension with current
investors. Its current investors include: Accel Partners, Greylock Partners, Meritech Capital Partners, Microsoft and angel investor
Peter Thiel. The investors are said to oppose the fundraising round because it would dillute their stake in the company.
After investing more than $400 million into the company, private investors are hoping to generate profits off the site's users. The social
network has grown to at least 200 million worldwide and the investors see this as a lucrative opportunity to cash in on its popularity.
Sandberg expects Facebook to boost revenue by 70% this year and it is on track to be cash-flow positive next year.
Tags: Facebook investors, facebook private equity, facebook buyout, facebook private equity, facebook investing, facebook private
investors, private equity investing facebook, facebook inc.
Link to This Resource: Facebook Valuation
http://privateequityblogger.com/2009/05/facebook-valuation.html
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Canada Private Equity
Canada Private Equity
Canada Private Equity: Buyouts Up as VC Sinks
Buyouts in Canada are at a near-record fund-raising pace and private equity investment activity will likely rise
too as asset valuations are expected to firm by the end of 2009. Unlike U.S. private equity firms' fund-raising--which has slowed
dramatically since the last quarter of 2008--the Canadian buyout industry is one of the world's strongest. The Canada's Venture Capital
and Private Equity Association (CVCA) reports that over the past five years, Canada's private equity buyout industry has increased
Canada's GDP by C$30 billion ($24.6 billion), creating more than 100,000 jobs.
Buyouts Investment Expected to Rise in 2009
The president of CVCA, Gregory Smith recently told Reuters: "I think we'll see some softness in terms of investment numbers in 2009,
but the amount of money that's been raised by private independent funds, the size and liquidity of our pension plans in Canada, the
strength of our financial institutions, our banks in Canada, will continue to put Canada in a very strong position for the mid-market in the
buyout industry." Smith believes that 2009 will be a solid year for investment, "We had a very strong fund-raising year 2008 and it was
strong in 2006 and 2007, which means we have a lot of capital that is available to invest in 2009."
As Buyouts Soar, Venture Capital Struggles
While Canada's buyout industry is a source of optimism, the country's venture capital sector is floundering. Investors began avoiding
venture capital at the onset of the global economic crisis and they have yet to return, according to Mr. Smith. Surprising, as Canada's
buyout industry prepares to break a fund-raising record, the venture capital sector reached its lowest deal activity in twelve years--just
over C$1 billion in 2008.
And Smith believes that venture capital investment may decline even further in 2009. He says, "There's been a number of long-term
venture capital firms in Canada, I'd say about a half of dozen in number, who have tried to raise new money to invest but have stopped
fund-raising efforts because of the inability to raise capital."
The low numbers reflect the decline of an industry that has been struggling for years in Canada. It's tough enough finding funding for a
small business or entrepreneur but even with investment an idea may fail to get commercial recognition as investors lose interest.
Smith explains, "Good ideas can die because there's no place to go. I think that the global crisis will have a further dire consequence
on what is already a very fragile venture capital industry in Canada."
Canada's Government to the Rescue
The CVCA has been working in conjunction with Canada's federal government to raise investment in venture capital. One example is
the partnership announced this week between the country's biggest pension fund administrator and the Quebec province. Caisse de
depot et placement du Quebec announced a major venture capital deal with the Quebec government worth at least C$825 million. This
follows a series of similar but smaller-scale venture capital deals with the local and federal government.
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Smith also hopes to fix Canada's property regulation, Section 116 of the Income Tax Act, which may have been a reason why
foreigners are investing elsewhere. By changing the Income Tax Act and working with the federal government, the CVCA hopes to
drive up venture capital activity. As private equity buyout activity booms, Canada hopes to save its venture capital sector from going
bust.
Source
Tags: Venture capital Canada, Canada buyout, Canada private equity, Canadian Private equity, Canadian venture capital, Canada
private equity firms, Canada buyout firms, Canada private investment
Link to This Resource: Canada Private Equity
http://privateequityblogger.com/2009/04/canada-private-equity.html
Private Equity in New York
Private Equity in New York
Private Equity Hurt By New York Ban on Middlemen
The private equity industry suffered a blow from New

York State as the comptroller banned the use of middlemen directing the pension fund's investments. The comptroller made the ban as
a response to a growing investigation by the SEC and the New York Attorney General into possible bribes and fees received by two
aides to the former comptroller. However, private equity funds may be the biggest victim in the aftermath.
Private equity firms rely heavily on such middlemen as placement agents, paid intermediaries and registered lobbyists to establish
relations with big investors like the New York State Pension Fund. All of these intermediaries are now banned under the current
comptroller's recent decision. The biggest fear for private equity firms is that this move is the start of a trend that will be copied by other
states. Michael Holland, a former partner at the Blackstone Group and founder of Holland & Co. believes this is probable, "I think it is
very likely to gather momentum. I'd be very surprised if other states don't follow that lead." (Reuters)
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The ruling especially hurts smaller private equity funds which rely primarily on placement agents to attract capital. The use of
placement agents has been growing in size over recent years and according to research firm Preqin, "Of the private equity firms that
raised funds in 2008, 54 percent used a placement agent, up from 45 percent in 2007 and 40 percent in 2006." Those in the private
equity industry call the decision unfair and say that placement agents serve a legitimate purpose for private equity.
Tags: Private equity, New York State Pension, Private Equity Fund, private equity investment, private equity placement agents, private
equity lobbyist, blackstone group, private equity pension
Link to This Resource: Private Equity in New York
http://privateequityblogger.com/2009/04/private-equity-in-new-york.html
Start a Private Equity Fund
Starting a Private Equity Fund
Tips to Start a Private Equity Fund
Most private
equity fund startups I speak with want referrals to respected service providers or advice on attracting seed capital. Almost none have a
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business plan for their private equity fund and only a few have PowerPoint presentations explaining their investment strategy. If you are
a fund manager in this position that doesn‘t mean you have done anything wrong but you may consider writing both a private equity
fund business plan and comprehensive 15-25 page PowerPoint presentation now to make it easier to work with service providers, third
party marketers, institutional consultants, and potential investors. Richard Wilson offers some helpful tips on starting a private equity or
hedge fund.
Parts of your private equity fund business plan should include:
Management - What team members are required to run the fund effectively? What is the chain of command, how are decisions made
and what happens if 2-3 professionals disappeared tomorrow? Who would take over responsibilities and what would happen to your
investors funds? The importance of a well constructed and managed team can not be overstated.
Investment Process & Risk Management - Managing risk is what running a private equity fund is all about. Meet with your prime
brokerage firm‘s risk advisory division, speak with your traders and portfolio managers, and network with other managers to pick up
some best practices within this space. At the end of the day your risk management approach, investment process and team must be
molded into one cohesive group all pointed in the right direction. There is no magic bullet to raising assets or gaining seed capital but
getting this combination right is the most important thing you can focus on.
Service Providers: Who are you going to use as your prime brokerage firm, fund administrator, auditor or third party marketer? How will
this evolve as your fund passes the $100M and $300M marks? Will you use multi-prime brokerage services? Capital introduction
teams? Multiple third party marketers? Your choice of firms within this space can affect the levels of assets you manage, the quality of
advice you receive and the reputation of your firm as a whole. Our advice would be to meet and interview at least 3 service providers of
each type in person or over several phone calls and go with one that is well experienced yet not so large that your sub $1B account is
not an annoyance to them.
Infrastructure & Technology: Meet with other local private equity fund managers, your trader, your prime brokerage firm and other
service providers to nail down exactly what you will need in terms of reporting, processing and functioning as not only a private equity
fund, but a small business. When you start a private equity fund you become an entrepreneur and you have to face all of the
challenges that come with that position in addition to those challenges found in managing your portfolio. Many funds under-estimate the
costs of some of the technology needed to operate as they grow beyond more simple $1-$5M fund operations.
Marketing: Nothing is traded or managed until the dollars come in. Anyone who joins your firm or board will want to know how you are
looking to grow your business. What channels of investors will you approach? Institutional investors including fund of private equity
funds, consultants, large family offices and pension funds or smaller family offices, wealth management firms, high-net-worth
individuals, and accredited investor clubs? Here is a hint, in our asset raising experience the later should be 80% of your focus if you
are managing less than $100M. What resources do you or should you have in place to meet these goals? Third party marketers?
Databases of investors? An in-house marketing specialist? How much does this cost and when should these resources be put in
place?
We will be expanding our thoughts here on what should be included in a Private Equity Fund Business Plan. We will also be providing
an example business plan eventually that will provide you with a template to use for your own hedge fund startup work.
Richard Wilson's Hedge Fund Startup Guru
Tags: Private equity startup, private equity fund startup, private equity funds, private equity advice, private equity start up, private equity
fund start up, startups, starting a fund, start a fund
Link to This Resource: Start a Private Equity Fund
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http://privateequityblogger.com/2009/04/start-private-equity-fund.html
Private Equity EU
Private Equity EU
EU Law Adds More Regulation of Private Equity
Private equity in Europe has felt already been struggling in the economic downturn and a
new draft Euriopean Union law threatens to make matters even more difficult for private equity firms.
A draft EU law that will be published next week would require any private equity group managing funds of at least €250m (£220m) total
to report more information about its structure, strategy and investors. Simon Walker, head of the British Private Equity and Venture
Capital Association, estimates that this law will effect 86 UK private equity firms. That's in addition to the 16 large firms already
complying with the voluntary transparency code enacted last year. Nine of the effected firms are venture capital and provide a seed
capital for technology start-ups, an area which European politicians have been striving to encourage.
Another aspect of the draft EU legislation effects companies owned by private equity groups. Any private equity owned company with a
turnover exceeding €50m would have to submit an annual report of its finances, strategy and outlook. Mr. Walker estimated that 500-
600 UK firms would be affected by the law. According to his "quick estimate by a big four accountant" he calculates that the firms will
have to pay an additional £25,000 to £30,000 cost in order to comply with the new law.
Strangely, according to Mr. Walker the law would apply to a company outside the EU if it is possessed by a EU private equity firm. On
the other hand, if a UK firm is purchased by a private equity firm it does not have to adhere to the new law.
Mr. Walker criticized the new law predicting: "This will provide a profound disincentive to be owned by a private equity fund. Will it be
passed on through increased costs for investors? I think so."
Source
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Tags: Private equity, private equity eu, private equity legislation, private equity law, private equity filings, private equity europe,
european private equity, private equity firms in Europe
Link to This Resource: Private Equity EU
http://privateequityblogger.com/2009/04/private-equity-eu.html
China Private Equity Investment
China Private Equity Investment
China's State Pension Fund to Invest in Private Equity
Some exciting news from China: the country's pension fund, the National Social Security Fund, has announced
that it is interested in investing with 3-5 private equity funds this year. The state pension fund is enlisting the private equity funds help
manage some of its US$82 billion portfolio.
Chairman Dai Xianglong said at the Boao Forum for Asia, "We will pick at least 3-5 private equity firms this year, focusing on investing
in small and medium businesses and the service industry." By purchasing equity stakes in state firms, the pension fund hopes to limit
its bond exposure and increase its holdings to at least $1 trillion yuan. Dai did not say if the fund would invest in domestic or foreign
markets.
Although the pension fund is allowed to invest up to 20% of its assets abroad, it only invested $1.66 billion outside China by the end of
2007. In addition to investing with private equity funds, the NSSF's chairman expressed hopes of using the Chinese yuan currency to
invest directly overseas. While the yuan is not entirely convertible, financial regulators have called for a greater use of the currency with
the Chinese central bank governor even calling for the yuan replacing the U.S. dollar as the world's primary reserve currency.
Source
Tags: China private equity, private equity investment china, Chinese private equity, national pension fund, National Social Security
Fund, China pension fund, private equity pension fund
Link to This Resource: China Private Equity Investment
http://privateequityblogger.com/2009/04/china-private-equity-investment.html
PBS Nightly Business Report Interview Transcript
PBS Transcript
Nightly Business Report Interview
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Below please find a transcript that I was sent earlier today via email:
The PBS program Nightly Business Report is pleased to release a transcript of its exclusive interview with SEC Chairman Mary
Schapiro. This is the Schapiro‘s first television interview since taking the reins of the SEC.
STEPHANIE DHUE, CORRESPONDENT, NIGHTLY BUSINESS REPORT: You told credit rating agencies the status quo wasn‘t good
enough. When will we see changes in the way they do business?
MARY SCHAPIRO, CHARIMAN, SECURITIES AND EXCHANGE COMMISSION: As you know we held a roundtable yesterday on
credit rating agencies and we brought in about 30 experts from academia, from the investment community from labor unions and from
the credit rating agencies themselves to talk about the short comings in the current model of credit rating agencies. And we had an
enormous amount of information from all of these participants and a lot of issues for us to parse and to really think about, so I can't tell
you a specific time when I think we'll be done on that issue, but we will be very much informed by what we learned yesterday from all
these experts and proceed hopefully sometime this summer to propose some additional enhancements.
STEPHANIE DHUE: So you think new regulations will be needed, the regulations that have been put in place don't just need enough
time to work?
MARY SCHAPIRO: Some of the regulations are new they haven't really had enough time to work. But I think there are some additional
things we need to focus on to align the interests of the credit rating agencies with the users of the ratings, investors, as opposed to the
issuers of the security. And that's really important to us because investors relied on credit ratings, they were badly misled in many
cases, and if we want to bring integrity back to the ratings process, we've got to find a way for the ratings agencies to serve the users of
the ratings and that's investors.
STEPHANIE DHUE: Would you be prepared to take away a company's "nationally recognized" status as a credit rating agency to
punish them if they don't get their act together?
MARY SCHAPIRO: I think if somebody has the nationally recognized rating from the SEC and they violate the law, that's absolutely
something we would consider doing.
STEPHANIE DHUE: We're just about in the throws of proxy season and shareholder activists are pushing hard to reign in executive
pay, will you help them to get rid of non responsive board members by giving them access to the proxy?
MARY SCHAPIRO: We are very committed to giving long term, serious investors access to the proxy and we should propose rules on
that probably in a month or so for the commission to consider and to put out for comment. But it's real important, especially given the
crisis that we are going through right now that boards be ever more accountable to owners of the company, the shareholders. So we
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are very committed to moving ahead on responsible proxy access as soon as possible.
STEPHANIE DHUE: Responsible proxy access - how far do you go?
MARY SCHAPIRO: I think we have to grant access to the proxy to longer term shareholders of some size in terms of their share
holdings, there has been lots of debate about should you have to own 5% or 1% of a company's stock, or should we have a tiered
approach, where depending on the size of the company the threshold for stock ownership might be different. So we are looking at all of
those different options and we will propose something in about a month which we think will provide very good and responsible access.
STEPHANIE DHUE: Just before the financial meltdown banks that owned money market funds were quietly shoring up funds they were
concerned would break the buck, or would have broken the buck if they didn't pour money in, largely unbeknownst to investors. What
changes are you going to make to money market mutual funds and the way they are regulated?
MARY SCHAPIRO: Money market funds are an enormously important part of the financial system, there are 4 trillion dollars in money
market funds and investors rely on them enormously. So from my perspective, it's really critical that the SEC take all the steps it can to
bolster confidence in money market funds. So we are going to look at proposing rules very shortly that will enhance the credit quality of
money market holdings, shorten maturities, and therefore increase liquidity and hopefully make them more resilient in an economic
crisis then we learned they were in this past fall.
STEPHANIE DHUE: Do you think investors should be concerned about money market funds, there is the insurance now, but are there
still dark areas there? Will we see more turmoil?
MARY SCHAPIRO: It's hard to predict whether we'll see more turmoil there, but I think investors can have confidence in the basic
integrity of money market funds. The insurance program is in place, as you mentioned, and we will take the steps necessary to again
restore their resilience in times of economic crisis.
STEPHANIE DHUE: The SEC has been involved in investor education on Ponzi schemes, particularly in light of the Madoff scandal,
are you getting more people calling in with tips about Ponzi schemes and what are you doing with that information?
MARY SCHAPIRO: We receive close to a million tips per year at the agency and we need to handle them better and more effectively
then we have historically, and we are reviewing from A to Z our process so we can be more effective with them. But I will tell you the
number of Ponzi schemes that we are detecting early on and stopping, shutting down immediately has grown dramatically in the time
that I've been here and I think to quote Warren Buffett, ―when the tide goes out we see who's been swimming naked‖ and that's what's
happened with Ponzi schemes. They can't maintain the scheme in more difficult economic times and as a result they are being
exposed earlier on.
STEPHANIE DHUE: You certainly do have your work cut out for you, you're also looking at Bank of America and bonuses that they
paid to Merrill Lynch, if you find that they didn't disclose that information like they should, what's the punishment for that?
MARY SCHAPIRO: We're looking very carefully about the disclosure of the bonuses and I've said that to a member of Congress who
inquired about it, and if it turns out to be inappropriate it will be referred to our enforcement division and then we have the full range of
sanctions that we can imply in the conduct of an enforcement case.
STEPHANIE DHUE: But even though you've been making all these efforts, the SEC, given its handling of the financial crisis is under
fire and some critics say, you know, it's time to scrap it and start over, maybe fold it into the CFTC or just do away with it, they haven't
done their job. What do you see for this agency in the next five years?
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MARY SCHAPIRO: I don't think that there's any doubt that the agency has had a difficult couple of years, but I think now more than
ever, particularly in a crisis, we need a competent, very aggressive, very activist Securities and Exchange Commission. We are the
only federal agency charged with protecting investors, those are our constituents, those are the people we should be serving and I'm
highly committed to doing that. I would not have come to the SEC if I didn't feel like I had the freedom to move the agency in that
direction. The markets are critically important, restoring investor confidence in the market is important, that's not going to happen if the
SEC isn't doing a first class job and that's what we're committed to do.
STEPHANIE DHUE: Can the SEC do the job, can they police the markets, or does it just give people a false sense of security that their
investments are being protected, when they're not.
MARY SCHAPIRO: I think the SEC can do the job. Does that mean we'll never miss a fraud or we'll never miss a scam? Of course not,
the markets are enormous. We're an agency of only 3,500 people with close to 30,000 regulated entities, so we're small for the task,
but with that said I think with an aggressive enforcement program, with a regulatory response to problems as they begin to emerge, so
that the rules are written that protect the public more effectively, I think we can do a very, very good job. That said, investing always
has risks and investors always need to have that in the front of their minds.
STEPHANIE DHUE: We've been speaking with Mary Schapiro, Chairman of the Securities and Exchange Commission, thanks for
joining us.
MARY SCHAPIRO: Thanks it was my pleasure.
Tags: PBS Nightly Business Report Interview Transcript, PBS Interview Transcripts, SEC Chairman Mary Schapiro, Mary Schapiro,
SEC
Link to This Resource: PBS Nightly Business Report Interview Transcript
http://privateequityblogger.com/2009/04/pbs-nightly-business-report-interview.html
New York Pension Fund
New York Pension Fund
Private Equity Firms in Pension Fund Scandal
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New York state and federal authorities are investigating whether several private equity
firms and hedge funds--including the Carlyle Group--participated in an illicit scheme to secure investments from the New York state
pension fund.
According to the Washington Post:
New York Attorney General Andrew M. Cuomo has subpoenaed several firms that got business from the $122 billion pension fund after
using the services of a middleman who connected investment firms with potential investors, the sources said. Cuomo and the
Securities and Exchange Commission have alleged that the middleman won business for the firms through illicit payments.
Additionally, the firms are being investigated to see whether they failed to disclose their using the middleman to the pension fund, to
find if the fund was aware of the special treatment that the various firms were receiving. According to court documents, the New York
state pension fund has invested the most with the Carlyle Group. The private equity firm was involved in five investments with an
estimated $730 million in capital from the pension fund.
Carlyle's spokeman offered the following statement, "Carlyle has fully cooperated with the New York Attorney General's investigation.
We understand this is an industry-wide investigation and that we are not the focus of the investigation." And referring to Carlyle Group's
previously scrutinized relationships with consultants the spokesman said, "Our agreements with placement agents, whether large Wall
Street firms or smaller broker-dealers, call for all parties to abide by all laws to ensure the integrity of the investment process. Carlyle is
pleased to currently serve the pensioners of New York, Illinois and Connecticut and has achieved excellent returns in several funds on
their behalf."
This investigation follows the criminal and civil charges filed by the New York Attorney General and the SEC against the former top
aide to former New York comptroller and the pension fund's former chief investment officer. The two have been accused of receiving
bribes and gifts for directing pension fund money toward investment firms. While they deny any wrongdoing, court documents claim
that they received $30 million in fees and gifts.
The use of consultants is not in itself unlawful, and many investment firms see consultants as a necessary means to receiving an
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audience with a pension fund. The accusation is that investment firms paid bribes and fees in order to obtain investments from the
pension fund. The SEC's complain asserts that at least some of the firms were fully aware of the illicit arrangement: "Private equity
firms and hedge fund managers . . . together paid millions of dollars to Morris and others in the form of sham 'finder' or 'placement
agent' fees in order to obtain those investments from the Retirement Fund. These payments to Morris and others were, in fact, little
more than kickbacks that were made pursuant to undisclosed quid pro quo arrangements."
The problem of pay-to-play practices is not exclusive to New York and the Attorney General Cuomo did not rule out the possibility of
the investigation expanding to other firms and funds. Recently, the Connecticut Attorney General reached a near half-million dollar
settlement in a case where a broker was secretly compensated for directing pension-plan business to insurers.
The New York investigation is ongoing and has been for over two years, and just recently the SEC joined the case.
Source: WP
Tags: New York Attorney General, SEC investigation, Private Equity, Private Equity Pension Funds, Private Equity Pension Fund
Scandal, New York Pension Fund, Private Equity Hedge Fund Consultant
Link to This Resource: New York Pension Fund
http://privateequityblogger.com/2009/04/new-york-pension-fund.html
Jonathan Russell | 3i Group PLC
Jonathan Russell | 3i Group PLC
Jonathan Russell Criticizes EU Plans for Regulation
Jonathan Russell, managing director of 3i Group PLC has been a leading voice in
negotiations with the European Commission over proposed regulations that will include small and medium-sized firms. The original
legislation was designed to target large private equity firms and hedge funds but has also ensnared smaller portfolio companies.
Firms with more than EUR500 million for funds and EUR100 million for a company's enterprise value will be subject to the proposed
regulations which Russell says are "unwarranted disclosure rules that go beyond even those required by publicly-listed companies."
The Wall Street Journal has more on 3i Group PLC's Jonathan Russell:
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"The proposals completely miss the point and instead impose an unnecessarily costly burden on companies about which no-one is
concerned," said Jonathan Russell, managing director of 3i Group PLC (III.LN), who has spearheaded the European industry body's
negotiation over the proposals.
"The rules as drafted will also make Europe a less attractive place to deposit capital, driving away investors," he added.
Earlier Wednesday, the European Commission published new disclosure requirements for hedge funds and private equity firms that will
catch much smaller firms than the regulator initially considered.
The European Private Equity and Venture Capital Association's main complaints center on the "one size fits all" approach adopted by
the commission which has lumped hedge funds and private equity funds together.
EVCA says that private equity managers, unlike hedge funds, don't pose a systemic risk because they only use leverage at their
underlying portfolio companies - not at the fund or manager level.
Read more...
To see more on 3i Group PLC, please see our 3i Group private equity tracker profile.
Tags: 3i group, 3i group plc, 3i group private equity, private equity 3i, private equity europe, private equity tracker profiles, 3i group plc
private equity, European private equity firms
Link to This Resource: Jonathan Russell | 3i Group PLC
http://privateequityblogger.com/2009/04/jonathan-russell-3i-group-plc.html
Verizon Buyout
Verizon Buyout
Private Equity Firms Bidding on Verizon Assets
Verizon's wireless telephone assets are attracting bids from large private equity firms, according to sources
close to the situation.
Major private equity firms including Carlyle Group, Kohlberg Kravis Roberts & Co and Blackstone Group (BX.N). Carlyle Group and
KKR teamed up for a joint offer and the Blackstone Group offered a bid before last week's deadline. However, rival telecommunications
companies also bid in the auction. Verizon said that over 30 bidders expressed interest in purchasing the assets and the auction will
take place over several months.
Verizon Communications is divesting its wireless telephone assets after its acquisition of the rural wireless company, Alltel Corp, in
January. In order to gain regulatory approval for the deal, Verizon has to divest airwaves in 105 markets. Verizon and Britain's
Vodafone Group Plc (VOD.L) (VOD.N) own Verizon Wireless. The acquisition of Alltel Corp. made the largest U.S. wireless carrier in
terms of subscribers, overtaking AT&T.
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Tags: Private equity verizon, buyout verizon, buyout bid verizon, buyout telecommunications, private equity telecommunications,
private equity buy verizon, verizon private company, Verizon assets
Link to This Resource: Verizon Buyout
http://privateequityblogger.com/2009/04/verizon-buyout.html
Private Equity 2009 Data
Private Equity 2009 Data
2009 Q1 Report Shows Investors Still on Sidelines
The latest report from PitchBook Data covers the first quarter of 2009. It reveals that
although fundraising has remained strong, private equity investors are still hesitant to invest any of that capital. PitchBook's CEO, John
Gabbert, sums up the findings best, "...despite having raised record amounts of capital over the past two years, private equity investors
are still waiting on the sidelines for the current economic conditions to stabilize, the credit markets to return, and valuations to adjust
before they really get back to doing new deals.‖
The key statistics for private equity Q1 2009 are:
Only 188 investments were completed in the first quarter, while 440 were in Q3 and 279 in Q4 of 2008. Compared to Q1 2008,
investment activity dropped by 68%, with a 70% fall in buyouts.
The credit crunch has cut the number of deals over $250 million to just 12% of Q1 deals. Instead, private equity investors are turning to
minority investments and acquisitions of middle-market companies. This led the median deal amount to drop from $61 million in 2008
to $25 million this quarter.
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The amount that private equity firms invested during this quarter reached a new low of only $12.8 billion, compared to $52.7 billion
invested during the same period last year--and the remarkable $177 billion invested in Q4 of 2007.
Breaking it up by industry: In Q1 2009, 53 investments were completed in the Consumer Products and Services industry. The Business
Products and Services industry followed at second with 46 transactions and then Healthcare with 28. The Energy industry felt the
biggest drop in investment activity, with a more than 60% drop from last quarter at just 9 completed investments.
For the full report from see Pitchbook
Tags: Private equity, private equity investors, private investors, private equity news, private equity data, private equity pitchbook data,
pitchbook data, private equity information
Link to This Resource: Private Equity 2009 Data
http://privateequityblogger.com/2009/04/private-equity-2009-data.html
Alternative Investments
Alternative Investments
Investors Turning Away From Alternative Assets
Following the banking crisis and Bernie Madoff's large-scale fraud, investors have
reason to be anxious. A survey by Quinnipiac University and Greenwich Roundtable sheds some light on investors' attitudes.
The latest survey reveals that investors are less confident in alternative investments and the regulatory agencies. According to Steve
McMenamin, executive director at the Greenwich Roundtable, "Leverage, liquidity, and lack of confidence are still keeping the
sophisticated investor on the sidelines. We have never seen so many rational, cool-headed limited partners refrain from making future
commitments to alternatives."
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Quinnipiac University and Greenwich Roundtable interviewed almost one hundred institutional and private investors at the beginning of
2009 to find the following results:
Asset Allocation and Market Outlook
Over the past quarter, more than one third of participants signaled that they had lowered their allocations to alternative investments
while 54 percent of participants are keeping their allocations constant.
Close to 50 percent of respondents believed that asset prices will need to stabilize for a period of six months to a year before investors
return to the markets.
Thirty percent of managers felt it will take a year or longer for market conditions to improve.
Gates
One third of participants said that between 10 percent and 40 percent of managers are raising gates or suspending redemptions.
Close to one-quarter of managers indicated dissatisfaction with current fund gate structure.
About 10 percent of investors felt that gates were being abused.
Madoff
Approximately 45 percent of members felt that better oversight by the SEC could have prevented the fraud.
More than 28 percent of respondents believed that any due diligence should have raised enough red flags to preclude investing.
Twenty-two percent of investors said that verification by auditors could have prevented the Madoff scandal.
Regulatory Agencies
More than 72 percent of members voiced a negative view of the SEC.
Ninety-seven percent of respondents believed the rating agencies as ineffective.
Close to 50 percent of investors had a positive view of the Federal Deposit Insurance Corporation.
About 47 percent of participants had a positive view of the Federal Reserve Board.
Results from this Source
Tags: Private equity survey, alternative investments, private equity alternative investments, private equity surveys, private equity
investors, institutional investors, private equity
Link to This Resource: Alternative Investments
http://privateequityblogger.com/2009/03/alternative-investments.html
Gulf Private Equity
Gulf Private Equity
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Gulf Private Equity Returns Expected to Rise
Private equity returns in the Gulf region are expected to soar, at least according to the chief executive of
Abraaj Capital. At a recent private equity conference in Dubai, Arif Naqvi predicted, "The private equity industry in this region is going to
enter a phase where I believe that the returns we have seen over the last few years will be dwarfed by what we are going to see."
As large American private equity firms like the Carlyle Group and KKR are eying the region for potential investment opportunities.
Carlyle Group recently announced its first $500 million Middle East and North Africa fund. Arif Naqvi explained why the Gulf may be an
appealing prospect for foreign private equity investors:
―The public markets are paralyzed and closed, not just regionally but globally. Well, we are the alternative option. Private equity has a
good name in this region. People have seen how value has been created
Although he sees many private equity investors turning to the region, Naqvi urged investors to use judgment and due diligence when
investing. Investors should, Naqvi suggested, take a long term approach and to become more knowledgable in industries they invest in.
Source
Tags: Private equity gulf, private equity industry, private equity middle east, private equity carlyle group, carlyle group, private equity
middle east, private equity north africa
Link to This Resource: Gulf Private Equity
http://privateequityblogger.com/2009/03/gulf-private-equity.html
Private Equity Summit
Private Equity Summit
Key Quotes from Global Private Equity Summit
The annual Reuters Global Hedge Funds and Private Equity Summit took place March 23-25. This year's summit
seems especially important for private equity as the traditional leveraged buyout model has received more and more criticism and the
industry faces the prospect of increased taxes on carried interest. Private equity has struggled in the economic downturn and fund
raising has become especially difficult for many private equity firms. Reuters has provided some of the key quotes to come from the
Summit:
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Laura Wang, the co-founder and managing director of Asia Alternatives:
"Anybody who's fund-raising right now I would say is banging their head against a wall."
"Anybody who has a fund of fund in their name is going to be looked at more closely."
The managing director of Societe Generale, Timothee Bousser said:
"A lot of the global macro players who used to wake up at night to trade Asia because they had things to trade and volatility was very
high... are now not waking up at night.
"They are watching to see if their seat is still there. They are facing redemption."
Frank Tang, the CEO and managing partner for Fountainvest Partners had an optimistic prediction:
"As a private equity investor, we don't have to wait for the economy to recover first before we put in the money, that would be too late.
"I think we'll be very busy for the next three years. This is exactly the time that private equity investors can play role, when perhaps
there are certain public market dislocations ... I think the next two, three, four years will really be a golden period for us."
For more information from the summit check out Reuters' coverage.
Tags: Private equity summit, private equity conference, private equity and hedge fund summit, Reuters private equity conference,
private equity news, private equity and hedge funds
Link to This Resource: Private Equity Summit
http://privateequityblogger.com/2009/03/private-equity-summit.html
Entrepreneur Risk
Entrepreneur Risk
Angel Investors That Entrepreneurs Should Avoid
Angel investors can help grow your business and while they are often beneficial there are some types of angel
investors to look out for. These angel investors will often to do more harm than good for your business.
Angel Investors To Avoid:
Control Freak Angel Investor: This angel investor is a great source of capital but the moment your business hits a pothole, the investor
is ready to start controlling your business. The control freak angel investor usually relies on special clauses in the contract that give him
more power if you fail to perform a duty. This is how a control freak attempts to take over your business and run it as his own, thus
creating a tension between his tendency to interfere with the entrepreneur's creative control.
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Micro-Manager Angel Investor: On the surface, this looks like the ideal investor; he wants to lend you the capital to grow your business
and he offers his expertise, for free. However, after a while it becomes apparent that this investor tries to involve himself in every
aspect of your business. The angel investor will either annoy you by trying to offer help in the simplest tasks or he will be so worried
over his investment that he checks on every single operation. While some micro-managing angel investors will simply exit the
investment, it's not always the case. Some become litigious investors.
The Litigious Investor: The litigious investor knows you lack the funds to fight a lengthy court case so they will look for any opportunity
to take you to court. Rather than helping your business succeed, this type of angel investor tries to squeeze money out of you through
threats, intimidation and legal action. The litigious angel investor looks for the slightest error--failing to send him stock certificates,
failing to keep him informed in a timely manner, etc. Some entrepreneurs certainly should be taken to court but there are some angel
investors that exploit this means for their own gains.
The Street has some tips for avoiding these nightmare angel investors:
Whenever possible, only accept investments from credible, professional investing organizations -- not private individuals.
If you are a raw start-up and have no choice but to accept investments from private "angel" investors, do the following: Ask what other
companies they've invested in and talk to the CEOs of those companies to find out what kind of investor they've been. Also, make sure
your lawyer writes the investment document -- not your investor. This document should be standard for all your investors and not
negotiated on a one-on-one basis. Watch out for any attempts to add clauses that can come back to bite you. And don't eat any soup
that tastes funny.
Whenever possible, hire an investment banker to prepare a proper Private Placement Memorandum that's consistent with National
Association of Securities Dealers requirements. We generally refer to PPMs as "anti-investment" documents because they warn the
investor about everything that could potentially go wrong, minimizing any basis for a lawsuit.
Divide your investors into two categories: pure investors and those you feel may bring additional value. For those in the first category,
don't encourage or allow them to "get actively involved" in the company. Be polite but firm in telling them you'll keep them informed of
your progress through written means only. If you want more active involvement, you'll ask them to formally join an advisory board or the
board of directors. However, if you do so, there will be strict, written guidelines as to what is expected.
Tags: Angel investors, angel investor risks, angel investor entrepreneur risks, angel investing, entrepreneur risk, angel investing risk,
angel investor
Link to This Resource: Entrepreneur Risk
http://privateequityblogger.com/2009/03/entrepreneur-risk.html
Treasury Secretary Timothy F. Geithner | Bad Asset Plan
Timothy F. Geithner
Treasury Secretary Timothy F. Geithner
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I believe that the Obama administration may have a hard time attracting many hedge fund and private equity
groups in supporting Timothy Geithner's plan on cleaning up toxic bank assets. Since Obama has taken office the US government has
been playing with the idea of regulating hedge funds, discussing decreasing their capital gains tax privileges, and in some circles
limiting their pay. This combined with the recent actions against AIG and UBS make many funds will be careful in what they commit to.
A favor done today may be a burden tomorrow.
Obama administration officials worked Sunday to persuade reluctant private investors to buy as much as $1 trillion in troubled
mortgages and related assets from banks, with government help.
The talks came a day before the Treasury secretary, Timothy F. Geithner, planned to unveil the details of the administration‘s long-
awaited plan to purchase troubled assets, meant to remove them from the balance sheets of banks and, in turn, spur banks to lend
more money to consumers and companies.
__________
―The deal is good, but it‘s not worth it if I‘m buying myself into a retroactive tax or a Congressional hearing,‖ the chief executive of a
major investment firm said, insisting on anonymity because he did not want to seem at odds with the Treasury Department in the event
that his firm ends up participating. source
Tags: Treasury Secretary Timothy Geithner, Timothy Geithner, Toxi Asset Plan, Bad Assets Investment Plan
Link to This Resource: Treasury Secretary Timothy F. Geithner | Bad Asset Plan
http://privateequityblogger.com/2009/03/treasury-secretary-timothy-f-geithner.html
Private Equity in China
Private Equity Investing in China
Private equity investors are adjusting with onshore investments, as onshore "round-trip" transactions have
become more difficult to carry out in China. A new report from an international law firm reveals that although there are still opportunities
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for private equity investments in China, there are some significant barriers created by the Chinese government.
So-called "round-trip" investments are becoming increasingly difficult to carry out in China. This transaction occurs when an investor
places money in an offshore holding company to gain an indirect share in a company located in China. Western investors like "round-
trip" investments because they provide several benefits such as common and preferred stock, and valuation adjustments.
Since 2005, however, the Chinese government has been tightening restrictions, making it difficult to establish the offshore entity.
According to the report, this has "made private equity deal structuring extremely difficult." Private equity investors have adjusted by
turning to foreign investment enterprises (FIE), usually as a joint venture. FinanceAsia explains how investors are using FIEs:
With regards to capital structures FIEs do not have shares. Instead, an investor's interest is represented by an undivided percentage of
the FIE's registered capital, the capital paid in by investors. This interest is not freely transferable since a transfer of equity requires not
only the approval of the government and the entire board, but for the FIE's documents to be changed too. Therefore, one recalcitrant
board member can scupper any transfer by either refusing to allow the transfer or by not allowing for the relevant documentation to be
changed.
A foreign invested company limited by shares (FICLS) is another form of the FIE which Dechert predicts will become a more attractive
option for private equity investors.
An FICLS can, in theory, have differing classes of equity, and it is the only FIE that can be listed on the stock exchange, allowing an
exit via an initial public offering. Compare this with, say, the inflexibility of equity joint ventures, where equity rights and board
representation must be set in accordance with equity percentages.
Private equity firms seeking to exit an investment will prefer the offshore transaction to the onshore:
...the onshore transaction offers fewer options than its offshore equivalent, which can often be concluded without government approval
by the sale of the holding company. It might be necessary to sell the foreign-held equity to domestic Chinese investors—an
increasingly likely option if the number of renminbi equity funds continues to rise. A listing in Shanghai or Shenzhen might be possible,
but this faces significant regulatory hurdles, says the report. This is the route that FIEs are already taking.
The report concludes: "Investors equipped to adapt to transaction and exit structures unique to onshore direct investments will have at
their disposal a broader range of alternatives and will be better-positioned than their competitors in a market recovery."
Primary Source
Tags: Private equity in China, private equity Chinese, private equity China, private equity Asia, Private equity Hong Kong, onshore
investments, offshore holding company, private equity investing
Link to This Resource: Private Equity in China
http://privateequityblogger.com/2009/03/private-equity-in-china.html
Private Equity Investing in Banks
Private Equity Investing in Banks
Bernanke Hopes For Private Equity Investing In Banks
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Federal Reserve Chairman Ben Bernanke gave a hopeful forecast in a rare
interview on "60 Minutes." Mr. Bernanke began the conversation with a surprisingly optimistic prediction saying "I do think we will see
the recession coming to an end probably this year. We'll see recovery beginning next year, and it will pick up steam over time."
While much of the interview covers the Federal Reserve's actions throughout this economic crisis, Bernanke made some interesting
remarks about the need for private equity to stimulate the economy. Bernanke highlighted the need for private equity firms to invest in
struggling banks as a crucial step in the recovery process:
"One sign would be that a large bank would be successful in raising private equity. Right now all of the money is sitting on the sidelines
saying we don't know what these banks are worth and we don't know if they are stable, and they are not willing to put their money into
the banks."
Skip to the end of this video for his comments on private equity or check out the full interview here:
While the Federal Reserve has made some promising motions to invite private equity firms to invest in banks, some are arguing that it
has not done enough. The Federal Reserve has loosened some regulations that prevent private equity firms from investing in banks for
example private equity firms may now hold bank board seats and communicate with management. (For the Federal Reserve's changes
to the banking regulation see this document.)
John Douglas, the chairman of the banking and financial institutions group at Paul Hasting's, offers an interesting take on the loosened
regulations for private equity in banks. He argues that the Federal Reserve has not gone far enough and that private equity firms
should be allowed to assume a controlling interest in a bank. Douglas believes that it is a good opportunity for private equity firms and
that they should be allowed to invest in the banks providing them with much needed capital. Here he is talking about private equity's
role in banks:
Tags: Private equity, private equity federal reserve, private equity recession, private equity Ben Bernanke, Private Equity banks, private
equity investing in banks, private equity investment banks
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Link to This Resource: Private Equity Investing in Banks
http://privateequityblogger.com/2009/03/private-equity-investing-in-banks.html
Buyout Funds and Venture Capital
Buyout Funds and Venture Capital
Private Equity Lost More Value than Venture Capital
According to Cambridge Associates new fund performance indices, private equity firms lost more value for
their investors than venture capital firms did in the first three quarters of last year. Non-venture capital private equity firms fell 8.9%
through the third quarter of 2008, while venture capital firms lost nearly half that, losing 4.26%. More from peHUB:
Cambridge Associates has released new fund performance data, which shows that private equity firms (buyout, growth equity, mezz)
lost more value for limited partners than did VC firms, during the first three quarters of 2008. Not just actual dollars — of which buyouts
simply has more — but in terms of percentage (net of fees, carried interest and other expenses). And given what we know about Q4,
it‘s a reversal of fortune that can be expected to accelerate.
Specifically, non-VC private equity firms were down 8.9% through Q3 2008, compared to a negative 4.26% mark for VC funds. The gap
is even more pronounced for one-year performance (Q3 07-Q3 08), where buyout firms are at -5.5% compared to -0.9% for VC funds.
They both suck, of course, but VC sucks less.
Things flip around once you begin looking at three-year and five-year performance. Venture has the lead on 10-year, but expect that to
disappear once the tin mark signifies the dotcom bust rather than the dotcom boom.
The Cambridge Associates data is based on a sample of 748 private equity firms raised between 1986-2008, and 1,238 VC funds
raised between 1981-2008. Also worth noting that Cambridge‘s results are more favorable to the VC industry than are Venture
Economics‘ results. Not in terms of this specific issue of YTD buyouts vs. VC, but just in terms of overall VC benchmarks.
If you'd like to see the venture capital and private equity firm performance data follow this link to Cambridge Associates.
Tags: private equity, venture capital, private equity value, venture capital value, private equity funds, venture capital funds, private
equity data, private equity cambridge
Link to This Resource: Buyout Funds and Venture Capital
http://privateequityblogger.com/2009/03/buyout-funds-and-venture-capital.html
FamilyOfficesGroup.com Re-Launch
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FamilyOfficesGroup.com Re-Launch
Our team has just re-launched FamilyOfficesGroup.com. The site now has
an upgraded appearance, more free-to-access articles on family offices and many resources related to both UHNW philanthropy and
alternative investments.
To learn more about family offices or to see our new site please visit http://FamilyOfficesGroup.com. Here are the most popular articles
from this site:
Family Office Jobs
Single Family Office Investment Performance
Philanthropic Giving
Financial Advisor Marketing
Family Office Services
Family Office Wealth Management
Single Family Office
Family Office Resources
Tags: family offices, family office, alternative investments, private equity, philanthropy, philanthropic, wealth management, investments,
hedge fund, hedge funds, real estate
Link to This Resource: FamilyOfficesGroup.com Re-Launch
http://privateequityblogger.com/2009/03/familyofficesgroupcom-re-launch.html
Family Office Database | Databases of Family Offices
Family Office Database
Family Office Database Option
Looking for a database of family office contacts?
Please complete the form below and a professional from the FamilyOfficesGroup.com will be in touch shortly.
Top of Form
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First Name:
Email Address::
Submit
Bottom of Form
Tags: Family Office Database,Family Office Databases,Family Offices Database, Database of Family Offices, Directory of Family
Offices, Single Family Office Database, Multi-Family Office Database
Link to This Resource: Family Office Database | Databases of Family Offices
http://privateequityblogger.com/2009/03/family-office-database-databases-of.html
Nordic Capital
Nordic Capital
Nordic Capital's Auto Parts Company Files Bankruptcy
The secondaries market has been seen as a point of optimism for the struggling private equity firms during the
credit crunch. However, Deal Journal pointed out Friday that Nordic Capital's recent purchase in the secondaries market has filed for
bankruptcy, suggesting that it could be a sign of what's to come in for private equity secondaries buyouts.
Since the purchase of Plastal eight years ago from Gilde Investment Management, Nordic Capital has sunk more than $150 million into
the auto parts manufacturer.
Nordic Capital invested 1.5 billion Swedish Kronor ($161.3 million) in the bumper and dashboard maker through its fifth fund. This
reflects the cost of the 2005 purchase from Dutch peer Gilde Investment Management, which had owned what became Plastal since
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2001; its contribution to Plastal‘s €350 million euro ($439.5 million) purchase of German car parts maker Dynamit Nobel Kunststoff; and
an equity infusion of 100 million kronor in January.
Despite Nordic Capital's investment into the company, Plastal filed for bankruptcy recently. The auto parts company explained the
bankruptcy filing thus, TThe Plastal group has been severely impacted by the unprecedented downturn in the automotive industry. A
sharp decline in volumes during the fourth quarter 2008 has been followed by a further 40% drop in the first two months of 2009
[against the same period the year before]."
Deal Journal explains that companies with heavy amount of debt are more likely to be hit by economic downturns, like the drop in
demand that crippled Plastal. And while secondaries buyouts tend to add a level of debt to companies, private equity firms thought
management teams would be especially able to handle the debt and increase cash flows.
Secondary buyouts were seen private-equity firms and their investors as more stable and better able to handle debt loads than so-
called primary buyouts, because the management teams were used to running the business to maximize cash flow to service the debt.
Such skills are increasingly valuable as cash has become king. Still, almost any business with leverage is more vulnerable than most
these days and this particularly affects secondary, or tertiary, buyouts.
While Nordic Capital's troubles aren't a conclusive prediction of what is to come for the private equity secondaries market, it is a sign
that even secondaries buyouts are vulnerable to market volatility.
For the full article follow this link.
Tags: Private equity trends, private equity industry, private equity nordic capital, private equity nordic capital plastal, plastal group,
nordic capital, private equity secondaries, secondaries market
Link to This Resource: Nordic Capital
http://privateequityblogger.com/2009/03/nordic-capital-nordic-capitals-auto.html
Carried Interest Taxation of Private Equity Funds
Carried Interest Taxes
Carried Interest Taxation of Private Equity
In case you missed it last week Obama's new tax plan for 2010 calls for taxation of carried
interest as ordinary income more than doubling what many will pay on taxes from such gains. Here is an excerpt from a related article:
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Executives at buyout, venture-capital and hedge-fund firms will pay an estimated $24 billion more in taxes over nine years if President
Barack Obama gets his way.
Obama‘s 2010 budget proposal, released today, proposes raising taxes on the managers by treating carried interest, the portion of
profits they take from successful investments, as ordinary income instead of capital gains. That change would boost the tax rate,
starting in 2011, to 39.6 percent for most executives from the 15 percent they now pay.
The proposal applies to partnerships that receive a portion of the profits they make for their clients. It will likely reignite a debate begun
in 2007 amid the biggest buyout boom in history, when firms including Blackstone Group LP and Och-Ziff Capital Management Group
raised their profiles through public stock listings. While the House of Representatives approved the tax change that year, the measure
wasn‘t taken up by the Senate.
―Obama and his team are up for a fight here,‖ said George Teixeira, a managing director with accounting firm RSM McGladrey in New
York. ―They‘re missing key components of what these industries do.‖ source
Tags: Private Equity Fund Taxation, Carried Interest Taxes, Carried Interest Tax, Carried Interest Taxation, Private Equity Taxes, Do
private equity firms pay taxes
Link to This Resource: Carried Interest Taxation of Private Equity Funds
http://privateequityblogger.com/2009/03/carried-interest-taxation-of-private.html
Blackstone Group LP
Blackstone Group LP
Blackstone Shows 2008 Losses and Executive Pay Cuts
The Blackstone Group has proved vulnerable to the economic downturn, announcing a $1.16 billion loss last year with an alarming
$415.2 million lost in the fourth quarter of 2008. This stands in stark contrast to the firm's performance in the recent private equity boom
where Blackstone was a giant in the industry posting a $1.62 profit in 2007.
The buyout firm's decision to go public in the summer of 2007 reveals a steady slide in the company's value (see Yahoo finance
image). The private equity firm began offering its stock at the height of the buyout boom, from its IPO of $31 Blackstone's stock has
declined ever since to just below $5 today. Significantly, Blackstone Group LP's stock fell at more than two times the rate of the market
last year.
Blackstone Group LP (BX) stock has steadily dropped, click here to see the full history of the stock.
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Pay Cuts for Blackstone Executives in 2008
The co-founder and chairman of the Blackstone Group LP, Stephen Schwarzman, suffered a steep pay cut last year. Mr. Schwarzman
received an impressive $180.1 million in 2007 coupled with the $684 million he received when Blackstone went public. In 2008,
however, he agreed to a 99% decrease to a $350,000 salary. Blackstone's President Tony James also received a pay cut-- to a lesser
extent. Last year, he collected $15.7 million in salary and bonus, down 73% from the previous year.
While Blackstone has suffered heavy losses recently, on a more optimistic note Blackstone is still pulling in steady income from
management and advisory fees and maintains more than $750 in available cash:
While the value of its investments tumbled during the quarter, the company was still able to generate $381.4 million in management
and advisory fees. Blackstone Group generated $447.5 million in management and advisory fees during the final quarter in 2007.
Despite the mounting losses, the company says its liquidity is strong enough to handle the downturn. Blackstone said it has $767.6
million in available cash as of Jan. 31 after paying off the entire $250 million balance on its revolving credit facility.
For the full report for Blackstone Group LP (BX) in 2008, visit this link.
Additional Source
Tags: Blackstone Group losses, blackstone group lp, BX stock, Blackstone Group (BX), Blackstone private equity, blackstone group
stephen schwarzman, blackstone salary
Link to This Resource: Blackstone Group LP
http://privateequityblogger.com/2009/03/blackstone-group-lp.html
Family Office Directory | Directory of Family Office Contacts
Directory of Family Office Contacts
Looking for a directory of family office contacts?
Top of Form
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First Name:
Email Address::
Submit
Bottom of Form
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Tags: Family Office Directory,Family Office Directories,Family Offices Directory, Directory of Family Offices, Single Family office
Directory, Multi-family office directory, directories of family offices
Link to This Resource: Family Office Directory | Directory of Family Office Contacts
http://privateequityblogger.com/2009/03/family-office-directory-directory-of.html
Private Equity Owned Companies
Private Equity Owned Companies
Private Equity Manages Companies Best, Report Finds
A consistent point of contention over private equity concerns the impact that private equity investors have when controlling a
company. A new report from the World Economic Forum aimed at answering this question and found that companies backed by private
equity are "on average the best-managed ownership group." The report reveals that private equity-backed firms fared considerably
better in a variety of management practices than other owners including government, family or private owners.
One reason for why private equity firms tend to manage companies better than others is the reward structure. That is, most private
equity firms use merit-based hiring, firing, compensation and promotions. Additionally, private equity firms tend to have uniquely
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rigorous evaluation metrics, which consider both short- and long-term performance, and is well understood by the PE firm's employees.
Private equity-backed companies performed especially well in operational management practices. Many private equity-owned
companies employ lean manufacturing practices, "with continuous improvements and a comprehensive performance documentation
process." In this way, private equity ownership implies a broad approach to improving management practices across the board.
The report concludes that "most private equity-owned firms are well managed." The impressive average levels of management
practices within private equity firms can be explained by the relatively small number of badly managed firms. So, while the number of
poorly managed firms owned privately or by a family is pretty normal, it is fairly rare to find a badly managed private equity-backed firm.
This reflects that private equity-backed companies are consistently managed well.
Here is the full report, it is over 100 pages and provides interesting insight into how private equity investors owning a company effects
its efficiency.
Tags: private equity, private equity management, world economic forum, private equity management practices, private equity owned
companies, private equity owned companies performance
Link to This Resource: Private Equity Owned Companies
http://privateequityblogger.com/2009/02/private-equity-owned-companies.html
Multi-Family Office Information & Articles | FamilyOfficesGroup.com
Multi-Family Offices
Top Articles on Multi-Family Offices
Many hedge funds count family offices as one group of their investor base. As the number of
family offices increase and larger institutions raise their AUM minimums this segment of the market becomes even more interesting to
those in charge of managing or marketing hedge funds and private equity firms.
The Family Offices Group is a 4,000+ person networking group dedicated to the family office space. Joining this group costs nothing
and our website http://FamilyOfficesGroup.com produces free weekly articles on the family office industry. Below please find the top 20
most popular articles to date from FamilyOfficesGroup.com:
Family Office Jobs
Philanthropic Giving
Family Office Services
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Single Family Office
Hedge Fund of Funds by Family Offices
Family Office Marketing
Family Office Industry
Family Giving | Philanthropic Management
Investing Book
Financial Advisor Marketing
Private Equity for Family Offices
Family Office Example
Starting a Single or Multi-Family Office
Family Offices Message Board
Private Banking and Wealth Management
The Cost of Being Wealthy
Jobs at Hedge Funds
CHA Designation
Family Office Consultants
Tags: Family Office, Family Offices, Multi-Family Office, Family Office Information, facts on single family offices, family office articles,
articles on multi-family offices, family office details
Link to This Resource: Multi-Family Office Information & Articles | FamilyOfficesGroup.com
http://privateequityblogger.com/2009/02/multi-family-office-information.html
Private Equity and Banks
Private Equity and Banks
Private Equity Firms Want Details Before Aiding Banks
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Private equity is a likely source of
capital for struggling banks, but private equity firms seem less than inspired by the new Treasury Secretary Timothy Geithner's latest
comments. If the government is interested in reaching out to private equity groups then Mr. Geithner did not convey this well, according
to reactions from several members of the private equity industry.
The main criticism toward Geithner was that he failed to provide any specific details on how private equity will work with the
government.
PE firms are clearly interested in partnering with the government to invest in banks. But after having been burned last year in the
sector, they want certain assurances from the government on what it will and won't do to encourage private investment. But beyond
Geithner's statement that the government needs to "mobilize and leverage private capital, not supplant or discourage it," there were no
specifics in his speech. Nor is there much information yet available at a new Web site, financialStability.gov, that Geithner unveiled
during his speech.
A telling response came from a partner from a financial services-focused private equity firm, ―They are still talking in concept, not in
substance. I wouldn‘t touch a bank stock after that speech.‖ Private equity firms specifically wanted details on what assets would be
bought and at what price, who will bare the risk and who will reap the rewards (the government or PE investors), and an idea of how
the deals would be structured. Without information like this, it is doubtful that private equity firms will be very willing to help in rebuilding
the banking system.
―We don‘t have every detail yet,‖ said Mani Sadeghi, managing partner of Equifin Capital Partners, which focuses on financial services
deals. ―Clearly we‘re interested. But the question is whether partnering with the government allows us to be value-adding…You have to
understand what you are buying, at what prices, and how they are serviced.‖
Source
Tags: private equity banks, private equity, private equity and banks, private equity investing in banks, private equity bailout, buyout
banks, private investment, private equity banking
Link to This Resource: Private Equity and Banks
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http://privateequityblogger.com/2009/02/private-equity-and-banks.html
Private Equity Marketing Materials | Pitch Book
Private Equity Pitch Book
Private Equity Marketing Materials Tips
Below is a list of my top 10 tips to those professionals who are looking to create a pitch book for
the private equity fund. My advice to both $30M and $1M private equity funds is that you can never start this process early enough, it is
an iterative constantly evolving project which will never be complete. Here are the top 10 tips for creating your private equity marketing
materials.
Think long-term. Invest in creating a robust institutional quality pitch book the first time around and complete 5 drafts of it internally
before showing it to a single investor.
Stress your team, investment process and risk management controls and how they all interact inside the operations of your private
equity fund.
Make your competitive advantage clear and do not rely upon canned phrases such as ―positive returns within bull or bear markets‖
anyone who reviews private equity fund materials for a living see these by the hour. Your advantage must be unique.
Stress the importance and individual functions of your team, your experiences and pedigree. This should be the foundation upon which
everything else is built.
Do not send any pitchbook or marketing material out before speaking with a qualified compliance or legal counsel on your team.
Create a one page marketing sheet, full 13-20+ page PowerPoint presentation and one page newsletter which would be released
monthly providing your view of the markets within your niche area of expertise.
Work with high caliber service providers so that you don‘t bring extra skepticism upon a relatively new fund which may already be
scrutinized by potential investors and advisors.
Use your whole team and prime brokerage business partners and other service providers to improve your marketing materials.
Professionals who work in prime brokerage or administration see many types of marketing materials and can help provide valuable
feedback at no additional cost to your fund.
Do not create a PowerPoint presentation that is longer than 30 pages. There are some institutional money managers who run 3 similar
funds and will sometimes cover each of these within a single presentation, but this is the exception. 95% of the people who you will
send the PowerPoint presentation to will not ready more than 15 pages of the material unless you are walking them through it over the
phone or in person.
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Purchase the rights to graphics, choose a unique, simple and professional layout for the presentation and use the new Windows Vista
diagramming tools to create institutional quality presentation. Coming into a meeting with a word document or 25 pages of bullet points
is not very effective. It is hard enough to catch an investors‘ attention and bring them to the table to discuss your fund, you don‘t want to
lose them due to the aesthetics of your PowerPoint.
Related to Private Equity Marketing Materials | Pitch Book
Private Equity Real Estate List
Private Equity Conference
Private Equity Real Estate
Private Equity Forum
Private Equity Industry
Private Equity Associate
Hedge Fund List
Private Equity Jobs
Tags: Private Equity Fund PitchBook, Private Equity Pitch Book, Private Equity Marketing Materials, Private Equity Fund PowerPoint
Presentation, Fund Pitch Book
Link to This Resource: Private Equity Marketing Materials | Pitch Book
http://privateequityblogger.com/2009/02/private-equity-marketing-materials.html
Private Equity Job Market
Private Equity Job Market
Tips for Entering the Private Equity Job Market
Many Private Equity Blogger readers are MBA students/recent graduates or professionals hoping to make the switch
from another finance career to private equity. I have made a point to update the site with as many resources as possible related to
private equity careers. For other Private Equity Blogger career resources please refer to the list at the bottom of this post.
Speakers for the recent private equity and venture capital conference at the Harvard Business School cautioned that today, MBA grads
need to have some patience--along with good grades and experience. Those who graduate with a Masters in Business Administration
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are faced with a very adverse private equity job market, perhaps only rivaled by the burst of the tech bubble. Many firms are imposing a
freeze on hiring or even cutting jobs--see Carlyle cuts 10% of staff. This leads Rob Go, a senior associate with Boston-based VC firm
Spark Capital, to warn, "Think about the funds that you want to join and then think out two to three or four years."
Interestingly, the private equity industry speakers suggested that hopefuls turn to alternate routes rather than focusing only on private
equity, such as with the government or within a start-up:
"If I were looking for a job, I'd work at [the Department of Energy] for a few years and then come out and [find] a clean tech firm that
has to penetrate those [regulatory] networks," said Craig Driscoll, a partner at Lexington, Mass., venture capital firm Highland Capital
Partners LLC.
Another suggestion was to make an effort to separate yourself from the other job candidates with special skills: "Take an
unconventional path and be okay failing," said Josh Wolfe, co-founder of Lux Capital Management, a New York venture capital firm.
"Running with the herd made sense with the vast majority of the evolutionary past, but it doesn't make a lot of sense in an investment
world."
The moderator of the event, a partner and head of a New York-based private equity recruiter, similarly spoke of thinking outside the
box by seeking positions besides an analyst or partner. Instead, he advises to look into investor relations or risk management for
private equity firms because positions such as the CFO or COO for a large firm can be highly lucrative and rewarding.
Although the panelists cautioned against working at a second- and third-tier private equity firm, they concluded on an optimistic note,
with one VC remarking: "In 2001 to 2003, we saw MBAs with anxiety, but that vintage of MBAs has turned out pretty well. The people
that have been through a crisis come out more battle hardened."
For other articles on private equity careers and jobs visit the following links:
Complete Private Equity Jobs Guide
Finding a private equity job
Private equity job salaries
Private Equity and Hedge Fund Jobs
Source
Tags: Private equity jobs, private equity, private equity careers, private equity job market, private equity job placement, private equity
job, private equity career, finding a private equity job
Link to This Resource: Private Equity Job Market
http://privateequityblogger.com/2009/02/private-equity-job-market.html
Davos 2009 | World Economic Forum
Davos 2009
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Private Equity at the World Economic Forum in Davos
It may be an overstatement to say that this year's meeting in Davos for the World
Economic Forum is the most important in recent years. However, with the financial crisis, a new American president and global
economic uncertainty it may be an accurate statement. Significant private equity firms were represented at the World Economic Forum,
among those firms are the Carlyle Group and Bain Capital.
David Rubenstein of the Carlyle Group took a few moments for an interview at the World Economic Forum. It's an interesting interview
especially in light of the turbulant global economy.
To begin, Rubenstein is asked about the likelihood of regulating private equity to which he answers that hedge funds are more likely to
face important changes in regulation than private equity. While Rubenstein is concerned about the ability to obtain leverage to finance
big deals, he seems a bit more optimistic (consistent with his attitude over the last few months). When asked what percentage of the
deals executed within the last three years will end in default or restructuring, Rubenstein concludes that very few will default but almost
all will face some sort of restructuring or need some form of debt. As other industry commentators have noted, Mr. Rubenstein adds
that prices still need to adjust to return to normal and attractive levels. For more information on the Carlyle Group visit the firm's private
equity tracker profile.
Another great video to come from Davos is the interview with Bain Capital's Managing Director Stephen Pagliuca. This interview
focuses primarily on the issue of failing banks in relation to private equity.
Mr. Pagliuca sees the solution to the banking crisis and the return to obtaining loans from banks as clearing the poor loans off the
banks books. He also calls for raising the minimum capital requirements for banks because he thinks the banking system has been
overleveraged. Like Mr. Rubenstein, he defends private equity from being blamed for the current financial crisis.
Tags: Private equity, private equity firms, private equity david rubenstein, private equity bain capital, private equity carlyle, private
equity capital, private equity world economic forum
Link to This Resource: Davos 2009 | World Economic Forum
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http://privateequityblogger.com/2009/02/davos-2009-world-economic-forum.html
Private Equity Australia
Private Equity Australia
Private Equity in Australia
Private equity markets in Australia are expanding but the country is still reluctant to embrace takeover bids for
Australian companies. Australia has been slow in accepting private equity firms relative to other countries like Britain, the U.S. and
Western European nations. Australian private equity firms have been increasing annually but at a slower rate, showing a maturing in
the market. Additionally, the average size of Australian private equity funds and investors has been growing at a quickening pace. The
following graph demonstrates the increase in the average size of funds by year of formation:
The following is from Research Whitepaper on Australian Private Equity:
Private Equity markets in Australia include both private equity funds, venture capital funds and other capital providers including both
equity and debt financing. The private equity market in Australia is relatively small, but nevertheless a growing market especially during
the 2000-2007 era.
In the recent 5 years, a significant increase of new Asian based private equity funds operating or setting up their representative office in
Australia. The leading Asian private equity funds are typically from Japan or Singapore at this stage, but other State-owned, especially
Chinese owned private equity firms have been increasing their activities in Australia especially in the mining and resources sectors.
The majority of private equity firms based in Australia are interested in the traditional businesses or IT related businesses - which are
mainly taken up by venture capital funds. Private Equity firms in Australia have been largely responsible to take over established
businesses including retail and manufacturing industries, a lot of deals were debt funded with very high gearing ratios, which is now
causing concerns to some of the acquired companies.
In 2008, there was a starting of consolidation amongst private equity firms in Australia. Some were led by wealthy Australian families,
some were acquired by corporate advisory firms or investment firms from overseas as a way to diversify their interests geographically.
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In the medium term, further consolidations to occur in Australia, both the medium and large sized private equity firms. We are already
seeing increasing number of European and US private equity firms selling stakes to Asian based private equity funds including many
State owned sovereign funds, the similar trend is also likely to occur in Australia.
Australian private equity funds tend to operate differently than other private equity funds in the world - because of the nature of the
business and heavy emphasis on mining and resources. However, this is set to change because of the rapid deterioration of mining
sectors in Australia.
The Australian investment market is certainly changing, and is now forming very close ties with Asia. The newly elected labour
Government in particular has announced strong ties with China, and has opened for direct investments allowing Chinese nationals to
invest directly in Australia - previously this was usually done through a representative or delegate in Australia.
Although the real impact is too early to predict, there has been increasing number of direct investments from Chinese financial
institutions such as CITIC lately, and the recent strong investments in Australia's Rio Tinto is another good example how Chinese or
Chinese Government sponsored private equity firms have now taking strong interest in Australian assets.
Source: Research Whitepaper is a global reports portal website established Money Cat Consulting, a global research and international
marketing company.
Here is a link for a resource on private equity in Australia
Tags: Private equity, private equity Australia, private equity firms in australia, private equity funds australia, Australian private equity,
Sydney private equity, private equity markets in Australia
Link to This Resource: Private Equity Australia
http://privateequityblogger.com/2009/04/private-equity-australia.html
Private Equity Courses
Private Equity Courses
2009 Calendar of Corporate Finance Courses
In the tough economic conditions today, strategies for corporate finance and mergers and acquisitions will presumably have to
adapt in new ways. This is why Eureka Financial has launched a new set of courses designed to help M&A specialists, corporate
financiers, equity investors and other finance professionals. Here is more from Eureka Financial:
With the current market situation comes a new chapter for M&A and corporate finance. Tougher conditions and new market players
force companies to re-think their strategies and search for new innovative approaches. Still, many corporate finance specialists believe
that the current market provides interesting opportunities. The key factor for success is to be well informed and well prepared.
This is why Eureka Financial has come up with new set of financial courses which will help boost your career and prepare you for
current challenges.
Run by international trainers with many years of practical experience and who have been involved in numerous international M&As and
LBOs transactions, the courses will give you a chance to improve your financial modelling skills, effectively manage cash flows and
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organise detailed due diligence in order to evaluate your potential targets. You will be able to explore more complex issues of the M&A
process as well as be prepared to help companies go through successful post-merger integration.
Whether you are an M&A specialist or work for a company which is thinking of getting involved in a merger or buyout of another
company, you should attend one of our courses in order to become better prepared for the awaiting challenges.
Here are links to Eureka Financial's latest courses:
Book now and save up to £1200!
Upcoming courses:
Successful Strategies for M&As Intermediate Level, 24-24 March London and 15-16 June Dubai
Financial Modelling for M&As and LBOs - Intermediate Level, 22-23 April London and 21-22 June Dubai
Leveraged Finance Strategies Intermediate Level, 19-20 April 2009 London and 17-18 June 2009 Dubai
Discounted Cash Flow Modelling for Corporates, 10-11 June 2009 London, June 2009 Dubai - Dates TBA
Post-Acquisition Integration Strategies, 25-26 June 2009 London, June 2009 Dubai - Dates TBA
For more information on Eureka Financial courses and a complete calendar visit this link.
Tags: Private equity courses, private equity education, private equity learning, private equity classes, private equity studying, private
equity books, private equity, eureka financial
Link to This Resource: Private Equity Courses
http://privateequityblogger.com/2009/01/private-equity-courses.html
Private Equity Chemical
Private Equity Chemical
New Buyers Replace Private Equity in Chemical Industry
According to recent statistics, the current environment for big private equity M&A deals is that deal volume
has fallen, existing deals are being abandoned, future deals are being put off or canceled.
For example, total mergers and acquisitions deal volume fell almost 30% in 2008 compared to the previous year. Banks and other
financiers are much more hesitant to lend capital in the credit crunch, making it very difficult to complete a private equity deal,
especially those relying heavily on debt. The difficulty in carrying out a private equity deal today is evident here: "In 2008, companies
abandoned 1,300 transactions valued at $900 million vs. 870 withdrawn deals in 2007 valued at $1.1 billion" (Dealogic).
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Without Private Equity, New Buyers enter Chemical Industry
Corporate deal activity in the chemical industry is being funded more and more by strategic buyers in the absence of private equity
firms. Prior to the economic downturn, private equity firms were awash with capital to finance acquisitions of major chemical
companies. Now, strategic buyers, who were pushed out by private equity's much larger capital capabilities, are able to use their capital
accumulated during that period to finance large acquisitions in the chemical industry.
Private equity players seem to have actually helped the strategic buyers. The high demand driven up by the competitive private equity
market pushed valuations far beyond realistic levels. According to Forbes, "Private equity demand drove multiples above 10x
EV/EBITDA (market capitalization plus debt minus cash divided by earnings before interest and taxes, plus depreciation)." This high
price made sure that strategic buyers couldn't enter the chemical market and thus were forced to wait it out until valuations returned to
more accurate levels. It's likely that the chemical industry will see an increase in deal activity again, this time led by smaller chemical
producers that can now buy competitively.
These strategic buyers have potential for executing highly beneficial deals because the companies can consolidate with other chemical
firms. Two recent examples of this trend are the eventual acquisition of Rohm and Haas by Dow Chemical as well as Ashland's
purchase of Hercules, Inc. Other chemical industry companies are expected to follow Dow and Ashland's lead and seek merger
partners while the industry is ripe.
Source
Tags: Private equity chemical, private equity chemicals, chemical mergers and acquistions, mergers and acquisitions, private equity
activity, private equity M and A, private chemical
Link to This Resource: Private Equity Chemical
http://privateequityblogger.com/2009/01/private-equity-chemical.html
Fund Administration
Private Equity Fund Administration
In an effort to began building up a comprehensive service provider directory on http://PrivateEquityBlogger.com please see the start of
our list of established private equity fund administration firms:
Apex Fund Services Ltd is a global hedge fund administration solution for hedge funds, fund of funds
and private equity clients located in 10 separate jurisdictions across the world. The company uses the software solution, PFS PAXUS,
a fully integrated hedge fund accounting system combined with web-based reporting providing access to information 24/7 securely
online. Highly qualified and experienced staff, mirrored with top tier technology and competitive fee structures make Apex Fund
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Services Ltd the clear choice for your fund administration needs. Please contact John Bohan the Group Operations Manager at
353 21 46 333 66 or john@apexfunds.ie for a demonstration of our capabilities and free quotation.
http://www.ApexFundServices.com
Tags: Private Equity Fund Administration, Private Equity Fund Administration Firms, Fund Administration Services, Fund
Administration, New York Fund Administration
Link to This Resource: Private Equity Fund Administration Services
http://privateequityblogger.com/2009/01/private-equity-fund-administration.html
Private Equity Europe
Private Equity Europe
Private Equity Europe | Geographic Distribution
Private Equity Info has supplied some

helpful data on the geographic distribution of private equity. Previously, I had shown the geographic distribution within the United States
(for that post, follow this link).
The following chart reveals the geographic distribution of private equity in Europe. The highest concentration of private equity activity,
measured either by private equity firms or portfolio companies, is in the United Kingdom, France and Germany. Interestingly, the top
ten countries are the same in either category--firm or portfolio company--only rearranged. Here is the list of private equity distribution by
European country:
Private Equity Firms Portfolio Companies
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2007 GDP
Country % of total Country % of total
(millions USD)
1 United .Kingdom 31.1% 1 United Kingdom 25.6% 2,804,437
2 Germany 12.7% 2 France 14.8% 2,593,779
3 France 12.2% 3 Germany 11.9% 3,320,913
4 Spain 5.7% 4 Netherlands 7.1% 777,241
5 Sweden 5.7% 5 Sweden 6.6% 454,839
6 Italy 4.9% 6 Finland 5.5% 246,350
7 Netherlands 4.6% 7 Italy 4.5% 2,104,666
8 Belgium 4.3% 8 Spain 4.3% 1,439,983
9 Finland 3.8% 9 Belgium 3.9% 453,283
10 Norway 3.0% 10 Norway 2.7% 389,457
Source: Private Equity Info
Tags: Private equity info, private equity, private equity distribution, private equity world, private equity data, private equity statistics,
private equity Europe, private equity United Kingdom
Link to This Resource: Private Equity Europe
http://privateequityblogger.com/2009/01/private-equity-europe.html
CVC Capital Partners
CVC Capital Partners
CVC Capital Partners Succeeds in Raising Capital
A brief story of optimism in the private equity market is that of CVC Capital Partners. The
private equity firm is noted in the Wall Street Journal for its ability to raise capital while many private equity firms are struggling.
For CVC Capital Partners, finding private investors is not easy but not impossible. Despite the economic hurdles that make fundraising
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so difficult lately, the European-based firm managed to pull in more than $14 billion in its latest round of raising capital. The most
impressive part of CVC's success in raising investments for the sizable fund, its fifth, is that all the capital was raised in less than a
year--after the biggest financial troubles emerged.
After such an impressive round of fundraising, CVC Capital must now look at where to invest the capital raised. This task is
exceedingly difficult for CVC, and other private equity firms due to the reluctance of banks to lend debt to finance major deals.
However, CVC Chairman Michael Smith is confidant in the fund saying that it is large enough to finance big deals without the help of
leverage. Other funds are not so large and are encountering considerable difficulty in the current economic climate. Mr. Smith says of
the new fund "It's about investing in companies for the future and endeavoring to improve them."
Tags: CVC Capital, CVC Capital Partner, CVC Capital Partners, CVC Capital Partners Fund, Private Equity Fund, Private Equity
Tracker Tool, Private Equity Funds, Private equity firms
Link to This Resource: CVC Capital Partners
http://privateequityblogger.com/2009/01/cvc-capital-partners.html
Chartered Hedge Fund Associate
Chartered Hedge Fund Associate
Interview with Founder of the CHA Program
As I have previously written, the hedge fund industry and private equity
have a lot of similarities and some important differences (for more information on this, see Private Equity and Hedge Funds). Richard
Wilson, who also runs a very successful blog on hedge funds, founded the CHA program last year to educate people within the hedge
fund industry and especially those hoping to enter it. I have conducted a brief interview with Richard discussing the Chartered Hedge
Fund Associate designation:
What is the Chartered Hedge Fund Associate (CHA) program?
Richard: The CHA Designation program is an online hedge fund certification program sponsored by the Hedge Fund Group (HFG)
starting in 2008.
The CHA Designation is a two part program. Level 1 helps participants gain a comprehensive base level of knowledge about the hedge
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fund industry. Level 2 allows participants to specialize within a niche area of the industry such as marketing and sales, due diligence or
analytics.
What do graduates from the CHA program receive, as in what are the benefits from taking the program?
Richard: For a list of the benefits from completing the program please see this page: http://chadesignation.org/CHA-Designation-
Benefits.html.
Our program also benefits hedge fund startups and sub $100M hedge fund managers. Here is how: http://chadesignation.org/How-To-
Start-A-Hedge-Fund-Startup-Benefits.html
How is this program connected to the Hedge Fund Group (HFG) and who decides what goes on the exam?
Richard: The Hedge Fund Group (HFG) sponsors the CHA Designation and created it in 2008. There is a team of 5 professionals who
have developed and maintain the designation and they are aided by an advisory board of approximately 55 professionals who work at
hedge funds, fund of hedge funds and prime brokerage/auditing firms.
Where are classes held? New York? How much do they cost.
Richard: The CHA Designation is offered 100% online and tuition is $599 or $499 if you register within the first 24 hours of registration
opening. The program and exam may be taken from anywhere in the world as long as the individual has a reliable internet connection.
Last year we had participants from Hong Kong, UK, US, Canada, India and China.
So the CHA Designation program is really international and not based within the Manhattan or any one location for that matter?
Richard: Yes that is correct.
How well-known is the program? Have mainstream media outlets interviewed your team?
Richard: To some extent we have been covered. We have not graced the cover of the WSJ or any large American newspaper but we
have been picked up by the Financial Times, Alpha Magazine, Institutional Investor and Job Search Digest. Most of these stories were
ran in interview form. The Financial Times was the most thorough, we spent over 4 hours speaking with them and that doesn‘t count
their inquiries to actual participants within the program as well.
Is there anything else you want to mention here before we end this interview?
Richard: We have much more information on our website: http://chadesignation.org/.
If you would like to contact Richard Wilson to find out more about the CHA Designation or to sign up for the program, you can send him
an e-mail to Richard@Hedgefundgroup.org
Tags: private equity hedge funds, private equity and hedge funds, hedge fund designation, chartered hedge fund associate, CHA
Richard Wilson, Richard Wilson hedge fund interview, CHA
Link to This Resource: Chartered Hedge Fund Associate
http://privateequityblogger.com/2009/01/chartered-hedge-fund-associate.html
Contacting Private Equity Firms

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Contacting Private Equity Firms
Protocol Tips When Contacting Private Equity Firms
Private equity firms field a lot of proposals from entrepreneurs and businesses seeking financing, with so many applicants private
equity firms have to weed out the non-serious proposals from the professional ones. Even if you are an established company with a
great investment opportunity, you could be dismissed because you contacted the private equity firm in an unprofessional or poor
manner. Private Equity Info has a great guide to approaching private equity firms, I'll be following this up with a similar post on finding a
private equity contact.
Protocol for Contacting Private Equity Firms
For best results (also the most professional approach), investment bankers first place a phone call to the key contact at the private
equity firm for the deal at hand (see prior blog post about how to find the best contact at each firm). This introductory phone call:
provides a brief introduction of the banker and his/her firm (very brief).
gives the private equity professional a ―heads up‖ that the banker intends to send an executive summary.
describes how the opportunity fits within the private equity firm‘s stated acquisition criteria or portfolio (or both).
A good script might follow this pattern:
―Hi. My name is Bob. I‘m with XYZ Capital in [city]. We currently represent a client operating in the [fill in the blank] market. I noticed
that you are active in this sector and think this would fit well with your [fill in the blank] portfolio company. Our client finished the year
with $X EBITDA on $Y of revenue and has been growing a Z% per year. I just wanted to give you a heads up that I will be sending you
the executive summary.‖
While this approach requires more effort, private equity professionals are much more responsive when a banker demonstrates that he
or she has done the required homework. The good news - PrivateEquityInfo.com provides the information and research tools to
simplify this process for you.
By funneling potential deal flow to private equity firms that is aligned with their investment objectives, and by calling them in advance of
sending, you set yourself apart from the crowd… and you will get a good response with this approach.
Source: Private Equity Info
Tags: Private equity contacts, private equity contact, contacting private equity firms, contact private equity firm, private equity firms,
how to contact a private equity firm, private equity tips
Link to This Resource: Contacting Private Equity Firms
http://privateequityblogger.com/2009/01/contacting-private-equity-firms.html
Family Office List | Lists of Single and Multi Family Office Contacts
Family Office List
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List of Single and Multi Family Offices
Looking for a list of family office contacts?
Top of Form
First Name:
Email Address::
Submit
Bottom of Form
Articles Related to Family Office List
1. Investing Book
2. Family Office Services
3. Family Office Marketing
5. Philanthropic Giving
Permanent Link: Family Office List

Tags: Family Office List,Family Office Lists,Family Offices List, Lists of Family Offices, List of Family Offices, Family Office List, Multi-
Family Office list, single family office list
Link to This Resource: Family Office List | Lists of Single and Multi Family Office Contacts
http://privateequityblogger.com/2009/03/family-office-list-lists-of-single-and.html
Private Equity Assets
Private Equity Assets
Private Equity Asset Prices Fall

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The price that private equity assets are selling for in the secondary market has
dropped, according to three years of data in a report by Cogent Partners.
The average percent of net asset value (NAV) fell significantly in 2008, from an average of 84.7% in the first half of 2008 to a 61%
average of NAV in the second half. This is a sharp departure from the peak in 2006-07 where assets traded above net asset value.
Cogent commented that the current report is the lowest private equity asset prices since 2005, when the firm started recording asset
prices.
The private equity secondary market has been booming compared to the leveraged buyout market which has been largely inactive
following the credit crisis. Many large private investors use the private equity secondary market to trade investments and capital
committments to private equity funds. Private investors have used this market to dump private equity assets in an attempt to limit the
investor's exposure.
Interestingly, Cogent reports a significant difference between the figures reported by private equity funds to investors and the prices
given on the secondaries market. The report reveals, "Prices in the secondary market are at a 40 percent discount to the values
reported by private equity funds." This is consistent with other articles commenting on the way private equity funds often seem to have
an unrealistic view of their investments.
Source
Tags: Private equity, private equity insight, private equity assets, private equity asset, private equity asset valuation, private equity
valuing, private equity valuation, private equity prices
Link to This Resource: Private Equity Assets
http://privateequityblogger.com/2009/01/private-equity-assets.html
Private Equity 2009
Private Equity 2009

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Will Private Equity Comeback in 2009?
It has been a tough year for private equity, for example last weeks report that deals have fallen to a five year low, and in the first
week of the new year I am sure many are wondering when private equity activity will return? BloggingBuyouts offers some thoughts on
this coming year for private equity:
The number of bad deals of the past few years has led to a growth in "loan to own" deals: vulture private equity firms that lend money
to companies struggling under the weight of earlier buyouts with the goal of gaining control over the equity.
The Wall Street Journal reports (subscription required) that buyout flops like Real Mex Restaurants and Bally Fitness are finding
themselves under the ownership of new private equity firms after the original deals go south.
But 2009 could also represent a comeback for private equity in the traditional sense if credit markets loosen up. Interest rates are at
historic lows and the stock market has taken a pounding leaving a number of profitable companies trading at valuations that make them
extremely attractive takeover targets.
If the credit markets return to normal levels of activity, private equity could be a major catalyst for the market's rebound over the next
few years by taking private many of the undervalued companies that are driving the market down.
Source
Tags: Private Equity predictions, private equity advice, private equity blogs, private equity bloggingbuyouts, private equity 2009, 2009
private equity predictions, new years private equity
Link to This Resource: Private Equity 2009
http://privateequityblogger.com/2009/01/private-equity-2009.html
New Years Resolutions
New Years Resolutions
Private Equity Blogger: New Years Resolutions
Although it has obviously been a tough year for private equity and the economy in general, it has been an
exciting year for Private Equity Blogger. This blog has vastly exceeded many of my goals in expanding readership to more than 1,000
pageviews each day, writing hundreds of articles and making lots of great contacts. Richard Wilson has a great tradition at his blog and
I'd like to start the new year by making some resolutions:
Private Equity Blogger 2009 New Years Resolutions
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Writing more than 100 educational articles especially focused on finding a position with a private equity firm, raising capital and
attracting private investors, operational due diligence strategies and selecting various private equity service providers.
Begin using alternative media for posts like original videos, audio interviews and hopefully a private equity "webinar."
Include more articles by knowledgeable private equity industry veterans. This is in line with my hope to further provide information to
those new to private equity and considering working in the industry.
Expanding this blog's up-to-date coverage on the big and small events impacting the industry.
At least doubling visits to this blog from 1,000 to 2,000 daily pageviews and increasing subscribers to the Private Equity Blogger feed.
I'd like to say thank you for all the readers who have supported this blog as well as the private equity professionals and firms who have
contributed their knowledge and experience. And of course, I wish everyone a happy new year.
Tags: Private Equity 2009, private equity industry, private equity, private equity future, private equity blogger, private equity industry,
private equity 2009 year, new years resolutions
Link to This Resource: New Years Resolutions
http://privateequityblogger.com/2009/01/new-years-resolutions.html
Elevator Pitch Essentials
Elevator Pitch Essentials
How to Create an Effective Elevator Pitch
I recently read a valuable book on developing a great elevator pitch. An elevator pitch is defined in Elevator
Pitch Essentials as "an overview of an idea, product, service, project, person or other Solution to a problem and is designed to just get
a conversation started." Although an elevator pitch is essential for many careers, venture capitalists and entrepreneurs would
especially benefit from reading this. I am often contacted by entrepreneurs wondering how to attract investors to their idea and having a
well-crafted elevator pitch is crucial. Elevator Pitch Essentials is a concise guide to creating an effective elevator pitch by Chris O'Leary.
Mr. O'Leary is a successful entrepreneur, with an impressive career in leading and advising start-ups.
One of the best aspects of Elevator Pitch Essentials is the author's sharing of his professional experiences. His experience working
with start-ups like SalesLogix allows venture capitalists and hopeful entrepreneurs to learn from an active member of the start-up
industry. The book is brief, straight-to-the-point while entertaining (like an elevator pitch) and inexpensive. I recommend this book to
anyone hoping to perfect their current pitch or learn how to get some interested in a potential business or investment opportunity.
If you'd like to purchase Elevator Pitch Essentials by Chris O'Leary visit this link: http://www.elevatorpitchessentials.com/buy.html
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Tags: Elevator Pitch Essentials, Elevator Pitch, Elevator Pitch Tools, Elevator Pitch Tips, How to Create an Elevator Pitch, Elevator
Pitches, Creating an elevator pitch, what is an elevator pitch
Link to This Resource: Elevator Pitch Essentials
http://privateequityblogger.com/2008/12/elevator-pitch-essentials.html
Family Office Services | Components of a Family Office
Components of a Family Office
I just came across an educational PowerPoint presentation by a US-based family office firm. Within this
powerpoint I found a list of services which are provided by family offices. For those of you who are selling to family offices, about to
work for a family office or are looking to soon engage a family office this list could be useful.
Tax Compliance, Planning and Preperation
Investment Policy and Asset Allocation
Portfolio Strategy and Manager Selection
Portfolio Accounting
Investment Performance Monitoring
Alternative Investment Tracking (Hedge Funds, Real Estate & Private Equity)
Trading
Bookkeeping and Bill Payment
Financial Reporting
Cash Flow Management
Estate and Wealth Transfer Management
Insurance and Risk Management
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Foundation and Philanthropy Management
Personal Finance Management
Concierge Services
Data and Document Management
If you are interested in viewing the full PowerPoint presentation you may find it by clicking here. I hope this was helpful, here are links
to additional resources on family offices:
Hedge Fund of Funds by Family Offices
Family Office Marketing
Tags: Components of Family Offices, Services by Family Offices, Family Offices, Family Office, Single Family Office, Multi Family
Office, Commercial Family Office, wealth family office
Link to This Resource: Family Office Services | Components of a Family Office
http://privateequityblogger.com/2008/12/family-office-services-components-of.html
Private Equity Deals Report
Private Equity Deals Decline
Private Equity Deals Decline to Five Year Low
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Private equity deals have reached a new indicator of the troubled private equity
industry. Along with the shaky market, private equity firms have had to persuade wary investors to join funds and maintain struggling
portfolio companies. According to Thomson Reuters, global private equity activity fell to a five year low of $188.7 billion in 2008. This is
a 72% decline from 2007, revealing just how troubled the private equity market may be.
Deals Decline
Buyout deals have especially declined, accounting for only 7% of all Mergers and Acquisitions volume. This a distinct change from the
private equity giants that executed mega-deals only a few years ago (peaking at 20.6% of M&A in 2006) and it is the lowest percentage
since 2001. Additionally, many deals that were put into motion before the financial crisis are now being put aside or canceled and some
private investors are fighting to back out of the deal.
All this has translated into sagging public investment in private equity firms, like the Blackstone Group which is trading about 1/5 of the
price of its IPO of $31. It seems that other private equity firms considering a initial public offering have taken notice of the poor market
response, as KKR and Apollo Management have stalled their move to the public.
With significantly less leverage available (which firms have used to finance large deals in the past) it seems that it will be a while before
private equity firms are executing multi-billion dollar deals like earlier in the decade. Although America maintained its superior deal
volume to Europe but only by a slight margin. The U.S. accounted for 42.4% of buyout deals while Europe trailed by only 0.4%. The
finance industry led the United States in private equity activity possibly hoping to profit from struggling companies. Energy and power
were the most popular investment area with 17% of private equity investments.
Keeping Clients
Perhaps the biggest challenge to private equity firms is keeping their clients and making sure that they are confident in investing with
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the firm. This is especially important for the biggest clients like pension funds and endowments which may be more skittish about
investing in the alternative areas like private equity or hedge funds. Especially after some endowments appear to have been burned
this year (see endowments and private equity). As University of Chicago finance professor Steven Kaplan comments "The question is,
how many limited partners will continue providing money? Historically, in markets like this they cut back, and it's precisely the time they
shouldn't." Private equity firms are struggling to maintain their investors, as Reuters shows:
Four out of five U.S. investors and nearly two-thirds of investors in the UK would refuse to re-invest if they felt funds had
underperformed, diverged from their core focus, or lost some key members of staff, according to a recent report from secondary private
equity asset specialist Coller Capital.
Sale of exposure to private equity funds has risen in the so-called secondary market as the years of high returns end. Universities such
as Harvard are among those trying to sell private equity assets, sources have told Reuters.
David de Weese, partner at secondary market specialist Paul Capital, estimates that $130 billion to $140 billion of private equity will
available for sale by institutional investors globally during the next two years, and that supply will continue to significantly outstrip
demand in 2009.
But improvement may lie down the road, with funds invested during the coming year expected to do better.
As for the future for private equity, Douglas Warner, a senior member of Weil, Gotshal & Manges LLP's private equity practice predicts,
"I think we will see reduced private equity activity in 2009, other than transactions such as PIPEs that don't require so much leverage. I
don't think the debt markets will come back immediately."
Source
Tags: Private equity market, private equity industry, private equity deals, private equity, private equity industry, private equity deals
data, private equity report, private equity 2008, private data
Link to This Resource: Private Equity Deals Report
http://privateequityblogger.com/2008/12/private-equity-deals-report.html
Venture Capital Interview
Interview on Regulation of Venture Capital
The Wall Street Journal has conducted an interview with Josh Lerner, a professor at Harvard Business School, on
the the venture capital industry. Professor Lerner is well-known within the venture capital world and serves as a senior advisor to the
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Wellesley, Massachusetts-based fund of funds manager Grove Street Advisors. He offers his views on the government regulation and
its effect on venture capital. Here the interview via WSJ:
Your next book (Boulevard of Broken Dreams to be published this fall by Princeton University Press) addresses public efforts to boost
entrepreneurship and venture capital. How did you choose this topic?
The financial crisis opened the door to massive public interventions in the Western economies. In many nations, governments
responded to the threats of illiquidity and insolvency by making huge investments in troubled firms, frequently taking large ownership
stakes. Many concerns can be raised about these investments, from the hurried way in which they were designed by a few people
behind closed doors to the design flaws that many experts anticipate will limit their effectiveness.
But one question has been lost in the discussion. If these extraordinary times call for massive public funds to be used for economic
interventions, should they be entirely devoted to propping up troubled entities, or at least partially designed to promote new
enterprises? In some sense, 2008 saw the initiation of a massive Western experiment in the government as venture capitalist, but as a
very peculiar type of venture capitalist: one that focuses on the most troubled and poorly managed firms in the economy, some of
which may be beyond salvation. Meanwhile, as we well know, the venture industry in many nations is on ―life support,‖ struggling for
survival.
Moreover, the global hubs of entrepreneurial activity—for instance, Silicon Valley, Singapore, and Tel Aviv—all bear the marks of
government investment. Yet, for every successful public intervention spurring entrepreneurial activity, there are many failed efforts,
wasting untold billions in taxpayer dollars.
In your opinion, what one or two changes would provide the biggest boost to venture capitalists?
There are two sets of changes that could make a big differences. The first is an evolutionary one, which is already underway. Not only
have too many groups had mediocre returns for long periods of time, but they have undertaken a lot of ―me too‖ investments that have
made it hard for everyone to succeed. We are now seeing that many second- and third-tier groups are having much greater difficulty
raising new capital. While this is of course a frustrating turn of events from an individual perspective, from the point of view of the
industry as a while, it cannot help but be seen as a healthy development.
The second relates to public policy. In too many areas, our system has made it hard to be an entrepreneur developing advanced
technologies. From a patent system which has been overrun by sham litigation to the many barriers that public companies face, there
are a whole variety of policies that create barriers to entrepreneurship. We need to revisit many of the ―reforms‖ of recent decades—
from the strengthening of patent rights to Sarbanes-Oxley—and ask how they could be changed to minimize the harmful effects on
entrepreneurs.
The proposed financial reforms recently released by the Obama Administration suggest that more private equity and venture capital
firms will have to register as investment advisors with the Securities and Exchange Commission. What impact do you see this having
on private equity or venture capital firms?
It appears to impose quite modest costs on the industry, while advancing transparency into an opaque industry that has prompted
regulatory concern. In fact, the greater transparency may even be helpful to the industry itself in terms of getting a better sense of
market conditions in ―real time.‖
Far more worrisome are some of the proposals emendating from Brussels and Strasbourg, in which some members of the European
Commission and Parliament are proposing to ―micro-manage‖ investment decisions of private equity groups.
What systemic risks, if any, does private equity and venture capital pose to the financial system?
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There have been repeated discussions regarding the desirability of increased regulation of financial intermediaries of all types,
prompted by fears that the financial sector poses systematic risks, which may affect the economy in broad and unanticipated ways. It is
a natural question whether private equity firms (both buyout and venture capital funds) pose such systemic risks. The relevant trade
associations have staked out strong positions arguing against the presence of such risks, yet to date, this issue has received little
study.
As part of our ongoing research initiative under the umbrella of the World Economic Forum, we are exploring how economic cycles
between 1985 and 2007 affected sectors where private equity was and was not present. In particular, we are looking at whether the
presence of private equity investments in given countries and industries led to more or less dramatic shifts in the face of economic
cycles. This new work will provide some insights into the impact of private equity in exacerbating or dampening economic crises.
Tags: Josh Lerner, Venture Capital Interview, Wall Street Journal, Private Equity Interview, Venture Capital Josh Lerner, Grove Street
Advisers, Grove Street Venture Capital
Link to This Resource: Venture Capital Interview
http://privateequityblogger.com/2008/12/venture-capital-interview.html
Carlyle Interview | Managing Director
Carlyle Interview
Interview with Carlyle's Growth Capital Fund Manager
Nick Sturiale, a Managing Director at the Carlyle Group offers some insight into the present and
future of private equity deals in this interview with BusinessWeek. Mr. Sturiale heads up the U.S. Growth Capital Fund of the Carlyle
Group focusing on mid-market private equity investments.
What struck me most about this interview is how optimistic Mr. Sturiale is in regards to the "current economic realities." He is looking
more into the near future of how his companies will be able to restructure and prepare for 2009-2010. "While there is a lot of fear that
things could get worse, I think there is a lot of optimism: how do you create customer value, how do you take advantage of the 09-10
markets that are going to open up?" Sturiale also predicts an uptick in private-to-private mergers, and lots of companies that will go
public as soon as 2009-10.
He also cites a problem with valuation in private equity: "I think there is still a lag between private company valuations and public
market valuations. And so many private companies still think the company is still valued at what it should have been valued at last year
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or a few months ago. The hard part is, that's just not the reality." So, he concludes that private equity firms and boards have to align
themselves with the market value because it doesn't make sense for to pay a higher price to take a firm private than what the firm will
go for when it's taken public.
Because of the aforementioned valuation dilemma, he suggests that the focus is less on trying to executing new major deals but
working on restructuring existing portfolio companies. The focus is on providing financial support to portfolio firms to expand globally,
adjust their balance sheets and cut excess costs.
For more information on the Carlyle Group including recent news stories visit the Carlyle Group's private equity tracker profile.
E-mail subscribers can view the video at this link:

http://feedroom.businessweek.com/?fr_story=5b69b68d3708f75da9dc1d5bb8e18acea71934b8&rf=rss
Tags: Carlyle Group, Carlyle interview, Carlyle Group Managing Director, Nick Sturiale, Private Equity Interview, Private Equity Future,
Private Equity Valuation, Private Equity Carlyle, Carlyle
Link to This Resource: Carlyle Interview | Managing Director
http://privateequityblogger.com/2008/12/carlyle-interview-managing-director.html
Private Equity United States
Private Equity United States
Private Equity Firms and Portfolio Companies by State
It has been a while since I have been able to post here, but I am now returning updating this blog daily as my schedule has returned to
normal. That said, I received some interesting data from Private Equity Info that shows the largest geographical concentration of private
equity firms and private equity portfolio companies as well. Private Equity Info sampled over 1,000 private equity firms and more than
10,000 companies held by private equity firms to give an interesting view of where firms are located and where they invest.
Geographical distribution of private equity firms and portfolio companies
Private Equity Firms ............ Portfolio Companies
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This data shows the high concentration of private equity firms in the industry, with 80% of U.S. private equity firms located in 10 states.
The largest concentration of firms are in New York, California and Illinois. The companies held by private equity firms are more widely
dispersed by states.
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Source
Tags: Private equity states, private equity firms, private equity portfolio companies, private equity investment, private equity location,
private equity firms by state, private equity companies
Link to This Resource: Private Equity United States
http://privateequityblogger.com/2008/12/private-equity-united-states.html
Private Equity Entry
Private Equity Entry
New Information on How People Enter Private Equity
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Degrees in higher education are held by many private equity
professionals, the most common of which is a Masters in Business Administration (MBA). However, new information from the Private
Equity Database reveals that less than half of people in all positions at a private equity firm hold an MBA. This is surprising because
many people consider an MBA a prerequisite to entering the private equity industry. Although MBAs are definitely useful for working in
private equity, this data suggests that it is not necessarily a requirement:
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I have spoken with many young professionals hoping to break into private equity but feel that not having an MBA prevents them from
working in private equity. There are many various paths people take to entering private equity even in the highest positions at private
equity firms.
Source
Tags: Entering Private Equity, Private Equity Entry, Private Equity Position, Private Equity Positions, Private Equity Data, Private Equity
MBA, Private Equity MBAs, Private Equity News
Link to This Resource: Private Equity Entry
http://privateequityblogger.com/2008/12/private-equity-entry.html
Private Equity Investment 2008
Private Equity Funds 2008
Largest Private Equity Funds of 2008
It's a little early for this, but PitchBook Data has put together a list of the largest private equity funds of 2008. The full report reveals that
private equity fundraising has increased by 29% in the first three quarters of 2008 compared to the same period last year. Although the
value and number of deals executed so far during this year have declined, but capital raising for private equity funds remains strong. As
the following image shows:
Here is the latest list of the largest private equity funds 2008:
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Tags: Private Equity Funds, Private Equity 2008, Private Equity Data, Private Equity Funds 2008, Largest private equity funds, largest
private equity funds in 2008, list of private equity funds
Link to This Resource: Private Equity Investment 2008
http://privateequityblogger.com/2008/12/private-equity-investment-2008.html
Private Equity Firm Jobs | How to Get a Job in Private Equity
Private Equity Firm Jobs
Private Equity Firm Jobs | How to Get a Job
One of the frequent questions we get is - "How can I get a job with a private equity firm? There
are many answers and we are slowly developing a complete section of our site to help you answer this question for yourself. Our most
recent additional resource to this part of our website is the result of some recent negotiations with a private equity job listings website
which you may use for a discount if you believe it would help you find a position in the industry.
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PrivateEquityBlogger.com has negotiated a special $10 first-quarter discount on subscriptions to Job Search Digest, a unique career
resource for finding venture capital, private equity, hedge fund and investment banking jobs. Since 2002, Job Search Digest has helped
finance professionals be much more effective with their job search. Every day their team researches all the online job boards (including
the specialty niche sites) and captures only the most relevant jobs—giving you a competitive advantage in your job search. They also
provide profiles of specialist executive recruiters, compensation data, and other resources aimed at making your job search more
efficient.
To get started and claim your discount on any one of their services, simply go to private equity Private Equity Job Center, Hedge Fund
Job Center, or Investment Banking Job Center
Tags: Private Equity Firm Jobs, Private Equity Jobs, Private Equity Job, How to Get a Private Equity Job, Private Equity Job Search,
Getting a Job in Private Equity, Private Equity
Link to This Resource: Private Equity Firm Jobs | How to Get a Job in Private Equity
http://privateequityblogger.com/2008/12/private-equity-firm-jobs-how-to-get-job.html
Apollo Private Equity
Private Equity Firm Apollo Management's Tough Year
Apollo Capital was ranked sixth this year in Financial Week's list of top private equity firms and seventh by Fortune,
but this year has been a trial for Apollo Management. With the poor performance of many companies backed by Apollo private equity
funds, the firm is struggling to maintain its impressive investment record.
In 1990, Leon Black formed Apollo Management and grew it into one of the largest private equity firms managing more than $20 billion.
Early this year though, The Apollo Group, lost its $365 million investment in the home furnishings retailer, Linens-N-Things, when the
company filed for bankruptcy and set about liquidating its assets. The company was purchased by Apollo and other investors for $1.3
billion but the new owners struggled to turn Linens-N-Things around. Mr. Black took some responsibility for the failed venture saying to
the New York Times that Apollo "underestimated the severity of the downturn of the housing market.‖ And he points out that the loss to
his investors was only half a percentage point on return.
This was a major blow to the private equity firm but Linens-N-Things is not the only Apollo investment that has floundered recently.
Many challenging investments lie in the portfolio of Apollo's sixth fund. Mr. Black admits that five of the fund's investments are
"cyclically challenged," the five he refers to are: the retail chain Clair's, Hot-Tub maker Jacuzzi, Realogy (owner of Coldwell Banker and
Century 21), the Countrywide real estate company in Britain and casino-chain Harrah's. One insider who claims to have knowledge of
the fund's performance says that the fund has had a negative 12.6% internal rate of return to investors from creation of the fund to
September this year.
To add to Apollo Management's difficulties, one of its subsidiaries owns Hexion Specialty Chemicals which recently offered $28 a share
to purchase the Huntsman Corporation. The deal was estimated at $10.6 billion and financed largely by two banks, Deutsche Bank and
Credit Suisse. Apollo Management then attempted to kill the deal but was told by a court that it could not. Then, on October 28th 2008,
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the two banks said they would not finance the deal because they think that the two companies merged will be insolvent. According to
the WSJ:
―Reputational risk no longer exists,‖ one dispirited investor told Deal Journal. Mitch Walker, a partner with Bass, Berry & Sims, sees its
differently: ―So far I haven‘t had much sympathy for the banks, but they are marginally more justified in saying ‗we need more proof of
solvency to lend this much money,‘‖ Walker told Deal Journal. ―If they made loans to a company that became insolvent, they would be
in considerable trouble with shareholders and the Treasury.‖
So, now Apollo is left with "trying to figure out how to make an unwanted marriage work out and how to persuade the banks to be a part
of the nuptials." The situation at Apollo Management is concerning, but the firm's head, Mr.Black, remains optimistic saying that he has
faced economic adversity before and produced good returns still.
Source: NYT and WSJ
Click here to see other firms in our Private Equity Tracker Tool
Tags: Apollo, Apollo Private Equity, Private Equity, Private Equity Apollo Management, Apollo Management LP, Apollo Group, Apollo
Private Equity Funds, Apollo Management Holdings, Apollo News
Link to This Resource: Apollo Private Equity
http://privateequityblogger.com/2008/12/apollo-private-equity.html
Private Equity Trends
Private Equity Trends
Report of Private Equity Trends 2008
A new report offers an overview of the last three quarters of private equity trends and where the industry is today.
The private equity industry has begun to significantly feel the effects of the financial crisis, as evident by the Carlyle group's recent cuts
and the latest data revealing reductions in the number and value of private equity deals. This does not necessarily represent a collapse
in the private equity industry, but more likely illustrates that many private equity firms are exercising caution toward working in such an
adverse climate as well as the lack of credit available for big deals in the current market. PitchBook Data has put together a brief report
showing current trends in private equity and which industries is private equity investing.
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The above chart shows that private equity deals have
significantly dropped, and predictions for the fourth quarter of 2008 are similarly low. To find out where this decline is occurring,
PitchBook has broken down the last three quarters of private equity activity by investment
sector:
Business Products/Services: 'Commercial Services, such as Media & Information and Consulting Services, led this sector with 230
deals in the first three quarters of 2008. The number of deals fell 33.7% and total capital invested fell 76% for the first three quarters of
2008 compared to the same period in 2007. Business Products & Services accounted for 35% of the deals in 3Q 2008.'
Consumer Products/Services: 'Consumer Durables led this sector with 54 deals in the first three quarters of 2008, followed closely by
Consumer Media with 49 deals. The number of deals and capital invested both fell 39% for the first three quarters of 2008 compared to
the same period in 2007. Consumer Products & Services accounted for 25% of the deals in 3Q 2008.'
Financial Services: 'Capital Markets/Institutions led this sector with 23 deals in the first three quarters of 2008, followed by Insurance
with 22 deals. The number of deals fell 20.8% and total capital invested fell 21.3% for the first three quarters of 2008 compared to the
same period in 2007. Financial Services accounted for 5% of the deals in 3Q 2008.'
Energy: 'Exploration, Production & Refining led this sector with 46 deals in the
first three quarters of 2008, followed by Energy Services with 30 deals. Number of deals fell 14% and total capital invested fell 58.4%
for the first three quarters of 2008 compared to the same period in 2007. Energy accounted for 7% of the deals in 3Q 2008.'
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Healthcare: 'Healthcare Services led the this sector with 72 deals in the first three quarters of 2008, followed by Devices & Supplies
with 29 deals. Number of deals fell 26.6% and total capital invested fell 54.4% for the first three quarters of 2008 compared to the same
period in 2007. Healthcare accounted for 11% of the deals in 3Q 2008.'
Information Technologies: 'Software led this sector with 42 deals in the first three quarters of 2008, followed by Communications &
Networking with 29 deals. Number of deals fell by 44.7% and total capital invested fell 91.4% for the first three quarters of 2008
compared to the same period in 2007. Information Technology accounted for 10% of the deals in 3Q 2008.'
Source: PitchBook Data
Tags: Trends in private equity, private equity trends, private equity trend, private equity trends 2008, trends in private equity 2008,
private equity data, private equity report, private equity trends report
Link to This Resource: Private Equity Trends
http://privateequityblogger.com/2008/12/private-equity-trends.html
Carlyle Group
Carlyle Group
Carlyle Group Cuts 10% of Staff
The Carlyle Group announced today that it will be reducing 10% of its staff, marking the first of the major private equity firms to
announce firmwide layoffs, the WSJ reports. An even more remarkable note is that this is the first time in the Carlyle Group's twenty-
year history that it has made a firmwide staff cut.
After a recent surge in hiring, the Carlyle Group will be reducing its staff to 2007 levels. Also the Carlyle Group is shutting down its less
than one-year-old office in Silicon Valley. Showing that even the mega-buyout firms are vulnerable to the financial crisis. A Carlyle
Group spokesman explained the move, ―In response to extraordinary market conditions, Carlyle has taken measured steps to balance
its cost structure with the current investment climate. The firm is well positioned to take good care of our investment portfolio and has
the resources to create and respond to compelling investment opportunities.‖
The Carlyle Group has already had its share of public setbacks this year after the failures of Hawaiian Telecom, SemGroup LP which
filed for Chp. 11 bankruptcy in July (SemGroup was only last year ranked 18th largest private company), and the fall of its mortgage
securities hedge fund Carlyle Capital. Yet this is far from a collapse of the Carlyle Group, in fact, in its 64 funds there is around $40
billion in uninvested capital and it is raising an estimated $14 billion for its next buyout fund.
Tags: The Carlyle Group, Carlyle Group, group and Carlyle, Caryle Group, Carlyle Group DC, David Rubenstein, Carlyle Group Loss,
Carlyle Group Investment, Carlyle Group Companies
Link to This Resource: Carlyle Group
http://privateequityblogger.com/2008/12/carlyle-group.html
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Buyout Market
Buyout Market
Debt Bankers Predict Trouble in Buyout Market
Leveraged finance bankers predict

that half of all private equity buyouts that have been completed within the last three years will struggle. The head of restructuring at JP
Morgan, Peter Jaffe, said that because companies have been overleveraged, around half of private equity buyouts made in the last
three years will run into trouble. He believes that buyouts need to be deleveraged because there is a lack of credit available in the
market for buyout deals.
Speakers at the Debt Brief Europe conference agreed that there will likely be an unparalleled amount of trouble for private equity-
owned companies.
―If anybody who runs an investment portfolio tells you they have no problems in it they‘re a bare-faced liar,‖ said Ryan McGovern,
investment director at Nomura Mezzanine, a Japanese debt provider. ―One of the problems is everyone is looking into a black hole of
economic morass.‖
A discouraging estimate came from rating provider, Moody's Investment Services, which expects the 5 year global high-yield default
rate to rise from 10.2% in September to 35.1% in 2013, more than tripling in just five years. This coincides with an increase in the
number of private equity-backed companies breaking contract, asking for a waiver or rearranging their debt structure.
S&P found that in the 12 months ended Oct. 30, there was a 100% increase in covenant breaches, waiver requests or related
restructurings among speculative-grade industrial companies in Europe, compared with the prior 12-months. These companies are also
running into difficulties more quickly, with the time from financing to experiencing problems with covenant tests decreasing considerably
in the past two years when compared with 2006, according to S&P.
The estimates given by participants in the Debt Brief Europe conference added to recent pessimism over the future of private equity,
especially in regards to buyouts.
Source
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Tags: Private Equity News, Private Equity Europe, Private Equity U.K., Private Equity Future, Private Equity Market, Private Equity Wall
Street Journal, Private Equity Outlook, Private Equity Conference
Link to This Resource: Buyout Market
http://privateequityblogger.com/2008/12/buyout-market.html
Korea Private Equity
Korea Private Equity
Private Equity Investment Returns to South Korea
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South Korea successfully recovered from the 1997-1998 Asian Financial Crises and was looking to foreign investors to stimulate
growth. But after a criminal investigation into a United States private equity fund, private equity firms adopted a low profile in South
Korea. Today, however, private equity investors are increasingly active in the country hoping to benefit from broke conglomerates
selling off assets at bargain prices.
Private equity firms played a major role in South Korea's recovery from the Asian Financial Crisis by rescuing distressed companies
from bankruptcy. Then a high-profile criminal investigation of Lone Star Funds, a Texas-based private equity firm, changed the private
equity landscape in the country. Following the financial crisis, Lone Star was regarded as a savior because it poured large amounts of
investment into the struggling economy. Eight years later, Lone Star Funds was investigated by South Korea for its planned sale of
Korea Exchange Bank which would earn the American firm $4.4 in profits and possible evasion of South Korean taxes. Another
investigation into bribery and embezzlement led to the arrest of three men with connections to the fund. The scandals led to public
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outcry and a general distrust of foreign investors in the country.
Today, foreign private equity investment is returning to the country in full force, as investors hope to purchase cheap assets from large
South Korean companies. Major private equity firms, such as CVC Capital Partners and Affinity Equity, are eying the country and
banking on a more welcoming attitude from South Korea's new government. The country's financial difficulties coupled with the
declining value of the won, have made South Korea an attractive location for private equity investors specializing in buying and selling
distressed assets.
The potential lies in the assets of large conglomerates based in South Korea, which are being sold off at bargain prices. Private equity
firms have considerably increased activity in the country recently. Thomson Reuters reports that M&A deals involving private equity
firms have more than doubled to $3.6 in value so far this year from the year before. In order to survive large to mid-size companies--
many involved in mergers or acquisitions--are selling off non-essential and even core assets. Family-owned businesses, "chaebols,"
are suffering from massive amounts of debt and need to sell their assets to stay afloat and pay off their obligations. The debt accrued
by South Korea's 30 largest conglomerates rose 59% to a combined $50 trillion won (almost $34 billion USD).
Most private equity firms that invested after the Asian Financial Crisis made huge returns, like the Carlyle Group and Newbridge Capital
which both more than doubled their returns on South Korean investments. Despite such proven success, private equity investors had
remained cautious following the Lone Star debacle, but a recent ruling suggests the drawn-out legal battle may be ending. That closure
along with a more welcoming stance by South Korea's government has led private equity managers to reconsider the country with its
new set of potential investments. Managers say that consumer goods makers are an attractive target for private equity because they
are less vulnerable to the economic downturn. Financial services and pharmaceutical companies are also attractive during the
economic downturn.
Although private equity investment seems to be returning to South Korea, managers expect the deals to be considerably smaller than
before because of limited access to leverage in the credit crunch.
Source
Tags: Korea private equity, south korea private equity, Korean private equity, private equity investment in South Korea, Private equity
investment in korea, private equity firms in south korea
Link to This Resource: Korea Private Equity
http://privateequityblogger.com/2008/11/korea-private-equity.html
Private Equity Change
Private Equity Change
Changes in Private Equity
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The Wall Street Journal has a great
article on the private equity's changes in light of the credit crunch and financial crisis. Also, private equity firms going private, like KKR's
delayed move to be a publicly traded company, are evaluated in such a volatile market. Here is an exert, to read the full article please
follow this link.
The heads of these mega-private-equity firms may also sense that there is a bigger prize at stake. With a number of investment banks
fatally wounded, there is scope for other sources of capital to emerge. Alongside a number of hedge funds, the larger private-equity
funds were until recently in the process of positioning themselves to provide this capital, taking the place of traditional investment
banks. In a recent example, Royal Bank of Scotland sold $8 billion in bank debt to private-equity firms, including Blackstone and TPG.
Entities which used to be the borrowers had become the lenders.
One of the rationales for the firms making this shift is that, for private-equity funds, redemption terms tend to be long. This gives them
the edge in providing long-term capital. However, inherent in the partnership structure -- as opposed to the public structure that KKR
and others seek -- is the understanding that payouts are variable and unpredictable because they are based primarily on volatile
investment performance, the value of which is realized on an irregular basis. By converting to publicly owned companies, these entities
place themselves at the mercy of shareholders who value regular fees over the variable and volatile ones that come from the traditional
work of private-equity funds.
This presents the new providers of capital with a different form of the problem that the rest of the banking system faced recently:
unpredictable assets and predictable liabilities. One way for the newly public funds to manage this mismatch is to focus on earning
steady, pre-agreed management fees rather than focusing on volatile investment performance. This shifts the core work of these funds
toward fee-earning work, such as corporate finance advisory services, and away from their entrepreneurial roots of buying private
companies and turning them around. This may be what the private-equity behemoths have in mind, but investors need to understand
that these companies will not be the private-equity funds of old -- and must adjust their expectations accordingly.
And what lies ahead for the rest of the private-equity industry? Once the behemoths move into other businesses, the asset class itself
may be free from the mantra of "bigger equals better." The remaining funds will be able to focus on their original task of extracting
buried value from unlisted companies. Those firms that stood their ground in the mid-deal market and ignored the ever-growing thirst
for bigger funds could once again become the standard bearers for the private-equity industry. Sticking to their knitting -- that is,
focusing on what investors want from them in the first place and maintaining the alignment of interests through a commitment to the
underlying investment performance -- may well prove to be a shrewder move than branching out as the big boys are doing.
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Tags: Private equity change, private equity changes, changes in private equity, private equity wall street journal, private equity news,
private equity story, private equity article, private equity industry
Link to This Resource: Private Equity Change
http://privateequityblogger.com/2008/11/private-equity-change.html
Private Equity Pension
Private Equity Pension
New Report on Private Equity and Pensions
A recent survey found that private equity firms

still see pension funds as a major concern when investing.
A new survey shows that private equity deals are significantly hindered by consideration of pensions. Above all pension-related
concerns for private equity firms is the probability of future life expectancies increasing, which would in turn increase the liability to the
private equity firm. An increase in life expectancy would make a more costly private ownership for the firm and potentially cause the
private equity firm to hesitate before investing. This is especially troubling when considering big manufacturers like in the auto-industry
that have large pension liabilities.
The survey revealed that a major consideration for private equity firms was the pension liability. Of the sixteen firms surveyed, "More
than 80 per cent of survey participants see making an agreement on a deal with a pension scheme‘s trustees as a significant hindrance
to completing a deal." This report shows that pensions are still a major obstacle for private equity firms when trying to make a deal,
adding to the already difficult market for private equity deals.
Source
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Tags: Private equity pensions, private equity pension fund, private equity pension, private equity pensions fund, private equity pension
funds, private equity investment pension, private pension funds
Link to This Resource: Private Equity Pension
http://privateequityblogger.com/2008/11/private-equity-pension.html
Private Equity Turnaround
Private Equity Turnaround
Discussion of the Private Equity Turnaround Market
Today's economic downturn may lead to an increase in the number of turnarounds

performed by private equity firms. In this type of deal, a private equity firm would supply the necessary resources or capital for a
distressed company to succeed, thus completing a "turnaround" of the company's performance.
I revisited a discussion published to AltAssets in 2003 with some private equity players that specialize in turnarounds. Although it is five
years past, the situation for private equity firms has distinct similarities to today. Most importantly, in 2003 the market was flooded with
companies failing presenting many opportunities for private equity-backed turnarounds. Today's economic downturn seems to be
presenting similar turnaround targets, making this Q&A very relevant.
Where are the best opportunities?

Jon Moulton of Alchemy Partners explains the basic criteria he uses for a turnaround, "The deals that work for us as private equity
players are those in which companies need liquidity to keep going, where there is a business worth saving and where we can get
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management control." But there are few companies that actually meet these requirements so the market for potential turnarounds
becomes very small.
Another opportunity is in companies threatened by China (and India), especially the automotive industry. As the manufacturing process
is outsourced to China by many U.S. and European automakers they fall into distress with excess workforce and resources. This could
be a great position for a private equity firm to cut the company to the bone leaving a more efficient company with only what is
necessary to survive.
What would you not consider for a turnaround?
Jon Moulton says, "We wouldn't do a large contracting turnaround. We have had no success in those and neither has anyone else.
They are fundamentally feeble businesses, you never know the depth of the hole you are puttying money into and then the money at
the end is usually pretty slight. I am also very suspicious these days of manufacturing. These businesses are swimming against the tide
and they often have large pension and environmental liabilities. We are looking at some turnarounds in which the key issue is a
dramatic restructuring to get rid of pension liabilities. It's brutal territory and a very unattractive activity for anyone to be involved with."
Again, the threat from Asia means that heavy industries are not great opportunities because countries like China can manufacture so
much more cost-efficiently than Western countries. So companies focused in manufacturing industries are less attractive for a
turnaround than say, the services industry, because that work cannot be outsourced abroad as easily.
Gary Klesh has several industries he is staying away from, " I wouldn't touch pharmaceuticals and other industries that are heavily
reliant on research and development. I won't go into business that are reliant on the skills of particular people, services such as
advertising agencies and consultancies. We are also staying away from the construction industry. But we are in negotiations with
companies in all other areas that are quite sick."
What are your main obstacles?
The most obvious obstacle is labor laws and protections against downsizing companies. This is a key way in which to trim the budget
and many distressed companies do have a lot of excess personnel. Moulton makes an especially relevant coorelation to today, "The
not so obvious obstacle is trying to restructure when you have a sick banking system around you. It's very tough dealing with banks on
a day-to-day basis - they are shell-shocked and can't make decisions." Banks that are reluctant to work with risky companies make it all
the more difficult for a turnaround.
Turnarounds are not always attractive to managers so one challenge "is finding the right people. When we turn around a company, we
set the strategy but we don't get involved in the day-to-day management of the business; we find other people to implement that
strategy. It is very difficult to get these people. As you can imagine, turnarounds are a lot of work and there is a lot of pressure involved
- it's not always an easy sell to managers."
Jon Moulton, managing partner of Alchemy Partners, a specialist in turnarounds and public to
privates in the UK
Gary Klesch, chairman of Klesch & Co, which specialises in investing in European companies
in need of restructuring
Ollivier Lemal, directeur general of Plantagenet Capital, a US and European firm that makes
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early-stage venture, strategic buy-out and turnaround investments
The future of private equity turnarounds is not clear but there are more and more companies facing insolvency and private equity
investment could be the best solution for filling that capital gap. Additionally, many firms need superior executives at the helm in such
difficult times and private equity groups often provide management that is experienced and capable of making the changes necessary
for survival.
Here is the full discussion from AltAssets
Tags: Private equity turnaround, private equity distressed, distressed private equity company, private equity turnarounds, private equity
investment turnaround, private equity distressed debt company, Private Equity Turn Around, private equity investment turnarounds
Link to This Resource: Private Equity Turnaround
http://privateequityblogger.com/2008/11/private-equity-turnaround.html
Private Equity Auditors | Auditing Firms
Private Equity Auditors
Private Equity Auditing Firms
The following is a list of recommended private equity auditors and private equity auditing consultants. While the performance of their
services cannot be guaranteed by this private equity website, we only work with a very small number of well established reputable firms
in the industry.
1. Jordan, Patke & Associates, Ltd.
Jordan, Patke & Associates is a firm that specializes in the audits of private equity funds. Our
team of experienced professionals services funds from around the country. Our focus on efficiency and extensive use of technology
allows us to offer a top quality service at extremely competitive rates. Our principals and staff are known for assisting fund managers
through every phase of their business, from fund formation to ongoing communication with investors and regulators.
Contact Info: Ronald S. Niemaszyk 847-382-1627 ron.niemaszyk@jordanpatke.com
2. If you would like to add your investment firm's bio here or explore other advertising options please email
Richard@HedgeFundGroup.org
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Tags: Private Equity Auditing Firms, Private Equity Auditors, Private Equity Auditor, Auditing Services for Private Equity Funds,
Auditing Service Providers, Audit for a Private Equity Fund, Private Equity Audit
Link to This Resource: Private Equity Auditors | Auditing Firms
http://privateequityblogger.com/2008/12/private-equity-auditors-auditing-firms.html
Private Equity Layoffs
Private Equity Layoffs
Private Equity Firms Hint at Possible Layoffs
So far, private equity employees have been more or less exempt from the
mass layoffs on Wall Street. Dan Primack of peHUB reports the latest rumors that suggest this may not be the case soon:
I‘ve begun asking senior industry sources about the prospect of private equity firm layoffs, and most of the replies have been in the
range of probably to definitely. I‘ve even heard that a few brand-name firms have begun holding internal discussions about across-the-
board personnel cuts, but the talks are too formative (and perhaps speculative) for me to feel comfortable naming names.
A big reason for the potential layoffs is the lack of deals being made right now at the big private equity firms. With the massive amount
of hiring during the peak of private equity, there are now a large number of unnecessary personnel. Primack notes especially the high
number of analysts that have little to do with the lull in private equity deals.
Other targets for layoffs in the private equity firms are senior executives that have impressive salaries for unimpressive deal-making
records. A trademark of private equity is the ability to trim the unnecessary fat from a firm's budget and it seems that this process may
be used on private equity firms themselves. With less and less deal activity this may be a necessary--even saving--manuever for some
private equity firms to stay afloat in rough times.
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Tags: Private Equity Layoffs, Private Equity Employment, Private Equity unemployment, Private Equity Firms Fire, Private Equity Firing,
Private Equity Management, Private Equity Layoff, Private Equity Budget
Link to This Resource: Private Equity Layoffs
http://privateequityblogger.com/2008/11/private-equity-layoffs.html
Yahoo Private Equity Deal
Yahoo Private Equity Deal
Yahoo's Kelkoo Sold in Private Equity Deal (YHOO)
After announcing that it would be cutting at least 1,500 jobs, Yahoo Inc. (YHOO) made another
big decision to sell Kelkoo to a private equity firm. The sale of the France-based shopping price comparison company to U.K. based-
private equity firm, Jamplant Ltd., was confirmed on Nov. 21 by a Yahoo spokesperson.
In 2004, Kelkoo was purchased by Yahoo for $576 million in hopes of boosting its global service capacity. The sale of one of its major
assets adds to the shaky environment at Yahoo Inc.
Earlier this year Yahoo rejected a takeover bid from Microsoft for $47.5 billion. Then, last week Yahoo announced that Chief Executive
Jerry Yang would step down for a new CEO to step in. All while it is in the process of reducing at least 1,500 jobs at the company.
Microsoft's CEO, Steve Ballmer, confirmed that Microsoft will not be resuming takeover talks with Yahoo, sending Yahoo's shares even
lower. The terms of the Kelkoo deal with Jamplant have yet to be publicly disclosed. Former Kelkoo CEO disclosed the news on his
blog here is the link (it may have to be translated from French though).
Source
Tags: Yahoo, Private Equity, Yahoo private equity, Jamplant, Private equity news, Jamplant Ltd. Yahoo Private Equity Deal, Kelkoo
private equity purchase, Yahoo Mergers and Acquisitions, Yahoo (YHOO)
Link to This Resource: Yahoo Private Equity Deal
http://privateequityblogger.com/2008/11/yahoo-private-equity-deal.html
Private Equity CFO
Private Equity CFO
Private Equity CFO | Chief Financial Officers
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Over the last few years private equity firms have succeeding in attracting many chief financial officers from jobs at large
public companies. These CFOs opt out of cushy, high-ranking positions to work for private equity firms and their portfolio companies.
Private equity firms are willing to compensate chief financial officers very competitively because there is a high demand for executives
with experience managing a company's finances with a wide range of responsibilities including financial planning, record keeping and
protecting against risk. Chief financial officers also make the move for the possibility of sharing in the immense profits from a successful
private equity deal when the portfolio investment is sold to another buyer or taken public. One negative aspect for entering the private
equity industry is that many private equity CFOs must move from company to company as their services are required. Chief financial
officers often give up a safe and consistent job with great pay for the career in private equity but find that not all private equity firms are
successful. CFOs are then faced with the decision between taking a potentially higher paying, exciting position in private equity with a
risk of losing money in the new job or remaining in a stable, well-paying job with one company.
The idea of moving to a private company may be attractive to an experienced CFO because private equity-backed companies are often
in a transitional period that allows for the chief financial officer to use his talents to improve the company. The challenge of taking an
underperforming company and having a vital role in its success can be appealing to CFOs unsatisfied in their current work.
More Valuable as a Private Equity CFO
Despite the tech burst, which showcased the risk to those working at private equity-backed firms, many CFOs welcome the risk
because the huge monetary incentive if they are able to produce positive results and make the company attractive to the public or
another buyer. Additionally, chief financial officers may feel undervalued or unappreciated at a standard post within a firm. In many
large public companies, the CEO often dominates the lower-level executives like the CFO but many cheif financial officers working in
smaller private equity-backed companies are regarded as vital to the success of the company and treated with more attention. In
private equity, CFOs are a "hot commodity" and the private equity model allows them to showcase their talents in an important way.
Although CFOs are in high demand, when making the decision to transition to private equity they may have to prepare for a period of
unemployment.
CFOs working in private equity have taken on a different role than they did a few years ago, according to Chad Brownstein a managing
partner at ITU Ventures in Los Angeles, he says "Before, venture capital firms hired smart numbers guys from accounting firms (as
CFOs) that the CEO could manage." Now it seems that private equity firms are willing to pay a CFO higher and offer a more prominent
within the company. Rather than focusing mainly on accounting, today's private equity CFO also takes on a major interest in the
company's capital structure and finances. Mr. Brownstein illustrates the point, ―Every CFO we have is part of our network. We are
working equally as hard to get the right CFO as the (right) CEO. It‘s a critical role.‖
As chief financial officers anticipate a greater role and higher compensation in private companies the transition from large public
companies to smaller private equity firms may become more and more attractive, even with the inherent risks.
Source
Tags: Private Equity CFO, Private equity Chief Financial Officer, Private Equity Chief Financial Officer, Private Equity CFOs, Chief
Financial Officer in Private Equity, private equity chief financial officer conference
Link to This Resource: Private Equity CFO
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http://privateequityblogger.com/2008/11/private-equity-cfo.html
Private Equity Growth
Private Equity Growth
How Private Equity Firms Promote Growth
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Private equity firms vary in their investment industries, region, size and many other factors but there is a common goal among all
private equity firms: to take a company with potential for growth and provide the resources necessary to realize that potential. Private
equity firms do this by injecting capital, prescribing a new strategy, restructuring the company or adding new talent to the existing
management team. The success of a private equity firm depends on its ability to realize the growth potential of its investments and
thereby satisfying investors with profitable returns from the investment.
Private equity firms are always looking for underperforming companies that are not realizing their growth potential either because they
do not have the resources necessary for expansion or they are poorly managed. Companies that are underperforming are attractive
because private equity talent pride themselves in being able to take the company and turn it into a more efficient and valuable firm,
using the resources available through the private equity firm. The private equity firm then hopes to profit from the held company by
either holding an initial public offering or selling to another buyer, giving positive returns to the limited partners of the fund.
A key advantage of private equity firms holding a company is that it can focus on long-term needs and changes, unlike many public
companies. Investors in public companies may not see the benefit of investing in a company long-term, fearing it would reduce short
term investments. But with private equity funds focusing in the long-term, the fund can invest in research and development that may
hurt returns in the short-term but create greater returns over time. By utilizing the vast resources available to private equity firms, many
companies have profited impressively under private equity ownership. In this way, private equity can be a great way to promote a
company's growth potential.
Tags: Private Equity Growth, Private Equity Grow, Private Equity Firms, How Private Equity Firms, Private equity firms growth, private
equity capital, private equity performance, private equity investment
Source
Link to This Resource: Private Equity Growth
http://privateequityblogger.com/2008/11/private-equity-growth.html
Private Equity Law
Private Equity Law
Top Private Equity Law Firms
Private equity firms, along with hedge funds, have often tested the legal limits of investing and have been the
subject of lawsuits by institutional investors and various entities, even the federal government. The risky practices of the private equity
industry can sometimes lead to the courtroom and many buyout firms have found it wise to work closely with attorneys.
Private equity firms do not only seek lawyers for protection from lawsuits but lawyers often advise private equity firms on organizing
funds' structures, drawing up and negotiating contracts. The boom in the private equity buyout industry led to the rise of many law firms
specializing in private equity and the relationship between attorneys and private equity remains an important one.
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PitchBook Data has compiled a ranking of the top 10 private equity law firms:
Top 10 Private Equity Law Firms 2008
Kirkland & Ellis
Jones Day
Skadden Arps Slate Meagher & Flom
Weil Gotshal & Manges
Simpson Thacher & Bartlett
Latham & Watkins
Paul Weiss Rifkind Wharton & Garrison
O'Melveny & Myers
Hogan & Hartson
Ropes & Gray
Please send me an e-mail at Theo@peblogger.com if you'd like discuss adding your law firm to the private equity law firm directory.
PitchBook Data
Tags: Private Equity Law, Private Equity law firms, private equity law firms list, list of private equity law firms, top private equity law
firms, top ten private equity law firms, top private equity law
Link to This Resource: Private Equity Law
http://privateequityblogger.com/2008/11/private-equity-law.html
Investment Training & Certifications | Professional Designations
Investment Training
Investment Training & Certifications | Designations
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Below are a series of articles hosted by
HedgeFundBlogger.com on investment training programs available for those professionals who are looking to work through a
certification program which could help them move their career forward:
Chartered Hedge Fund Associate (CHA)
Financial Designation on Hedge Funds | New Site
Chartered Financial Analyst CFA
CFA Discussions | Exam and Forum Discussion
CFA vs. CAIA
Chartered Financial Analyst (CFA) Study Tips
CFA Study Materials
CFA Salary | Average Starting CFA Salary Ranges | 1 Page Guide
CFA Study Guide | The One Page Guide to CFA Study Guides
CFA Institute | Exams, Books, Resources & Standards
CFA Pass Rate
How to Study for the CFA Exam
CAIA Study Tips | CAIA Test Study Materials Guide
CFA Registration
CFA Online Exam
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CAIA Preparation Notes | CAIA Exam Prep Guide
CAIA Exam Level 1 2 3 | Prep Questions
CFA Study Guide
CFA Level 1 Exam Details
CFA Courses
CFA Designation Guide | 1 Page Guide to the CFA Designation
Chartered Alternative Investment Analyst (CAIA)
Tags: Investment Trainings, Investments Training, Investment Certification, Investment Certifications, Investment Designation,
Investment Designations, Financial Training, Finance designation
Link to This Resource: Investment Training & Certifications | Professional Designations
http://privateequityblogger.com/2008/11/investment-training-certifications.html
Private Equity Companies
Private Equity Companies
List of Largest Private Equity Companies
A lot of public attention toward private equity

falls on large formerly public companies being backed by private equity. Companies like Chrysler and Toys R Us are familiar for many
Americans and they are among the largest private equity owned companies. Private Equity Database has constructed a great ranking
of the largest American private equity owned companies.
This table is constructed from Forbes' 2008 list of America's largest companies and edited to include only the companies owned by
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private equity firms. PE Database makes a good observation that the majority of the deals were executed between 2005 and 2007
during the boom of private equity buyouts in the United States. Private equity buyouts of public companies like those of this list are in
decline. Many observers attribute this decline to the global credit crunch making it more difficult for buyout firms to obtain leverage as
well as the overall instability of the economy.
List of Largest Private Equity Companies
‗07 Rev Deal Size

Rank Company Private Equity Owner (s) Announced
(bil), (1) (bil)
1 Chrysler $59.7 Cerberus Capital $7.2 05/2007
GMAC Financial
2 $31.49 Cerberus Capital $14.0 04/2006
Services
3 HCA $26.86 KKR, Bain Capital, Merrill Lynch Private Equity $21.0 07/2006
4 US Foodservice $20.16 KKR, Clayton, Dubilier, & Rice $7.1 07/2007
5 Toys R Us $13.79 KKR, Bain Capital, Vornado Realty $6.6 03/2005
6 Aramark $13.2 GS Capital Partners, CCMP, Thomas H. Lee, Warburg Pincus $8.3 08/2006
7 Harrah‘s Entertainment $10.83 Apollo, TPG Capital, Blackstone Group $27.8 10/2006
8 Dollar General $9.9 KKR $6.9 03/2007
Performance Food
9 $9.48 Blackstone Group, Wellspring Capital $1.3 01/2008
Group
10 CDW $8.15 Madison Dearborn Partners $7.3 05/2007
11 Hilton Hotels $8.09 Blackstone Group $26.0 07/2007
12 First Data $8.05 KKR $29.0 04/2007
13 Energy Future Holdings $7.99 KKR, TPG Capital, GS Capital Partners $45.0 02/2007
14 Aleris International $6.6 TPG Capital $1.7 08/2006
Hexion Specialty
15 $5.81 Apollo - -
Chemicals
Freescale
16 $5.72 Blackstone Group, The Carlyle Group, Permira, TPG Capital $17.6 09/2006
Semiconductor
17 Keystone Foods $5.58 Lindsay Goldberg - 2004
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‗07 Rev Deal Size
Rank Company Private Equity Owner (s) Announced
(bil), (1) (bil)
International Auto
18 $5.31 WL Ross - -
Components
19 Avaya $5.1 TPG Capital, Silver Lake Partners $8.2 06/2007
20 Pro-Build Holdings $5.0 Fidelity Capital - -
Silver Lake Partners, TPG Capital, Bain Capital, The Blackstone

21 SunGard Data Systems $4.98 $11.3 03/2005
Group, GS Capital Partners, KKR, Providence Equity
22 NewPage $4.66 Cerberus Capital $2.3 01/2005
23 Neiman Marcus $4.60 TPG Capital $5.1 05/2005
OSI Restaurant
24 $4.15 Bain Capital, Catterton Partners $3.2 11/2006
Partners
25 McJunkin Red Man $3.95 GS Capital Partners - 01/2007
Source
Tags: Private equity companies, list of private equity companies, private equity owned companies, private equity company, companies
owned by private equity, private equity public companies, private equity owned company, largest private equity owned companies
Link to This Resource: Private Equity Companies
http://privateequityblogger.com/2008/11/private-equity-companies.html
Arizona Venture Capital
Arizona Venture Capital
Arizona Venture Capital Event| AZ Venture Capital
I was recently contacted about a venture capital and angel investor event in Sedona, Arizona. As there are
somewhat less opportunities around the West coast for events like these (outside of California), I thought some readers may be
interested in attending. The event is sponsored by FundingPost which has hosted over 100 sold out venture capital events in 17 cities
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over the last 6 years. The event includes a panel discussion and various opportunities to network with investors and other
entrepreneurs. Here is the site's description of the event:
At our next Sedona event, the panel of investors will focus on Early-Stage Venture Investing - how to meet investors, pitch them, and
what it really takes to get them to write you a check! We will be discussing trends in Early-Stage Investing, hot sectors, sectors that
these VCs look at, things that are most important to them when they are considering an Investment, the best and worst things an
entrepreneur can do to get their attention, additional advice for entrepreneurs, and, of course, the best ways to reach these and other
Investors. There will be plenty of time for networking with the Investor panelists, both before the panel & afterwards at the Cocktail
Party.
The information for the event can be found at FundingPost's website but here are the basic details. The event begins on Thursday,
December 4 2008 with an optional pitching workshop from 11am-1pm with a 2-minute opportunity to pitch to investors and the main
event is from 2pm-7pm all at the Sedona Rouge Hotel & Spa. The cost of attending the Arizona venture capital event is $75 with
discounted room rates depending on party size. The venture capital speakers include Laura Sachar, General Partner, StarVest
Partners Rob Moss, General Partner, Kingdom Venture Partners Craig Ballard, Managing Partner, Pacific Southwest Ventures Dee
Riddell Harris, President, Arizona Angels Venture Group.
Tags: Arizona Venture Capital, Arizona Venture Capital event, Arizona Venture Capital investors, Arizona Private Equity, Arizona Angel
Investors, Arizona Venture Capital Conference, Venture capital in Arizona, AZ Venture Capital
Link to This Resource: Arizona Venture Capital
http://privateequityblogger.com/2008/11/arizona-venture-capital.html
San Francisco Private Equity
San Francisco Private Equity
San Francisco Private Equity | Private Equity Firms List
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San Francisco represents a major location for private
equity activities in the United States, especially in the West Coast.
Along with a widely recognized venture capital industry--spurred on by Silicon Valley tech start-ups--San Francisco has built a hub for
larger private equity deals. As the technology sector matured following the dot com boom and bust, private equity firms began to invest
in the now more stable and accurately valued tech companies with apparent success. Of course, San Francisco private equity is not
exclusive to technologies but it is a common investment for firms in the Bay Area.
In this decade's peak in private equity, San Francisco was flooded with institutional investors eager to get in on the private equity
scene. In 2004, the chairman of San Francisco's major private equity group, Hellman & Friedman, remarked after closing its $3.5 billion
fund, "We could have raised any amount of money." Golden Gate Capital's managing director expressed similar sentiments when
describing the easy fund raising efforts, "Marketing would have been a waste of time."
After that boom, San Francisco remains a popular location for private equity groups hoping to capitalize on both coasts. Many firms
open a branch in San Francisco in addition to a typical East coast location like New York City or Boston. Along with the high amount of
wealthy investors in and around the Bay Area, San Francisco private equity firms are also able to reach other cities like Portland or
Seattle that have fewer private equity firms.
Surprisingly, I have not seen any free directories of private equity firms in San Francisco so I have built a list, although it is far from
including all San Francisco firms. I am in the process of expanding the following list of San Francisco private equity and venture capital
firms, if you know of any any private equity groups based in San Francisco please e-mail the name(s).
List of San Francisco Private Equity Firms
Alpine Investors, LP
Aldrich Investors
Calera Capital
Champlain Capital Partners
Dorset Capital Management

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Francisco Partners
Freedman, Fleischer and Lowe
Generation Partners
Genstar Capital LLC
Golden Gate Capital
Harris McCall & Associates
Gryphon Investors
Hellman and Friedman
JH Partners
Partech VC
Saints Capital
Serent Capital
TSG Consumer
Vista Equity Partners
Tags: San Francisco Private Equity, San Francisco Private Equity Firms, San Francisco Private Equity Industry, California Private
Equity, California Private Equity, San Francisco Venture Capital, San Francisco Venture Capital Firms, San Francisco Private Equity
Firms List, San Francisco Private Equity Firm Directory
Quote Source
Link to This Resource: San Francisco Private Equity
http://privateequityblogger.com/2008/11/san-fransisco-private-equity.html
Venture Capital Investment
Venture Capital Investment
Strategies for Obtaining Venture Capital Investment
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Everyday I receive e-mails from entrepreneurs wondering how to obtain venture capital for launching a start-up or for
expanding their small business. While there is no simple solution for attracting venture capital investment, here are some basic rules to
keep in mind for making your business idea more attractive to venture capitalists:
Make sure your business idea is unique, but marketable: This is a very important aspect for venture capitalists because a revolutionary
idea has huge profit potential. While originality is key it is nothing if the idea is not marketable. Venture capital funds invest in
companies that they believe will be profitable because some of those profits are returned to investors, so an ideal proposal is very
marketable/profitable and unique.
Be Honest About Your Proposal: Venture capitalists are very good at judging the authenticity of a proposal and if the numbers don't
add up to your predictions they won't trust you and won't invest in you. Highlight the good aspects of your business but don't distort the
facts about competition or capital needs to make it more appealing to the VC.
Get to Know the Venture Capitalist, Too: Venture capital funds typically invest in companies for a number of years so it's important that
the VC is someone you can work with. While you're interviewed by the venture capitalist, you should be doing the same by getting a
sense for his business ethics, management style and any factors that could potentially damage the partnership.
If At First You Don't Succeed...: Venture capital firms are notoriously fickle about selecting companies to invest in, so don't be afraid to
fail in your first talk with a venture capitalist. If your business is unique, marketable and has all the components of a sound investment
obtaining venture capital is possible.
Tags: Venture Capital Investment, venture capital private equity, raising venture capital, finding venture capital, working with venture
capitalists, venture capital firms, venture capital funds, VC, venture capital and private equity investment
Link to This Resource: Venture Capital Investment
http://privateequityblogger.com/2008/11/venture-capital-investment.html
South Africa Private Equity
South Africa Private Equity
Private Equity Investment in South Africa
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South Africa‘s private equity industry is showing
promising growth in recent years, nearly doubling in size from 2006 to 2007. Africa obviously has problems in maintaining stability in
many nations--both political and economic--but South Africa has been receptive to private equity and its financial markets are
developing to meet the global standards. This is it is important to keep an eye on this exciting country that is gradually growing into an
important emerging private equity market.
The Venture Capital and Private Equity Industry Performance Survey that analyzed South Africa‘s private equity market from 2006-
2007 reveals a booming economy with impressive achievements. Most notably, South Africa‘s private equity industry holds R86.6
billion under management as of December 31, 2007, compared to December 31, 2006 at R59.3 billion. This is a 46% boost in the
industry, a major jump that brought the percentage of South Africa‘s GDP from private equity funds under management up from 1.7%
to 2.8% in the same period. Another major increase from the end of 2006 to the end of 2007 was the number of funds under
management by independents which rose by 74%.
Other highlights of the report from Dec. 31 2006 to Dec. 31 2007 include:
• An increase of funds raised annually from R14.5 to R15.3 billion
• Investment activity increased 270% in the one year period, spurred on by Bain Capital‘s big buyout of Edcon, valued at R8.7billion
• Private equity activity reached the Global top 10 for the first time.
United States investors have shown a major interest in doing business in South Africa. 64% of funds raised during 2007 were from U.S.
sources, and American investors also contributed 39% of funds raised the previous year. According to the report, this makes the United
States the biggest contributor of total funds raised to date and not yet returned to investors (followed closely by South Africa and then
the United Kingdom).
South Africa has demonstrated that it can maintain a stable economy that fosters growth in the private equity industry. As many
investors look for regions outside the United States and UK, emerging markets like South Africa will take on a critical role in private
equity.
Tags: South Africa Private Equity, South Africa Private Equity Guide, South Africa Venture Capital, Private Equity investment in South
Africa, Private Equity South Africa, Africa Private equity
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Link to This Resource: South Africa Private Equity
http://privateequityblogger.com/2008/11/south-africa-private-equity.html
Private Equity Book
Private Equity Book
Book Review | Lessons from Private Equity
This is the first book review on this blog but in the future, I will be adding more recommended books on private
equity. I am currently reading a book on valuation and another on constructing a successful elevator pitch. I hope to develop a library of
helpful private equity books on this site and I am working on putting together an e-book that will be available for free download as a
complimentary resource for readers here.
Lessons from Private Equity Any Company Can Use is a smart, concise guide to restructuring and employing profit-maximizing
practices applicable to any firm. The book is written in a simple language that does not require prior knowledge of private equity but
uses the ideas that private equity firms use to extract value and promote efficiency.
Rather than a comprehensive book on private equity, Lessons from Private Equity is a memo to CEOs describing the basics of private
equity and how the fundamental goals of private equity firms can be used to improve any company. The case studies used in this book
illustrate the point that utilizing private equity methods for managing a firm has led many public companies to success. The Sealy
Corporation and Nestlé are the most prominent examples referred to throughout the text as examples and indeed both these firms
have demonstrated great business management skills in producing profits to public investors (Nestlé more so than Sealy in recent
years).
The authors provide a step-by-step process for success:
Define the Full Potential: Use strategic due diligence to set a target "increased equity value."
Develop the Blueprint: Develop a plan for achieving that goal.
Accelerate Performance: Putting the plan into action by matching the blueprint to your company and overcoming obstacles to success.
Harness the Talent: Hiring the individuals that can make your company's blueprint a reality by either looking inside the company or
seeking outside talent.
Make Equity Sweat: This is a fundamental aspect of private equity firms managing a company, relying on "managing working capital
aggressively, disciplining capital expenditures, and working the balance sheet hard."
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Foster a Results-Oriented Mind-Set: Take the private equity disciplines learned in the book and implement them permanently into your
firm's culture and periodically reevaluate your company to ensure it is maintaining the formula for success.
The strength of Lessons from Private Equity lies primarily in its brevity (it is just over 100 pages long) and its straight-forward approach.
The ideas put forward are not counter-intuitive, they rely on basic strategic due diligence to identify underperforming areas and people
to establish a more effecient firm. This book is ideal for executives and young professionals hoping to reach the higher rungs of a
company, but also applies to entrepreneurs managing small companies. Lessons from Private Equity is accurately priced low because
of its short page-length but I found a great deal of value in this little book.
The authors of Lessons from Private Equity are Orit Gadiesh and Hugh MacArthur are both experts in improving management from the
large private equity firm Bain & Company. Gadiesh serves as the chairman at Bain and has been listed on both Forbes' "The Hundred
Most Powerful Women in the World" and the "Most Powerful Women in Business". MacArthur heads Bain's Global Private Equity
business and advises private equity firms on strategic due diligence on targeted firms and improving performance of those companies.
Tags: Lessons from Private Equity Any Company Can Use, Lessons From Private Equity, Private Equity book review, Private Equity
Books, Private Equity Resources, Private Equity Education, Reviews of Private Equity Books
Link to This Resource: Private Equity Book
http://privateequityblogger.com/2008/11/private-equity-book.html
Private Equity Deals
Private Equity Deals
When Will Private Equity Deals Return?
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According to Pitchbook Data "For the first three quarters of
2008, transaction volume for leveraged buyouts and growth capital financings was 1,268, a 34% decline from 1,935 deals over the
same period a year ago." With the credit crunch and the ensuing financial crisis it has been a tough year for executing buyout deals,
especially ones relying on leverage. Many banks have tightened the purse strings and are more hesitant to provide private equity firms
with the leverage necessary for the mega-buyouts like during the industry's peak a few years ago. So an important--and difficult--
question is when will private equity deals return? Erin Griffith from PEHUB reports some of the answers given by the panel at The
Deal's 2009 PE Outlook Conference:
Martin Mannion, Summit Partners: The time is now. With discipline, we are seeing the confidence to do deals now.
Jonathan Colby, Carlyle Group: It will probably be the second half of next year before we see any real activity.
Nicole Arnaboldi, DLJ Merchant Banking Partners: It‘ll be a multi-year crawl back that will start in the middle market.
Bruce Bowden, Head of M&A, Nokia: The end of this year will be a disaster, and for anything to start looking up, we‘re going to need a
sign. It could be late into next year.
Erin makes a good point responding to Colby's estimate: "The ―second half of next year‖ sentiment was certainly reminiscent of
something I‘d heard before, say, at outlook conferences at the end of last year!" Unfortunately, this underscores an important footnote
to any panel discussion like this, that it's very difficult to estimate when deals will be made more frequently. The return of private equity
deals relies on many variables like investors and private equity firms regaining confidence, the financial crisis resolving, banks lending
like before; all of which may or may not happen by the second half of last year. So, while it is important to hear what the big dealmakers
are projecting, it's worth noting that predictions like these are probably nothing more than (highly) educated guesses.
Tags: Private Equity Deals, Private Equity Deal, Private Equity Questions, Private Equity Buyouts, Buyout Deals, Buyout reports,
private equity deals volume, PEHUB, Private equity conference
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Link to This Resource: Private Equity Deals
http://privateequityblogger.com/2008/11/private-equity-deals.html
Private Equity Secondary Market | What is the Private Equity Secondary Market?
Private Equity Secondary Market
Private Equity Investors Turn to Secondaries Market
Generally, the secondary market for private equity is a market for the buying and selling of capital
commitments to private equity funds by limited partners. The secondaries market has seen a large boom recently as many private
equity investors are selling their investment commitments at considerably lower prices than the estimated value. The financial crisis
and low performance of many private equity funds has led to this major push to 'dump' private equity investments even at a short term
loss because the investors believe that it could get worse or cannot afford to remain committed to the fund as long as they are
obligated. As the private equity secondary market becomes more and more popular, it's important to have an understanding of what the
secondaries market for private equity is.
By definition, private equity investment is different from the public investment markets where anyone can purchase shares of publicly
traded companies. The private equity secondaries market is a way for private equity investors to exchange pre-existing investor
commitments, similar to public exchange markets. A big difference though is that the private equity secondaries market is involves
trading illiquid assets of long-term commitments to private equity funds.
The emphasis of these commitments is long-term because limited partners typically commit to private equity funds for at least 5 years
and as long as 10 years for some fund. The reason is mostly that private equity funds seek to maximize profits of portfolio companies
by restructuring and reducing the areas that cut into profits. To be successful, private equity firms prefer a longer time period to make
the changes and for good reason.
By having a longer time frame to carry out the adjustments, private equity firms are able to find what is best for the company's success
rather than worrying over producing near-immediate returns to investors. This is also a concern of private equity for limited partners
because they attach themselves to the fund for such a long time period, during which various problems could occur within the
investment or beyond (such as the current financial crisis) which causes the investor to want to cash out early.
This is where the secondary market for private equity proves useful to investors who want to exit their longterm investment. Especially
in times of turmoil, private equity investors may want out and in this event activities in the secondaries market surge. A great example
of this is the aftermath of the Dot-Com crash where many private equity investors, especially those in venture capital funds, scrambled
to sell off their investments that were rapidly sinking in value. During the time period of the Dot-Com bubble's burst and the subsequent
retreat by limited partners, the volume of transactions in the secondaries market rose from an estimated 2-3% to 5%. This led to a
massive influx of undervalued investments, a large amount from tech-focused venture capital funds, and after a couple years the
private equity secondaries market was more reasonably priced to the actual value. This may change again, however, as many nervous
or hurt private equity investors are selling off investment commitments seemingly at a much lower price than the actual value, similar to
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the aftermath of the Dot-Com collapse.
Types of Transactions on the Private Equity Secondaries Market
Sale of Limited Partnership Interests: The most common transaction on the private equity secondaries market is the sale of limited
partnership interests. Nearly all private equity funds (mezzanine fund, venture capital fund, angel investor fund etc) can be sold on the
secondaries market and many investors use this to sell capital commitments to funds to other investors hoping to benefit from what
they think is a undervalued investment. There are several variations on the basic sale of a limited partnership interest: a structured joint
venture is a typically more complicated exchange where the buyer and seller negotiate terms that suit both parties. Securitization is an
option for investors that want some liquid assets by investing its limited partner interests into a new vehicle, often a collatoralized fund
obligation which issues notes or other liquid assets to the investor in return. A stapled transaction is a negotiated agreement when a
general partner is raising another fund which ties the limited partner's current fund investment to the new fund.
Sale of Direct Interests: This is different from the sale of limited partnership interests because it trades a direct investment in operating
companies rather than in an investment fund. A secondary direct transaction is the sale of a captive portfolio of direct investments that
must be either actively managed by the buyer or the buyer is supposed to arrange for a manager. Synthetic secondary transaction
occurs when a secondary investor purchases a limited partnership holding a portfolio of direct investments. A tail-end transaction deals
with the interest in a private equity investment that is nearing or has passed its expected life.
The secondaries market is of special importance as private equity investors look to the private equity secondaries market as an exit for
their declining investment or to avoid expected declines.
Partial source: Wikipedia
Tags: Private Equity Secondary Market, Private Equity Secondaries, Private secondaries market, secondaries market, secondaries,
private equity investors, limited partnership agreements, financial crisis, selling limited partnership capital commitments.
Link to This Resource: Private Equity Secondary Market | What is the Private Equity Secondary Market?
http://privateequityblogger.com/2008/11/private-equity-secondary-market-what-is.html
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Private Equity Executives Recruited
Private Equity Executives Recruited
Banks Recruit Private Equity Executives Recruited
As banks have struggled to realize returns on their investments

under the sagging economy, many have turned to private equity management teams for help. As reports reveal an expected 70,000 job
cut on Wall Street, private equity executives are being recruited for their active managing skills.
FT reports that some banks have sought help from private equity executives to actively manage floundering companies. While banks
are slashing other branches, most often investment banking, they are taking on new talent from the private equity industry. Banks are
generally not skilled in improving the performance of companies, but private equity executive management teams are. Banks are
outsourcing the work to private equity executives who are able to restructure firms and extract profits, an especially important ability as
many of these firms face collapse if new management cannot correct the situation. Phillip Davidson of KPMG explains why banks are
hiring private equity executives: ―The idea is to hire people who can actively manage these companies and sit on their boards to
nurture them along and put the right managers in,‖ said Mr. Davidson. ―These are not things that banks are equipped for, so they are
turning to private equity.‖
According to Mr. Davidson, the private equity management teams are comprised of 5 to 15 people. He says that some of these teams
were recruited by banks last year, but the demand has increased under the pressure of the financial crisis this year. So it would seem
that while investment banking firms are reported today to be axing another 70,000 jobs, private equity executives are being
competitively recruited by these banks.
The ability to restructure companies and increase the value of firms is an important talent that private equity executives are known for.
The book, Lessons from Private Equity, offers an overview of this strategy in relation not only to private equity firms but any firm trying
to increase productivity and boost value. I will be writing a review and summary for this book later this week as today's article shows
that the ability to master restructuring and value-adding is crucial to succeeding in such a down market.
Source: FT
Tags: Private Equity executives, private equity investment banks, private equity banks, private equity investment, private equity CEOs,
Private equity executives management teams, value-added, Private equity and the financial crisis
Link to This Resource: Private Equity Executives Recruited
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http://privateequityblogger.com/2008/11/private-equity-executives-recruited.html
Endowments and Private Equity
Endowments and Private Equity
Universities Suffering From Low Investment Returns
The financial crisis appears to be hurting the nation's universities with many schools being forced to scale back spending and
make major cuts to stay afloat. Importantly, many schools are said to be reassessing their endowment investment portfolios, which
have a strong portion invested in private equity and hedge funds.
Although most universities will not release their endowment returns until the end of the academic fiscal year, June 30, however th e
widespread expectation is far from optimistic. In light of the financial crisis and negative predictions of investment returns this year,
many universities have imposed a spending freeze and made budget and employment cuts. During the bull market of the previous few
years, many universities saw their investment portfolio returning very favorably and took on expensive long-term construction and
remodeling projects for the campus. Now, it seems university administrations are rethinking bold initiatives and reigning in spending:
The president of Amherst, a Massachusetts liberal-arts college, recently said its endowment is off about 25% since June 30, when it
totaled $1.7 billion. Maine's Colby College said its endowment has fallen by a similar amount since its peak a year ago. Wesleyan, in
Middletown, Conn., is delaying the construction of a major science building and filling vacant positions only when necessary, to help cut
$10 million to $15 million in expenses in the next few years. Cornell is freezing most hiring and delaying new projects. (Barron's)
The financial crisis' impact is not limited to the smaller colleges though, the large East Ivy-league schools Harvard, Yale and Princeton
are said to be feeling the effects as well. These universities caught public attention when they received impressive returns by putting
their endowments in alternative investments like private equity and hedge funds.
Yale, Princeton and Harvard have recently focused the majority of their endowment funds in private equity, hedge funds and "real"
assets ranging from oil to timber. All three devoted most of their funds in those three groups with Yale and Princeton claiming 70% is
invested there and Harvard invests only slightly less in the three areas at 57%. Some critics have argued that the universities should
place more funds in traditional stocks, bonds and mutual funds that have less risk and the argument has been somewhat bolstered by
the shaky performance of private equity and hedge funds.
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As universities become more cautious of investing in private equity they have sought to sell off much of their purchased stakes to the
secondary market. According to Barron's, "The going rate is said to be about 50% of stated investment values." Meaning that those
limited partners turning to the secondary market are willing to sell off their investments at far less than normal, illustrating a growing
concern that alternative investments are going to decline further in value than they already have.
This represents a major problem for private equity firms who rely largely on major investors like these universities for capital calls. A
domino effect is also a concern for private equity groups, as pension funds could follow the universities lead; pensions funds like the
California Public Employees Retirement System represent a huge percentage of capital for private equity funds. Universities using their
endowments to invest in private equity has built a strong relationship and the potential loss of this investment source could spell more
bad news for private equity.
Tags: Private Equity, Endowments, Endowment Private Equity, Private Equity and Colleges, Private Equity University, Private Equity
Universities, Private equity Endowment investment, Harvard Endowment, Princeton Endowment, Yale Endowment
Link to This Resource: Endowments and Private Equity
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http://privateequityblogger.com/2008/11/endowments-and-private-equity.html
Top Private Equity Schools
Top Private Equity Schools
List of Top 25 Schools for Private Equity
A common question for students hoping to enter the private equity industry is what is the best private equity school? While many
students enter private equity through various business schools, and attending a top-tier business school can dramatically help one's
chances of working in private equity, there are some schools that offer a specific focus on private equity. For example, Dartmouth's
Tuck Business School introduces business students to private equity through their Center for Private Equity and Venture Capital.
While attending a recognized business school is helpful for a career in private equity, it is not required and many professionals working
in the private equity industry have taken unique paths to private equity that may or may not include earning an MBA or studying finance
even. Some general partners at private equity firms or hedge funds have different backgrounds than what is stereotypical for the
industries, for example the successful hedge fund manager, David E. Shaw has an advanced degree in computer sciences.
For those hoping to enter private equity, some schools increase your chances by reputation, others by directly preparing students for
buyout modeling and fund operations. Private equity is a challenging environment and an educational background is valuable to
entering the industry but it is open to anyone who has the desire to learn the skills necessary to succeed, a passion for working in the
private equity industry and a strong work ethic.
Top Private Equity School List

With that said, the list of private equity schools was prepared by Private Equity Database, which compiled the highest number of
placements in the private equity industry by school. The list of the top 25 private equity schools includes both graduate business
schools and undergraduate schools that have proven most successful at private equity placement of its students.
List of the Top 25 Private Equity Schools
1 Harvard University
2 University of Pennsylvania
3 Stanford University
4 University of Chicago
5 Northwestern University
6 New York University
7 University of Virginia
8 Dartmouth College
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9 Columbia University
10 Yale University
11 Duke University
12 University of Michigan
13 Cornell University
14 Georgetown University
15 University of California, Los Angeles
16 University of California, Berkeley
17 Massachusetts Institute of Technology
18 University of Texas, Austin
19 University of Southern California
20 University of North Carolina, Chapel Hill
21 Indiana University
22 Emory University
23 University of Rochester
24 Carnegie Mellon University
25 Arizona State University
Permanent Link: Private Equity Schools
Tags: Private Equity education, private equity programs, private equity schools, list of the top 25 private equity schools, top 10 private
equity schools, best private equity business schools, private equity school, private equity business programs, private equity MBA
Link to This Resource: Top Private Equity Schools
http://privateequityblogger.com/2008/11/top-private-equity-schools.html
Private Equity Portfolio
Private Equity Portfolio
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How Private Equity Portfolio Firms Can Succeed
The economic downturn and the financial collapse of this year have left many private equity firms
struggling to produce returns from their portfolio companies. The executive management of these firms have an important role in the
company's survival by providing clear leadership and sound strategy in unsettling times.
Mark Rittmanic is the founder of ForteCEO, a leading senior interim executive firm for private businesses in the United States. He
offers private equity portfolio firms and other private businesses the opportunity to work with ForteCEO's executives--all of which have
at least 20 years experience leading successful businesses--to exploit profitable areas and overcome obstacles. Mr. Rittmanic offers
his thoughts on how private equity portfolio firms can survive in a challenging economy here.
"Four Survival Tips for Struggling Private Equity Portfolio Firms"
1 Immediate Renewal Leadership: A challenging economy can be a blessing when you see and react to issues that were not revealed
when the tide was high, especially leaders who are not able to adapt. If you have a struggling leader with a "deer in the headlights"
reaction to the business downturn, you need to take decisive action and bring in overqualified leadership to steer the ship through the
storm. Since you need this assistance right now, and likely will not need this level of leadership long term, consider an interim CEO to
work with the current team and help them succeed.
2 Demand Industry Expertise: Many PE firms have operational partners as a first line of defense for portfolio assistance. A prolonged
downturn, which certain industries are currently facing, is no time for on the job training in a new industry. If your operating bench is
light on the right industry experience, consider ForteCEO's operating executives who have led business renewals in more than 30
industry sectors.
3 Don't Assume We Have Seen the Worst: We are preparing clients in certain industries to survive 2009 with 30 to 40% lower annual
revenues. At first blush, this seems impossible, and it may be with your current leadership. But taking a focused, zero-based approach
with people, clients, operating expenses, product SKU's and service offerings usually results in a dramatically different view of what is
necessary for survival. It just takes a leader who has done it before.
4 Get Everyone Involved: In the middle market, most great companies are based on getting extraordinary accomplishments from
ordinary people. This is never truer than when the firm is under fire. Take advantage of times like these to galvanize your team around
the goal of survival, which may include pay cuts and other sacrifices for all parties until you are out of the woods. Don't shield your
people, landlords, vendors or other key constituents from your challenges. Make them part of the renewal effort.
By Mark Rittmanic, Founder of ForteCEO
Tags: Private Equity Portfolio, Private Equity Portfolio Firms, Private Firms, CEOs, ForteCEO, Private Equity Owned Companies,
Private Firms, Private Businesses, Tips for Private Equity Portfolio Firms
Link to This Resource: Private Equity Portfolio
http://privateequityblogger.com/2008/11/private-equity-portfolio.html
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The Blackstone Group Posts Losses
The Blackstone Group Posts Loss
The Blackstone Group Posts $502.5 Million Loss
The Blackstone Group, one of the most successful private

equity firms has posted a significant loss in the third quarter of 2008. Blackstone reported losses in nearly all of its businesses totaling
at a $502.5 million loss. The advisory arm for Blackstone gained substantially while Blackstone's hedge fund, private equity and real
estate businesses all experienced negative revenue.
The Blackstone Group's private equity business reported $68.3 million in negative revenue. The typically profitable real estate arm
suffered more as the value of its assets fell considerably; Blackstone's real estate business posted $273.7 million in negative revenue.
Finally, Blackstone's hedge fund operation also declined to $48 million in negative revenue. The only relief came from Blackstone's
advisory business which gained 90% from the same time last year at $160.7 million in positive revenue for the period.
In a statement regarding the losses, Blackstone's chairman and chief executive, Stephen Schwarzman said "We are operating in a
challenging and volatile environment. As evidenced in the third quarter, global equity and credit markets have declined substantially
and we have lowered the carrying value of our fund investments.‖ DealBook has more on Blackstone's losses:
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Blackstone‘s quarterly loss was reported in what the firm calls economic net income after taxes, which excludes costs associated with
the firm‘s I.P.O. On a generally accepted accounting principles basis, the firm lost $365.5 million for the quarter.
Since it went public in June 2007, Blackstone, one of the world‘s largest buyout firms, has become a barometer for the health of the
industry. Its stock price has plummeted 75 percent since the I.P.O. Units in the company closed on Wednesday at $8.60, down about
4.8 percent.
The firm emphasized that it had a strong balance sheet, with $1.13 billion in available cash and $1.29 billion invested in liquid funds,
while having only $845 million in short-term borrowings.- (DealBook)
Tags: The Blackstone Group, Blackstone Private Equity, Blackstone Stephen Schwarzman, Blackstone, Stephen Schwarzman Private
equity, Private equity losses, Private Equity Blackstone Group
Link to This Resource: The Blackstone Group Posts Losses
http://privateequityblogger.com/2008/11/blackstone-group-posts-losses.html
Barack Obama Capital Gains Tax
Barack Obama Capital Gains Tax
President Obama May Increase Capital Gains Tax
The election of Barack Obama for President of the United

States could spell bad news for the private equity industry as he will likely support increasing taxes on carried interest earned by private
equity fund managers.
When President-elect Barack Obama steps into office on Tuesday, January 20th of next year, he will inherit among other
responsibilities a massive deficit that he would likely seek to reduce. One of his proposals for increasing revenue to curb the deficit is
the closing of tax loopholes that benefit big businesses and upper class Americans. Throughout the primary and general election
Obama harped on this idea and suggested he would support altering the current tax code for capital gains.
A large part of private equity earnings come from carried interest, in which a fund's manager claims a percentage of the total profits
earned of the fund when an investment is sold. While management fees are taxed as high as 35%, the carried interest is regarded as
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capital gains in the U.S. tax code. Instead of the average capital gains tax of 15% private equity fund managers could see their carried
interest taxed up to 35%. The opposition to the current tax treatment argues that managing a fund is a service and should be taxed in
the same way as other service providers like say teachers or mechanics.
The Bush administion will be replaced by an Obama administration that favors increasing taxes on carried interest earned by private
equity managers. Under the Bush administration, any legislation that would change the capital gains tax stood little chance of passing.
Even with the House majority being Democrats, who would likely support increasing the tax, the threat of President Bush vetoing the
bill ensured that private equity managers would enjoy the same tax treatment. However, with a struggling economy, Democratic
majority in the House of Representatives and the new Democratic President entering office shortly, the likeliness of increasing taxes on
carried interest is far greater.
The opposition for such a change comes from the possibility that it would effect much more than private equity groups by boosting
taxes on venture capital and real estate partnerships. As David Hirschmann, the CEO and President of the Center for Capital Markets
Competitiveness explains: "This was viewed initially as a way to tax a few large private equity firms, without realizing that the basic tax
structure is used by 2.8 million partnerships that are literally the small office building on the corner of Main Street." (CNN) While
proponents of increasing the taxes on carried interest originally projected revenues from the taxes to be $25.6 billion, that estimate
seems to have fallen since last year. With investor interest in private equity slipping and fewer deals being executed, the amount of
revenue would likely be far below that.
Tags: Barack Obama Private Equity, Barack Obama Carried Interest, President Obama and Private Equity, Private Equity tax, Carried
interest Obama, Obama capital gains tax
Link to This Resource: Barack Obama Capital Gains Tax
http://privateequityblogger.com/2008/11/barack-obama-capital-gains-tax.html
Private Equity: Obama and McCain
Private Equity: Obama and McCain
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President McCain or President Obama
This is a very important day in America, as the nation decides whether Republican John McCain or Democratic Barack Obama
becomes President of the United States. In many ways the winner will likely change the course of this country, for better or worse.
What are the implications for private equity under President McCain and President Obama? Before the results come in, I'd like to do a
brief summary of the presidential candidates' positions on private equity and investing.
In the primary season, when Hillary Clinton was fighting off Barack Obama for president, the Wall Street Journal did a piece comparing
Barack Obama to Nermal (the softer, lovable feline opposite to the cartoon character Garfield). The comparison of Barack Obama and
a kitten stems from Obama being able to attract seemingly opposing endorsements.
A striking example is that Barack Obama's presidential campaign took in more contributions from private equity than any other
candidate (except early-dropout Mitt Romney) in the race at $253,788 just in 2007. Mitt Romney is a more reasonable funnel for private
equity donations as he is a founder of Bain Capital, but dropped out in February 2008. At the same time, Barack Obama received an
endorsement from the Service Employees International Union which publicly opposes private equity (recently confronting the Carlyle
Group's David Rubenstein).
It makes sense that private equity would want to invest in potentially the next president because Obama has pledged to change the
treatment of the capital-gains tax. The private equity industry opposes these changes and it's possible some see the best move is to
support Barack Obama so that he may reconsider if elected.
President John McCain, on the other hand, promises little change to the existing tax treatment and more importantly the treatment of
capital-gains tax. Therefore, most private equity contributions to the McCain presidential campaign is in hopes of getting him elected to
ensure things stay the way they are for private equity. He has received a good size contribution from Henry Kravis of KKR private
equity, as well as from high-profile CEOs at investment banking firms all of which hope to see their taxes stay the same if not decrease
under McCain as president. The Wall Street Journal concluded a recent assessment of which presidential candidate has the bigger
support from the financial sector and found McCain to have more allies funding him.
McCain has also built support from venture capitalists based on his treatment of business taxes, specifically offering lower taxes than
his Democratic competitor. This is extremely important for small businesses who have fears that President Obama would raise taxes
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on their startup. Bob Brady, a partner at the Carlyle Group, recently argued in a editorial titled "Why Venture Capitalists Should Support
John McCain" that venture capitalists should vote for McCain concluding:
Senator Obama certainly sounds and looks good. But this important election is about policies, not personalities. And on the issues
most important to venture capitalists – capital formation, taxation, economic growth, job-creating investment, free trade, and access to
highly skilled workers – it is actually Senator John McCain who has advocated and voted for policies that will protect and restore the
key building blocks of innovation and investment success.
Today will no doubt have an important effect on the future of this country and private equity as well. By tomorrow, if not tonight, we will
know if it is President Obama or President McCain that will inherit a shaky economy.
Tags: Barack Obama, John McCain, Private Equity Barack Obama, Private Equity John McCain, President barack Obama, President
john McCain, Private equity 2008 election, Election results
Link to This Resource: Private Equity: Obama and McCain
http://privateequityblogger.com/2008/11/private-equity-obama-and-mccain.html
Buyouts and the Credit Crunch
Buyouts and the Credit Crunch
Buyouts Under Pressure in Credit Crunch
As the economy falters, several major private equity-backed companies have filed for bankruptcy revealing a
grim insight into the recession's impact on private equity. A new article shows how private equity buyout firms are feeling the squeeze
of the credit crunch.
While earlier this week a report showed that salaries and bonuses were staying strong for private equity firms despite the financial
crisis, it appears that many companies acquired by private equity firms are now struggling under the amount of debt used for the
buyouts. The New York Times has a critical article that points toward private equity as a contributor to the United States' struggling
economy:
Private equity firms embarked on one of the biggest spending sprees in corporate history for nearly three years, using borrowed money
to gobble uphuge swaths of industries and some of the biggest names — Neiman Marcus, Metro-Goldwyn-Mayer and Toys ―R‖ Us.
Linens ‘n Things, a big retailer owned by the private equity firm Apollo Management, filed for bankruptcy protection this year.
The new owners then saddled the companies with the billions of dollars of debt used to buy them. But now many of the loans and
bonds sold to finance the deals are about to come due at the worst possible time.
The piece presents a bleak outlook for those who are working for an acquired firm and those who invested in private equity too, as
returns are expected to decrease in the near future:
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People who work for companies owned by private equity firms could lose their jobs as firms cut costs to meet their debt obligations.
And private equity firms like Apollo Management, which owns Harrah‘s and Linens ‘n Things, face deep markdowns on the value of
their holdings.
Pension funds and college endowments that invested their money into in these funds in recent years hoping for big returns are likely to
suffer as well, and many of those investors could face a cash squeeze, as they are forced to hold onto their investments for years until
the economy recovers.
To read the full article click here.
Tags: Private Equity Buyouts, Buyout firms, LBO, leveraged buyouts, credit crunch, private equity and the credit crunch, private equity,
Buyouts, buyout firms, private equity firms
Link to This Resource: Buyouts and the Credit Crunch
http://privateequityblogger.com/2008/11/buyouts-and-credit-crunch.html
Private Equity Saudi Arabia
Private Equity Saudi Arabia
Saudi Arabia: Private Equity's Next Big Market
Saudi Arabia and the greater Middle East

region is increasingly building a market for private equity. As a new report by Global Investment House reveals, private equity is
broadening to the Middle East and Northern Africa region (MENA) with offices opening in countries like Saudi Arabia, Turkey and
Egypt.
Saudi Arabia May Become Center For Private Equity in the Middle East
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Egypt has been the preferred destination in the MENA region for private equity investment--which totalled $2.4 billion in the region in
the last 10 years--primarily thanks to two investments exceeding $500 million each. However, without these two large investments,
private equity is distributed much more evenly in the region in the last decade. The United Arab Emirates took in 27% of private equity
investment, Saudi Arabia 23% and followed by Jordan and Egypt combining for $800 million. This shows that there is reasonable
evidence to suggest Saudi Arabia is an increasingly attractive area for private equity investment.
Furthermore, the successful Saudi economy over the last few years especially--real GDP rising at a 5% compound annual growth rate
from 2002-2007--will likely draw private investors. Also, the Saudi government has made several important efforts to attract foreign
investment such as joining the World Trade Organization in 2005. And of course the high oil prices have continued to fund Saudi
Arabia's economy and allows for a very large government budget for infrastructure improvements. Recently, the country has worked to
reduce its economic exposure to oil by diversifying business sectors and emphasizing building friendly business relations. (Saudi
Arabia is rated by the World Bank 16th in the World and best in MENA in ease of doing business.)
Despite the many positive indicators for private equity in Saudi Arabia, there are some major obstacles too. Private equity deal volume
as a percentage of GDP is very low at estimated 0.1% compared to 1.5% for the United Arab Emirates. Saudi Arabia still has some
barriers keeping foreign investors from completing private equity deals inside the country like unfamiliarity with cultural setting and
regulations, unique business culture despite impressive pushes, and a current lack of talent (likely offset by %50 of the population in
the below 20 years age bracket.)
Saudia Arabia's economy is steadily expanding and the government reforming and privatizing many institutions such as transportation,
telecommunications, finacial services, retail goods and services, and healthcare. This shows major potential for Saudia Arabia private
equity investment to boom in the near future.
Source: GIH Report and CPI Financial
Tags: Saudi Arabia, Saudi Arabia Private Equity, Private Equity Saudi Arabia, Private Equity in Saudi Arabia, Private Equity Investment
in Saudi Arabia, Private Equity Investment in Saudi Arabia
Link to This Resource: Private Equity Saudi Arabia
http://privateequityblogger.com/2008/11/private-equity-saudi-arabia.html
Private Equity Salaries Increase
Private Equity Salaries Increase
Private Equity Salaries Increase in Financial Crisis
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For many Americans, especially those working in the financial sector,
the economic crisis has brought lower salaries or even lost jobs. Private equity is a different story. According to the 2009 Private Equity
Compensation report, private equity compensation has not lowered in any categories and the majority of private equity positions
showed increases in compensation. In fact, the report reveals a 6% increase in bonuses awarded to Principles, a striking contrast to
the struggling investment banking firms. Dealscape reports further on the private equity compensation data:
The total cash compensation (base salary and cash bonus) for senior associates at the largest buyout funds (those with $5 billion or
more in assets) is now $435,000, a 4% increase over their 2007 levels....At the principal level, large buyout funds pay an average total
cash compensation of $885,000, also a 4% increase from last year. Bonuses for principals at these funds rose 6% to an average of
$607,000, which is included in the $885,000.
This is pretty startling considering the gloomy predictions for private equity lately, and the decline in most other financial sectors.
Compared to this week's reported layoffs at Lehman Brothers and several major retail companies, the estimated 6% rise in bonuses is
quite impressive. Private equity firms are well-known for paying high salaries to employees as a way of retaining talented deal-makers
and attracting skilled young professionals to the industry. But there was plenty of reason to anticipate that private equity firms would
make reductions in salaries and employees:
...private equity dealflow fell roughly 75% to $143 billion in the first half of 2008. Among megabuyouts, Kohlberg Kravis Roberts & Co.
posted a loss of $1.1 billion for the first half as difficult credit markets took their their toll on the values of the firm's holdings. Blackstone
Group LP posted a net loss of $156.5 million for the second quarter, compared with net income of $774.4 million a year earlier.
Blackstone also had negative $198.6 million in performance fees for the first six months of 2008 (meaning it reversed previously
recognized performance fees), compared to about $1.1 billion in performance fees it earned for the first six months of 2007. I'm not
even going to bring up the price of Blackstone's stock.
The most reasonable cause for the increase in private equity compensation during such a poor year for deals is the impressive capital
fund raising of 2008. Dealscape reveals "When combined with 2007, which set a record for capital inflows, private equity funds
continued to have the resources to maintain compensation levels and in many cases increase them, according to Glocap."
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Source: Dealscape and the 2009 Private Equity Compensation report
Tags: Private Equity Salary, Private equity salaries, private equity salaries report, private equity income, private equity compensation,
private equity compensation report, private equity salary increase
Link to This Resource: Private Equity Salaries Increase
http://privateequityblogger.com/2008/11/private-equity-salaries-increase.html
Private Equity Firms Data
Private Equity Firms Data
Chart Shows Private Equity Firms Formation History
Private Equity Database has created a chart of private equity firms formed since 1980. While it does not represent every private equity
firm, because some firms choose not to disclose the formation date, the graph is a telling history of private equity. The chart shows the
peak in private equity firms formed in 1998-1999 at about 60 firms and the subsequent drop (presumably following the tech bubble's
burst). Then the recent spikes that preceded 2008's major decline to below 10 firms.
I suppose this is an appropriately gloomy illustration of the downturn in private equity to be posted on Halloween...
E-mail readers, please use this URL to see the image: http://privateequityblogger.com/2008/10/private-equity-firms-data.html
Tags: Private Equity Data, Private Equity Statistics, Private Equity Firms By Year, Private Equity Firms Data, Private Equity Data and
Firms, Private Equity Trends, Private Equity Firms Forming
Link to This Resource: Private Equity Firms Data
http://privateequityblogger.com/2008/10/private-equity-firms-data.html
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The Pac-Man Defense
The Pac-Man Defense
The Pac-Man Defense | What is the Pac-Man Defense?
The Pac-Man defense

is a strategy in mergers and acquisitions that is used by a company facing a hostile takeover. The basic idea of the Pac-Man defense is
that the company being acquired attempts to purchase the would-be buyer. Understanding the Pac-Man defense is important when
considering executing a buyout.
Most people who grew up with video games remember the classic Pac-Man game, in which the player controls Pac-Man trying to
consume various rewards while evading the ghosts in pursuit. Pac-Man is utterly defenseless and must run away from the ghosts until
he consumes an "energizer" which allows Pac-Man to turn around and chase his pursuers for a period of time. (I promise, this does
relate to private equity.)
Using the Pac-Man Defense

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The Pac-Man defense follows the video game's concept because the once vulnerable company (i.e. Pac-Man) stops trying to avoid his
enemy (i.e. acquirer) and strikes back with a hostile takeover of his own. This tactic has been employed by companies that do not wish
to be purchased and so try to scare off buyers. The takeover target uses whatever resources available (even taking from its war chest)
to defeat the acquisition, most often by purchasing a large amount of shares in the other company.
An Example of the Pac-Man Defense in an Acquisition

Although the Pac-Man defense has been employed on several occasions, the most cited example is the Bendix Corporation's
attempted hostile takeover of the Martin Marietta Corporation. Bendix purchased a controlling stake in Martin Marietta, and essentially
owned the company. However, in the brief period between Bendix owning and controlling the company, Martin Marietta's management
sold off all non-essential assets to finance its own hostile takeover against Bendix. The Pac-Man defense was supported by United
Technologies and Bendix was placed in the difficult position of fending off the counter-takeover. When the dust settled, Bendix was
acquired, but not by Martin Marietta; instead, by the Allied Corporation.
Tags: The Pac-Man Defense, What is The Pac-Man Defense, How to use The Pac-Man Defense, Mergers and Acquisitions strategies,
Mergers and Acquisitions, Bendix, Martin Marietta, Pac-Man Private Equity
Link to This Resource: The Pac-Man Defense
http://privateequityblogger.com/2008/10/pac-man-defense.html
Private Equity Funds in the Financial Crisis
Private Equity in the Financial Crisis
Starting a Private Equity Fund in the Financial Crisis
While the current financial crisis has in some ways limited private equity, primarily by reducing a private equity firm's
ability to leverage a buyout, the crisis could also yield huge returns to private equity firms that start funds for buying up profitable
assets. Dwight Bush hopes that his new private equity fund will thrive by identifying and purchasing profitable assets at low prices from
the government and other funds.
Making the Best of a Bad Situation

The financial crisis could be very profitable for private equity funds. At least this is the bet that some investors are making, hoping to
capitalize on the weak assets available by fixing them up and selling them for a profit. One such optimist is Dwight Bush, an
experienced corporate banker who is setting up a private equity fund, he is also the subject of a recent Washington Post article. One
might wonder why he chose this bad economic period to start a private equity fund, or how he plans to raise capital from "cash-
strapped" investors and more importantly how he hopes to give his Limited Partners more money than initial investment? Here are his
basic answers to these questions:
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Why choose a financial crisis to start a private equity fund?
Bush: "What we know is that the last time we had a mortgage meltdown, there were great fortunes made," Bush said. "In this type of
fragmented environment, those people who can identify good assets that are undervalued . . . people like Joe Robert . . . and that can
work with those assets over time to help realize their true value" will make lots of money."
What is his strategy for his private equity fund?
Bush: He said the private-equity fund plans to do two things: manage assets that the federal government buys from banks and buy
assets that the "Paulson Plan" auctions, then fix them up and sell them -- hopefully at a profit.
Additionally, he hopes to make money of hedge funds dishing out assets at fire-sale prices. Some $43 billion came out of the hedge
fund market in September because investors are demanding their money. Bush said hedge funds are selling off quality assets, from
manufacturing companies to farmland to commodities, at low prices so they can give cash to their impatient investors.
Okay, sound strategy, but where will the private equity fund get money to buy the assets?
Bush: "Remember one thing," he said. "Every month, pension funds take in money and pension funds have an obligation to pay their
retirees over time. So new capital is available in the market every month and the money has to be put to work."
What about the private equity buyout model based on leverage in light of the current credit crunch?
"In the short term, private-equity firms will tend to work more with strategic partners, and the assets acquired will be less leveraged," he
said. "Over the long term, you've got to remember that banks have to lend to make money and that this too shall pass. My view is that
the current situation should reach bottom some time in early to mid-2009, and by 2010 we should have a more robust economy again."
Dwight Bush presents a strong argument for why private equity can endure the financial crisis with what he sees as eternal investment
capital (pension funds) and long-term lending from banks that necessarily lend in order to make money.
Tags: Private Equity, Private Equity Fund, Financial Crisis, Private Equity Funds, Private Equity Fund manager, Dwight Bush, Private
Equity and the Credit Crunch, Private Equity Fund Management, Private Capital
Link to This Resource: Private Equity Funds in the Financial Crisis
http://privateequityblogger.com/2008/10/private-equity-funds-in-financial.html
Leonard Green and Partners
Leonard Green & Partners
Leonard Green & Partners | Private Equity Firm
Leonard Green & Partners is a large private equity firm based in Los Angeles, California. Leonard Green & Partners was
estimated to hold $9 billions in profits at the end of 2007. The firm has formed multiple private equity funds that raised more than $1
billion in private investment. Leonard Green & Partners has carved a niche for itself by investing in large and mid-market retail
companies like Petco, Big Five and the Container Store.
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The most recent and very high-profile investment is the purchase of a 17% stake in Whole Foods Market. Announced on November 5,
2008, Leonard Green & Partners' affiliate fund Green Equity Investors injected a large amount of capital into the struggling grocery
chain.
Resource 1# Green Equity Investors Purchases 17% Share of Whole Foods
A private equity firm is buying a 17 percent stake in Whole Foods Market, a much-needed vote of confidence for a chain that is being
battered by increased competition and a weak economy.
The news came as the company announced a huge drop in fourth-quarter earnings amid sputtering sales.
Under the terms of the agreement, Green Equity Investors, an affiliate of Los Angeles-based Leonard Green & Partners, will invest
$425 million in the company.
Follow title link to full article
Tags: Leonard Green and Partners Invests in Whole Foods, Whole Foods, Leonard Green and Partners, Leonard Green and Partners
Private equity Firm, Green Equity Investors, LA Private Equity
Link to This Resource: Leonard Green and Partners
http://privateequityblogger.com/2008/10/leonard-green-and-partners.html
Harvard Private Equity Conference
Harvard Private Equity Conference
Private Equity Seminar | Mergers and Acquisitions
Harvard's Corporate Governance blog writes of an upcoming conference on private equity and mergers and
acquisitions on Thursday, October 30 from 3:00 p.m. - 4:30 p.m. Eastern Time. The event is entitled "the Failure of Private Equity" and
is free and open to the public. If you're like me, and can't make the trip to Wilmington, DE on a Thursday you can still attend it online.
The sponsors have thankfully made this a webinar and details for attending either in-person or online can be found here.
The following is the overview of the conference and the speakers:
With the Lyondell Chemical case on appeal, and with the Huntsman/Hexion merger still generating litigation activity, M&A lawyers are
looking forward to the presentation next Thursday afternoon by Professor Steven M. Davidoff (Click here for more information and to
register). His principal topic (The Failure of Private Equity), on which he writes in a forthcoming article, is expected to focus on
highlights from Delaware court decisions and proceedings in the past, tumultuous year, particularly as they reflect ambiguous
contracting that has often proven ineffective to address the now-evident potential for market reversals. Additionally, Vice Chancellor
Leo E. Strine, Jr. will join Professor Davidoff as commentator.
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Writing as The Deal Professor, Davidoff is a commentator for the New York Times DealBook on the legal aspects of mergers, private
equity and corporate governance. A former corporate attorney at Shearman & Sterling, he is a professor at the University of
Connecticut School of Law. His columns are available at The Deal Professor blog.
Permanent Link: Harvard Private Equity Conference
Tags: Harvard Private Equity, Harvard Business School, Harvard Corporate Governance, Private Equity Conference, Private Equity
Event, Private Equity Webinar, Harvard Private Equity Seminar, Private Equity
Link to This Resource: Harvard Private Equity Conference
http://privateequityblogger.com/2008/10/harvard-private-equity-conference.html
New York Private Equity Tax
New York Private Equity Tax
New York City Private Equity Tax on Carried Interest
New York City Council members appear open to raising the tax on carried interest earned by local private
equity managers by 20%, a move that would leapfrog the national debate over taxing carried interest.
According to the Working Families Party, the majority of New York City Council members would support raising the tax on carried
interest earned by local private equity firm managers from 15% to 35%. This is a hotly debated national issue, as many view private
equity and hedge fund managers earning 35% of the fund's profits to be unfair to investors and even to the public. The claim is that
carried interest is an unfair loophole that causes an unbalance in tax system and hurts middle- and working class Americans.
Working Families estimates raising the tax would net $225 million each year for New York City; however the complaint is not likely to
be acted upon anytime soon--if ever. The national debate over taxing carried interest is ongoing and so far nothing has been changed
in the treatement of private equity and hedge fund manager's carried interest. To change New York City's tax toward carried interest
would be surprising, as it is rare that a local or state tax system would deviate from national tax code.
Potential Issues With Locally Taxing Private Equity
In my personal opinion, there are several potential obstacles to New York taxing local carried interest: federal tax code, Mayor Michael
Bloomberg and staunch opposition by private equity firms and hedge funds.a
The first obstacle is the fact that the federal tax code has not been changed to increase taxes on carried interest. As the President of
Robert Willens LLC., a tax and accounting law firm, recently said "I would say the chances are about as close to zero as could be
possible. State and local taxes are geared to the federal code. They almost never deviate." It would be highly irregular for New York
City to do this.
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The second obstacle, is the current Mayor Michael Bloomberg. The Mayor is known first as a very successful businessman and while
it's unfair to say that he would favor business interest, but it's not likely he would go out of his way to hurt financial institutions either.
Although his term is coming to a close, he is the incumbent candidate for Mayor next election. (Last week, the City Council passed an
unprecedented vote to overturn the term limits, allowing Bloomberg a third term.)
Lastly, private equity firms and hedge funds have been able to resist national pushes to raise the tax on carried interest, so far. With all
the resources and money available to the private equity and hedge fund industries, it is difficult to push such an unpopular tax on them.
Additionally, forcing an unpopular cut in local private equity and hedge funds profits would potentially cost the city revenue if the firms
changed location to avoid the tax.
The debate of taxing carried interest is ongoing and as political leadership shifts along with changes in the economy it's hard to predict
which side will win.
Source: Dealscape
*Note: This article in no way endorses a particular position or represents financial advice.
Tags: New York Private Equity Tax, Private Equity New York, New York Private Equity, New York Private Equity Tax system, Carried
interest, New York private equity firms, New York Carried interest tax, private equity and hedge funds carried interest
Link to This Resource: New York Private Equity Tax
http://privateequityblogger.com/2008/10/new-york-private-equity-tax.html
Private Equity Manufacturing
Private Equity Manufacturing
Private Equity Investment in the Manufacturing Industry
Manufacturing companies often require private equity investment to stay competitive and expand their
businesses. Manufacturers need capital for many reasons such as to purchase new equipment, expand into new markets, research
and development and growth initiatives. The credit crunch has limited the ability of mid-market manufacturers to borrow capital, leading
many manufacturing firms to look for private equity.
Benefits of Private Equity Investment in Manufacturing Firms
There are several benefits for manufacturing firms seeking out private equity:
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Adding a Strategic Planning Partner: Mid-market private equity firms often become involved with the manufacturer through a strategic
planning partnership. A private equity firm may use its resources to help the manufacturing firm. For example, by adding an
experienced board of directors to advise the manufacturer.
Long-Term Strategy: A big benefit of private equity, especially relevant for manufacturing firms, is the focus on creating a long-term
strategy. Public investors tend to have less patience for long-term results. A public company's growth is measured quarterly while a
private equity backed-company has more flexibility to make more profitable long-term decisions.
Global Expansion: Globalization has become increasingly important over recent years, especially for manufacturing firms trying to stay
competitive. Private equity firms can provide the resources and expertise to help firms expand into new markets.
Increase Efficiency: Private equity firms may increase efficiency in manufacturing firms by assessing a firm's business model and
making improvements. Private equity firms add a new perspective on the current market opportunities and suggest adjustments that
will increase returns for the company and the private investors. A private equity firm's success is tied to the success of its investments
so it is in their interest to improve the efficiency of the company through structural and management changes.
How Private Equity Firms Have Increased Earnings
Oliver Products Co., manufacturer of food and medical packaging products, partnered with Milwaukee-based private equity firm Mason
Wells in May of 2007. After just one year, the company has been able to increase their revenue nearly 10%. Why? The partnership
gave the management team the confidence and sense of empowerment it needed to move forward with strategic growth plans that had
been on hold due to the economic outlook and the company's understandably cautious approach.
The influx of cash enabled Oliver Products to purchase new equipment and open an office in China. In addition, the company relocated
its operations in the Netherlands to a larger facility, and R&D efforts have significantly ramped up to develop new products. Lean
manufacturing principals were implemented throughout the organization, leading to improved production efficiency in the manufacturing
processes.
As is typical in PE investments such as this, Mason Wells obtained a majority ownership position, with the balance of equity held by
management. While the PE firm's leaders serve as advisors on the strategic direction of the business and serve as board members, the
company was able to remain independent and the management team steers decision making and oversees day-to-day operations. -
Industry Week article
Tags: Private Equity Manufacturing, Private Equity, Private Equity Manufacturing Industry, Manufacturing and Private Equity, Private
Equity Investment in the Manufacturing Industry, Mid-market manufacturing
Link to This Resource: Private Equity Manufacturing
http://privateequityblogger.com/2008/10/private-equity-manufacturing.html
Investing Private Equity Capital
Investing Private Equity Capital
Private Equity Hesitates to Invest Capital
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Lately, private equity firms have often been described as "sitting on the sidelines," referring to the minimal private
equity activity in the current financial crisis, while having a lot of capital waiting to be invested. This private equity "pause" is considered
by Dealbook, which asks why private equity firms have taken this passive position in Why the Reluctant Vultures? Specifically, the
piece focuses on those private equity buyout funds that have thrived in depressed markets like today's:
Other types of vultures, often those associated with private equity firms like Apollo or Cerberus, look to acquire controlling positions in
companies through the bankruptcy process. Many of them are sitting on the sidelines, waiting for borrowers to get closer to default
before they swoop in.
There‘s the chance prices could fall more, especially if investors think historical recovery rates don‘t reflect what they‘ll be able to claw
back if the companies go bust.
That‘s possible — the debt issued in the most recent boom was, on average, of lower credit quality than that issued in earlier cycles,
and it was festooned with borrower-friendly innovations that could impede lenders‘ recovery.
Also, while there is now only $40 billion or so of United States leveraged buyout-related loans stuck on bank balance sheets — a sixth
of last year‘s peak — another overhang threatens. S.& P. estimates that hedge funds and structured investment vehicles hold $50
billion in loans they might be forced to sell.
Dealbook then concludes that this financial crisis may be too risky, even for those known for succeeding in an uneasy market.
Permanent Link: Private Equity Capital
Tags: Private Equity Capital, Private Equity Financial Market, Private Equity Sidelines, Dealbook, Private Equity Industry, Private Equity
Boom, Private Equity Decline
Link to This Resource: Investing Private Equity Capital
http://privateequityblogger.com/2008/10/private-equity-capital_24.html
Private Equity Energy
Private Equity Energy
Private Equity Investment in Energy | Biotechnology
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A recent article in the Financial Times chronicles the
accelerated boom and bust of ethanol in the United States. Many influential people, especially politicians including President Bush,
hailed ethanol as a promising step in loosening the United States' foreign oil dependency. As enthusiasm built, private equity investors
sunk large amounts of capital into the biotechnology sector, anticipating big returns.
For some private equity firms, investing in Ethanol was an immensely profitable venture, while other private equity firms have lost
considerable money in their biotechnology investments. The biggest winner was Morgan Stanley's former private equity arm Metalmark
gained a 10-fold return on its 2003 purchase of Aventine after it went public in 2006. Those who, like Metalmark, bought into the
alternative energy source early and were smart or lucky enough to sell before the bust made considerable sums. However, the
Financial Times reports more losers than winners:
The losers in the ethanol investment frenzy, which some have compared to the dotcom mania of the late 1990s, include famous
names, such as Mr Gates, Microsoft founder. His private investment firm has lost millions on its 2005 investment in a company called
Pacific Ethanol. Mr Gates's firm, Cascade Investments, did not return calls seeking comment.
Other private equity firms and hedge funds that piled into the ethanol industry in the boom years of 2005 and 2006 have put in a mixed
performance. Those who bought into ethanol and sold out at the earliest stages made substantial sums. Metalmark, the former private
equity arm of Morgan Stanley, the US bank, reaped a 10-fold return on its 2003 purchase of Aventine when it went public in 2006.
Thomas H. Lee Partners, one of the biggest of the Boston private equity firms, suffered big losses on their purchase of Hawkeye
Renewables. It bought the ethanol producer at the peak of the ethanol boom and were forced to stop its planned float after the bust.
While there are many factors that forced these private equity firms to lose big, there was some obvious exposure to risk, especially in
Thomas H. Lee's case. The firm bought into an ethanol producer in a tough market that FT suggests were already showing warning
signs of going bust, most notably the overcrowding of the industry forcing down profits.
The lesson from this for private equity is to exercise extreme caution when buying in on a trend like an alternative energy source. Of
course, private equity firms love to be the first investing in the next big thing because that means incredible returns, as was the case
with Metalmark. The hard part, like in most forms of investing, was knowing when to get out and those who didn't pull out quick enough
lost a lot of money. Private equity investment in ethanol shows both the extreme positives and extreme the negatives of trying to
anticipate a new investment. This lesson is especially relevant as private equity energy investment grows and new alternative energy
products are released.
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Tags: Private Equity Energy, Private Equity Alternative Fuels, Private Equity Ethanol, Private Equity Energy Investment, Alernative
Energy Private Equity, Private Equity and Ethanol, Private Equity News
Link to This Resource: Private Equity Energy
http://privateequityblogger.com/2008/10/private-equity-energy.html
Private Equity and Hedge Funds Jobs
Private Equity and Hedge Funds Jobs
Private Equity and Hedge Funds Jobs Resource
Private Equity Jobs is a resource for individuals

interested in entering the private equity and hedge fund industry, as well as those existing private equity and hedge fund professionals
who want to manage their future and view possible job opportunities. The website was started in March 2008 by a veteran recruiter with
over ten years experience in the alternative investment space.
Private Equity Jobs uses a pre-qualifying method on candidates individually reviewing every candidate's background to ensure all
community members possess the requisite educational background and work experience that is necessary for a job in the private
equity or hedge fund industry. Currently, Private Equity Jobs more than 10,000 of these pre-qualified professionals its database.
Private Equity Jobs offers weekly newsletters and job bursts to disseminate relevant real-time industry information, private equity and
hedge fund job hiring news and career management tools. Since its inception Private Equity Jobs has hosted both front- and back-
office positions, including job postings for Portfolio Managers, Partners, Principals, Quantitative Analysts, CFOs, COOs and Investment
Associates.
Future of Private Equity Jobs
Private Equity Jobs hopes to launch a monthy webinars and the site is currently composing a compensation survey.
Although it has a single site now, Private Equity Jobs hopes to launch at least twenty more within the hedge fund and private equity
industry over the next two years.
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The majority of listings on Private Equity Jobs are based in the U.S. but the site is working to expand its listings of non-U.S. based
positions.
In light of the volatile market, Private Equity Jobs now offers a new pricing structure for job postings. Presently, the site offers a 30 day
job posting for $199 instead of the previous fee of $350. Non-U.S. based job postings are only $99 for 30 days.
Related Article: Free Private Equity Career Guide
Tags: Private Equity Jobs, Private Equity Jobs Resource, Privat Equity Jobs Database, Private Equity and Hedge Fund Jobs, Private
Equity, Hedge Funds, Private Equity Career, Finding a Private Equity Job
Link to This Resource: Private Equity and Hedge Funds Jobs
http://privateequityblogger.com/2008/10/private-equity-and-hedge-funds-jobs.html
How Private Equity Will Survive the Financial Crisis
Private equity has suffered amid the financial crisis, especially in the stable
area of private equity, leveraged buyouts. As banks are less and less willing to finance debt for big private equity buyouts, private
equity firms are faced with unsettling prospects. A new report shows the challenges facing private equity and how firms are adapting.
The report outlines areas of concern as well as opportunities for private equity firms trying to survive the financial crisis.
Private equity surviving through the current financial crisis
Improving the Business Model By Diversifying: The economic downturn may well present opportunities to expand into other asset
classes. Private equity has shown a trend of growing the business beyond U.S. and European leveraged buyouts into other asset
classes and investment areas that could perform better in a poor capital market. Beyond adopting other asset classes, private equity
firms will likely take advantage of the failing investment banks by either buying large stakes (even a controlling interest) in banks or
hiring talent from the investment banking industry. Taking on experienced staff from investment banking firms can help expand private
equity geographically, enabling a profitable entry into emerging markets abroad.
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Greater Accountability: There is a long-standing critique of private equity that is has very low transparency and accountability to
investors. The traditional private equity view on heightened regulation and accountability has been negative because it would likely cut
into profits. However, with the investment banking collapse putting a spotlight on corporate responsibility it is likely that private equity
will necessarily adapt to increased accountability. Not only toward investors but also the environment. While the push toward "going
green" presents some exciting and potentially profitable business opportunities, it also impacts the way companies operate and adds
more liability. Environmental responsibility does not appear to be a passing trend, so private equity firms hoping to survive long-term
should be more conscious of the environmental impact.
Reduce Tax Risk: Global expansion is a way for private equity firms to access new investment opportunities and new investors, but it
also presents more complicated tax risks and structural concerns. With new less-developed investment territories come new tax issues
such as permanent establishment and beneficial ownership. Additionally, in developed countries tax policy is evolving with new anti-
avoidance measures and increased audit activity over transfer pricing and jurisdictional substance. On the other hand, some tax
systems may treat firms more favorably and present exemptions and benefits as private equity expands globally.
Expanding to BRIC: The rapid growth in Brazil, Russia, India and China have attracted private equity firms hoping to profit from these
evolving economies. BRIC present new investment opportunities and the potential private equity firms to profit from the considerable
earnings growth prospect in these emerging nations. Understanding the risks and opportunities for each specific country is fundamental
for a successful international private equity firm.
Long-term Focus: Larger private equity buyout deals tend to have a long-term focus but the small and middle-market deals often have
shorter holding periods. An emphasis on long-term structural adjustments and management improvments may help private equity
outlast the current poor financial market by improving the current investments until there is greater capital available for new
investments.
Report: Seeking Differentiation at a Time of Change
Tags: Private Equity in the Financial Crisis, What will happen to Private Equity in the Financial Crisis?, Private equity future, economic
crisis, financial crisis, private equity and investment banks, mortgage meltdown, private equity report, private equity industry future
Link to This Resource: Private Equity in the Financial Crisis
http://privateequityblogger.com/2008/10/private-equity-in-financial-crisis.html
Hedge Fund Blog | Investment Blog on Hedge Funds
Hedge Fund Blog
HedgeFundBlogger.com | Overview
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This is a quick post to introduce my readers to http://HedgeFundBlogger.com. HedgeFundBlogger.com is a 1,000 article deep
investment blog which focuses exclusively on hedge funds. This site tracks hedge fund trends, security purchases, news, networking
events and offers dozens of educational resources.
Here are some links to the top 30 resources hosted on HedgeFundBlogger:
Hedge Fund Resources:
Hedge Fund Marketing Guide
Hedge Fund Due Diligence
Hedge Fund Strategy Guide
Terms & Definitions
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Geographical Hedge Fund Guides
Hedge Fund Tracker Tool
Hedge Fund Message Board.com
Investment Securities Tool
Investment Book
Hedge Fund Startup Tools
Hedge Fund Newsletter
Hedge Fund Information
Top Hedge Fund Resources
Archives of 1,000+ Articles
Investment Book Reviews
Hedge Fund Databases
Hedge Fund Performance
Hedge Fund Videos
Hedge Funds FAQ
Hedge Fund Services
Third Party Marketing
University Endowment Funds List
Raising Capital
Investment Marketing
CTA Database
Top 100 Hedge Funds
Fund of Hedge Funds
Prime Brokers - Hedge Fund Prime Broker / Brokerage
New York Hedge Fund Guide
Connecticut Hedge Fund Guide
Texas Hedge Fund Guide
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California Hedge Fund Guide
San Francisco Hedge Fund Guide
Boston Hedge Fund Guide
Chicago Hedge Fund Guide
London Hedge Fund Guide
Brazil Hedge Fund Guide
Hedge Fund Career Resources:
Hedge Fund Employment Guide
Job Listings
Hedge Fund Careers
Chartered Hedge Fund Associate (CHA)
Hedge Fund Jobs
Chartered Financial Analyst CFA
CFA vs. CAIA
Chartered Alternative Investment Analyst (CAIA)
Investment Certification
Financial Certification
Hedge Fund Training Courses
Hedge Fund Internship
Tags: hedge fund blog, hedge fund blogs, blogs on hedge funds, investment blog, alternative investment blog, alternative investment
blogs, blog on hedge fund managers and investments
Link to This Resource: Hedge Fund Blog | Investment Blog on Hedge Funds
http://privateequityblogger.com/2008/10/hedge-fund-blog-investment-blog-on.html
Philadelphia Private Equity
Philadelphia Private Equity
List of Private Equity Firms in Philadelphia | Pittsburgh
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Philadelphia
attracted a large amount of private equity during the technology boom of the late 1990's and beginning of this decade. But like other
technology-based regions, private equity investment fell considerably following the internet bubble's burst around 2000-2002. The
emphasis on venture capital and middle-market remains a focus for private equity in Philadelphia.
In 2008, Philadelphia private equity firms have continued the technology trend by investing a lot of capital into Bio-medical and
pharmaceutical companies and website-based companies (notably an estimated $13 million to MyYearbook.com). According to the
recently published "Money Tree" report, private equity investment in Philadelphia and surrounding cities in Pennsylvania have dropped
by about $5 million dollars from this time last year. While this isn't great news, it is not terribly surprising given current market
conditions. With its close proximity to private equity centers like Boston and New York, Philadelphia seems poised to become a venture
capital and private equity leader.
Similar to articles on other private equity hubs, I am compiling a list of private equity firms located in the Philadelphia, Pennsylvania
region.
List of Private Equity and Venture Capital Firms in Philadelphia
Alliance Holdings Inc.
Argosy Partners
Birchmere Ventures
Ben Franklin Technology Partners Southeastern PA
Berwind Corporation
Brown Brothers Harriman & Co.
Context Capital Partners
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Cornerstone Capital Holdings
Edison Venture Fund
Element Partners
Eureka Growth Capital
First Round Capital
Gatshead Partners
Graham Partners
Huron Capital Partners
Inverness Graham Investments
Liberty Venture Partners
LLR Partners
Merion Partners
Milestone Partners
MVP Capital Partners
New Spring Capital
Pi Capital Group LLC
PNC Equity Partners
Quaker BioVentures
R.A.F. Industries
Robinson Venture Partners LP
Rosetta Capital Corporation
Safeguard Scientifics
Spring Capital
SR-One
Zon Capital Partners
If you would like to have your firm listed please send me an e-mail at Theo@PEblogger.com
*Although this list is comprised of mostly private equity firms located in Philadelphia there are also firms located in other parts of
Pennsylvania.
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Tags: Philadelphia Private Equity, List of Philadelphia Private Equity Firms, Private Equity Firms List, Philadelphia Private Equity Firms
List, Pennsylvania Private Equity Firms, Pittsburgh Private Equity Firms, Philadelphia Venture Capital Firms, Philadelphia Venture
Capital, Pennsylvania Venture Capital
Link to This Resource: Philadelphia Private Equity
http://privateequityblogger.com/2008/10/philadelphia-private-equity.html
Private Equity Jobs
Private Equity Jobs
Private Equity Jobs | Career Resource | Guide
A job in private equity can be both

challenging and highly rewarding, which explains the very competitive private equity job competition. So, gaining an advantage through
articles, advice from professionals and research is increasingly valuable in finding a private equity job.
I am often contacted by young professionals who are eager to get a job with a private equity firm and want to know what it takes to get
there. Landing a job in this industry is no simple feat but with the right credentials, a great work ethic and dedication to working in
private equity it is possible. I have compiled a free guide to help people interested in working in private equity with some knowledge
that I can share as well as other resources that I have found helpful. I will be updating this guide to make it very comprehensive and a
great tool for finding a private equity job.
If you would like to have a job listing posted on Alternative Investments Jobs, please e-mail me at Theo@PEblogger.com
Private Equity Job Opportunities
Private Equity Jobs Guide
Private equity MBA: Here is an article on how private equity is attracting MBA graduates.
Resume writing: This article provides tips for writing a resume with a focus on private equity careers.
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Private equity associate: A private equity associate is the typical entry-level position for MBA graduates and this shows what that
position entails.
Private equity partner: The private equity partner is a sought-after position in private equity firms, this is a overview of the qualifications
and duties of a partner at a private equity firm.
Venture Capital Associate: This article emphasizes the associate position at a venture capital firm.
Private Equity Positions: A general overview of the different positions at a private equity firm.
Private Equity Job Database: This is a collection of job database websites.
Tags: Private equity jobs, private equity job, private equity jobs guide, guide to private equity jobs, private equity career, private equity
careers, private equity, private equity resume, getting a job in private equity
Link to This Resource: Private Equity Jobs
http://privateequityblogger.com/2008/07/private-equity-jobs.html
Private Equity Advertisement | Advertising with Private Equity Blogger
Private Equity Advertisement
Now Accepting Private Equity Advertisements
Private Equity Blogger is happy to announce that we are now open to relevant, targeted advertising options for
this Private Equity website. These options include--but are not limited to--private equity advertising profiles and articles. However, we
ask that all advertising be related to private equity.
This blog has grown to host hundreds of articles with over a thousand readers visiting the website each day and a quickly expanding
network of private equity professionals. If you would like to learn more about this site or if you would like to set up an advertisement on
this private equity blog, please e-mail Theo at Theo@peblogger.com
Examples of Private Equity Advertising Options
Press Release Publishing
Site Sponsorship - (120 x 30 banner ad on all pages)
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Sponsored Niche Article Publishing (Search Engine Optimized)
Theo O'Brien
Theo@peblogger.com
Mobile #: 503.804.8129
Tags: Private Equity Advertisement, Private Equity Advertisers, Private Equity Ad, Private Equity Sponsorship, Private Equity
Sponsors, Private Equity Advertise, Private Equity Advertising
Link to This Resource: Private Equity Advertisement | Advertising with Private Equity Blogger
http://privateequityblogger.com/2008/10/private-equity-advertisement.html
Leveraged Buyouts
Leveraged Buyouts
Leveraged Finance for Private Equity Buyouts | LBOs
Leveraged finance has been a key resource for private equity as

many deals use leverage to purchase companies that would otherwise be impossible to acquire. Many of the major private equity deals
were financed primarily through debt, with the percentage of leverage sometimes being as high as 90% but typically in the 60-70%
range. Leveraged buyouts have been very popular for most of this decade until the global credit crunch which has largely restricted the
amount of leverage offered for LBOs.
How Leveraged Buyouts Work
Leveraged finance in private equity has its positives and negatives. Principally, the benefit is that private equity groups can acquire
majority shares without first having the necessary capital; the negative is the risk involved in such a deal, financing a deal using a large
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amount of debt has an inherent risk that the deal will not be successful and the buyer is faced with having to pay off the loan. Often the
private equity buyout uses the assets of the company it is acquiring as collateral for obtaining the loan. For this reason, leveraged
buyouts (LBOs) have attracted a lot of criticism in the investment community, but these types of deals are still made and often times a
successful leveraged buyout provides impressive returns to investors. Below is a graph from a report on leveraged buyouts by the
Committee on the Global Financial System that shows how the typical leveraged buyout is structured (it's a little fuzzy but hopefully not
too hard to read.)
The leveraged buyout firm usually repays the deal sponsors in three to seven years depending on the arrangement, and there are
different ways in which the LBO firm repays this debt. Options for repayment include: dividend recapitalization, selling the acquired firm
to other private equity firms or alternative buyers, or through an initial public offering (taking the company public through a stock
offering). In this decade, there has been a noticeable resurgence in the popularity of leveraged buyouts; global leveraged buyout fund-
raising increased from less than $100 billion in 2004 to more than $200 billion in 2007.
Advantages of Leveraged Buyouts
Leveraged buyouts have provided high returns to investors who are open to the element of risk that is present in financing deals
through leverage. Beyond the aspect of returns to investors, private equity firms that acquire a controlling interest in a company are
often able to improve performance by providing a heightened level of management oversight and improved corporate governance.
Private equity investors enjoy greater freedom from SEC regulation than investors in public companies, and they use that freedom to
sometimes actively manage the company. The methods by which the private equity backer will improve a company are direct oversight
of management by the private investors, using pay-for-performance incentives for managers and addressing structural problems that
eat away at profits.
Another benefit for a leveraged buyout of a public company is the reduction in inefficient use of free cash flows. Often managers of
public companies that gather large operating profits but are unable to find good investment opportunities will be motivated to dump the
money into low-return projects instead of returning the profits to investors. A firm acquired in a leveraged buyout will put that money
toward debt repayment. Lastly, firms bought through an LBO tend to focus on the long-term because there is little pressure to provide
short-term profits. Many view this as a benefit of leveraged buyouts because it allows for structural changes and long-term profit
producing changes.
Leveraged Buyouts in a Bad Market
The mortgage meltdown has made leveraged buyouts very difficult as they rely on sizable loans which the investment banks are not as
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willing to offer now. The banks tightening the purse-strings has forced buyout firms to either scale back the size of their investments or
seek other sources of capital. While leaders of top private equity like Steve Schwarzman and David Rubenstein have been optimistic
this week over the return of leveraged buyouts, Bloomberg reports "Announced transactions by leveraged buyout firms have dropped
more than 70 percent so far in 2008 from the same period a year earlier." Private equity firms hope that the injection of capital back into
the banking system by the federal government will help solve some of the illiquidity in the market and revamp leveraged buyouts.
Tags: Leveraged buyouts, LBOs, LBO, Leveraged buyout definition, leveraged buyout, what is a leveraged buyout, benefits of
leveraged buyouts, leveraged finance, What is an LBO?, Private Equity leveraged buyout, Leveraged buyouts news
Link to This Resource: Leveraged Buyouts
http://privateequityblogger.com/2008/10/leveraged-buyouts.html
Private Equity Future
Private Equity Future
Clues of Private Equity's Future from Jack Perkowski
Like most people, I have been anxiously following the recent financial developments, but especially in regards to private equity.
The financial crisis has made it increasingly difficult to make predictions of the future of private equity; with so much chaos and
fluctuation in the market there have been conflicting guesses as to private equity's future. Today, I found a great insight into what the
top industry leaders are thinking through Jack Perkowski's blog Managing the Dragon.
Mr. Perkowski is a highly successful businessman in China and author of Managing the Dragon and he recently spoke at the
SuperReturns conference along with big private equity names like David Rubenstein and Steve Schwarzman. Jack Perkowski reveals
some points made at the event that found a general consensus among the private equity leaders speaking. I believe that these points
provide some clues to the future of private equity from the best in the business:
Long Recovery: No one thought that the recovery from the current financial crisis would be quick. In fact, approximately 90 percent of
the attendees thought that it would take three years or more for financial markets to recover to their 2007 highs. Of these, 38 percent
thought it would take more than five years. Most felt that the United States and Europe, in particular, were in for long and nasty
recessions.
Traditional PE Business Models Won‘t Work: The days of using financial engineering (high leverage, ―covenant light‖ debt and
arbitraging higher exit multiples) to generate returns are gone. With the consolidation of the banking industry globally, there are fewer
lenders today than there were yesterday, and the ones that are still standing have opportunities to buy existing debt in good companies
at substantial discounts to their face values. While cost cutting can improve profitability, companies cannot cost-cut their way to
prosperity. Therefore, the premium is on growth as the way to generate acceptable private equity returns in the future.
Minority Interests and Buffet: Traditionally, PE firms have taken control positions in companies and have generally shunned minority
investments. In this turbulent financial world with debt financing scarce, the head of a major global PE firm expressed the view that
minority interests and ―buy and hold‖ strategies might become more prevalent, specifically citing Warren Buffet‘s recent strategic
investments in General Electric and Goldman Sachs as examples of what the future might hold. Following on this point, the moderator
remarked that when Warren Buffet was asked to explain his strategy for determining when and under what circumstances to sell a
company, he responded by saying: ―I don‘t know. I‘ve never sold one.‖
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Emerging Markets versus Developed Markets: As readers of MTD know, the term ―emerging markets‖ was coined by my friend,
Antoine Van Agtmael http://managingthedragon.com/index.php/2008/09/28/2008-world-business-forum/ in the early 1980s. It now
refers to about 200 countries—essentially all of the countries in the world outside the United States, Canada, Western Europe, Japan
and Australia. A head of one of the major global firms thought that the term ―emerging markets‖ had outlived its usefulness because it
was now so broad. For example, lumping the countries of China and Chad into one category is not terribly meaningful. In the words of
this individual, the term ―developed markets‖ should be changed to ―submerging markets.‖ More than anything, that remark
characterized the views of the conference.
Places to Avoid Investing: Europe and commercial real estate, anywhere.
Highest Future Returns: Approximately 60 percent of the participants thought that the best returns over the next five years would come
from the Asia and India region. While the current credit crisis would lead to recessions in many countries, most felt that it would merely
slow the growth rates in China and India. In this context, the current crisis might actually be a blessing in disguise for China by
providing an opportunity to cool down the overheating of the economy experienced in 2007.
-Managing the Dragon
Tags: Private Equity Future, Private Equity Future Outlook, Private Equity Industry, Private Equity and the Financial Crisis, The Future
of Private Equity, jack perkowski, Private Equity Outlook
Link to This Resource: Private Equity Future
http://privateequityblogger.com/2008/10/private-equity-future.html
Private Equity Media
Private Equity Media
Private Equity Investing in Media
Investing in the media can be both very profitable (as evident in the rise of internet media companies) and very
risky (as is the case with private equity bids for major print-newspapers.) The incredible rise of the internet and mobile media has
transformed the media industry and private equity firms are quickly recognizing the importance of the new media. Here is a great
article, although a year or two dated, that considers private equity investment in media.
A recent example of media buyouts is the possible bid for Virgin Media by private equity firms the Blackstone Group, Cinven, KKR and
Providence Equity. Estimates of the bid's value range from $6 billion to $7.5 billion. Venture capital funds invested significant capital
into emerging technology and media firms, most notably during the dot-com bubble. The collapse of many of those venture capital-
backed media and technology-based companies when the bubble burst reveals the risk to these private equity investors.
Internet and technology-based media is not the only form of media attracting private equity, there have also been numerous bids and
executed buyout deals of major print newspapers. The evolution of internet and cable news has led to a general decline in print media,
leaving many newspapers open to private equity acquisitions.
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On October 13th 2008, Scott Sperling co-president of Boston private equity firm Thomas H. Lee Partners was asked about his firm's
recently removed bid for the Knight Ridder newspaper chain. Sperling explained that newspapers were just too expensive and said of
the major decline in print newspapers' revenue "I would have predicted a lesser decline than what we‘ve seen… We were probably too
kind in our assessment of the industry three years ago.‖ His most telling remark was his reply when asked if he reads the Wall Street
Journal's hard copy, he admitted "Sometimes," to laughter from the crowd.
The major driving force behind private equity firms purchasing print-newspapers seems to be the potential for developing and
implementing a more current news model that heavily incorporates video and internet resources. For example, the New York Times is
adopting a format that is more techology-based, even adding several popular blogs, while still maintaining its journalistic reputation.
Despite such turnaround efforts by the traditional newspapers, the new media sources have appear to have the upper-hand in
attracting private equity.
Read full story on Thomas H. Lee and Knight Ridder
Permanent Link: Private Equity Media
Tags: Private Equity Media, Private Equity and the Media, Private Equity Media Investment, Media Takeovers, Media Mergers, Media
Acquisitions, Mergers and Acquisitions of the Media, Media Buyouts, Media Buyout, Private Equity
Link to This Resource: Private Equity Media
http://privateequityblogger.com/2008/10/private-equity-media.html
Private Equity in India
Private Equity in India
Value of Private Equity Deals in India Drops
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India private equity has been developing impressively over recent years but September proved to be an indicator that even India is not
immune to the struggling global market. Venture Intelligence reveals that the value of private equity deals in India fell by 28% in the
period of July to September compared to last year at this time. While the number of deals completed stayed almost exactly the same
as last year's number, the value fell to $3 billion compared to $4.2 billion at the same period last year.
Reuters reports further on the fall in India's private equity deals:
A stock market slump also dried up deals ahead of initial public offers, Chief Executive Arun Natarajan said.
There were six deals of more than $100 million each, with JPMorgan‘s $250 million investment in coffee shop chain Cafe Coffee Day,
topping the chart, he said.
In comparison, there were nine deals in the year-earlier period of over $100 million, with the top being a $700 million transaction.
―The pre-IPO market has dried up,‖ Natarajan said. Pre-IPO placements of shares and buyouts together comprised about 8 percent of
total private equity investments in India in 2007, he said.
Total investments in the first nine months of 2008 stood at 330 deals worth $9.7 billion, against $9.5 billion invested across 296 deals in
the same period of last year, Venture Intelligence said.
Private Equity Blogger articles related to India Private Equity:

India Private Equity Boom Overview
List of India Private Equity Firms
Tags: Private equity in India, Private Equity India, Private Equity Investment In India, India's Private Equity, Private equity report India,
Private Equity and India, India Private Equity Investment
Link to This Resource: Private Equity in India
http://privateequityblogger.com/2008/10/private-equity-in-india.html
Acquisitions and Mergers
Acquisitions and Mergers
Strategies for Successful Acquisitions and Mergers
Acquisitions and mergers can bring big profits to companies but all-too often this is not the case because
acquirers fail to notice some key problems that could be avoided. I recently read a relevant article on some common pitfalls for mergers
and acquisitions that lead to big losses and big wastes for both parties involved. Today's post focuses on some of these problems and
simple resolutions that can lead to successful mergers and acquisitions. The following issues are especially relevant to private equity
groups in acquisitions.
Problems and Solutions for Company Acquisitions and Mergers
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Poor Match: There have been many mergers and acquisitions that have failed because the companies simply don't match; either
operationally 0r strategically, and sometimes because the products and services of the companies are too different. When a company
strays outside of its territory it can sometimes lead to poor performance. So, when considering a merger or acquisition, be realistic of
the weaknesses and difficulties in taking on the other company.
Give the People What They Want: A common problem in mergers and acquisitions is that the acquirer brings on the other company's
staff but assumes that they will work as productive and contently in your completely different work environment. Different firms have
different work environments and cultures that you should be sensitive to in a takeover. Taking into consideration the factors that make
these professionals productive could save you some two week's notices and hopefully improve your company as a whole.
Conducting Strict Due Diligence: Due diligence is a crucial aspect of Mergers and acquisitions, and if performed rigorously it saves a lot
of time and trouble by catching potential issues and problems early. Conduct this process to the greatest degree possible but know that
there are some problems that come up unexpectedly regardless.
Betting the House: The implicit hope in a merger or acquisition is that it will benefit your company, but many deals end up hurting the
acquirer. An example could be a high-growth rate company taking on a steady but slow-growth rate company, which could slow down
the high-growth company and have a negative impact on business and profits. The idea is to be careful that conducting a merger or
acquisition won't end up negatively impacting your firm's success. Another problem for your company could be simply betting too much
on the success of the merger or acquisition, to the point that even a moderate failure can end up really hurting your firm. The typical
case of this is a leveraged buyout that uses too much debt so that anything but a highly profitable success ends up costing the buyer
more than it makes from the merger or acquisition.
You Gotta Give a Little...Or a Lot: An acquisition is typically a major deal that requires the acquirer to give a large amount of resources
in order for the acquisition to be beneficial. Don't think of it as sacrificing your resources, think of it as re-investing in your company
because it's really adding value to a company that you are very much invested in. So adequately allocating resources for every stage of
the deal is connected to, rather than separate from your business--from due diligence to structuring the deal to incorporating the firm
into your company.
Both acquisitions and mergers are consuming and require a lot of investment from a company for it to be successful. These tips will
help you toward an acquisition that benefits both parties involved and ultimately creates a better business.
Source: Bruce R. Evans is the Managing Partner at Summit Partners' Boston office. His article offers key points of success and failure
in Mergers and Acquisitions.
Permanent Link: Mergers and Acquisitions
Tags: Mergers and Acquisitions, Mergers and Acquisitions Information, Corporate Mergers and Acquisitions, Mergers and Acquisitions
of companies, Acquisitions and Mergers, Merger and Acquisitions, Private Equity Mergers and Acquisitions
Link to This Resource: Acquisitions and Mergers
http://privateequityblogger.com/2008/10/acquisitions-and-mergers.html
Middle East Private Equity Conference
Middle East Private Equity Conference
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Dubai Private Equity Event Hosts Prominent Speakers
The Intercontinental Hotel in Festival City, Dubai will host some of the biggest
names in private equity for the SuperReturn Middle East event. The prominent private equity speakers include the president and CEO
of Investcorp, David Rubenstein of the Carlyle Group and Steve Schwarzman, the co-founder and CEO of Blackstone. Mr. Long said of
the conference:
"We are delighted to be a principal partner of such a prestigious event. SuperReturn is the definitive private equity forum. Its success
and standing in Europe is now being replicated here in the Middle East at a time of increasing excitement and opportunity for the local
private equity industry."
The conference is sponsored by Investcorp, Gulf Capital, HGB Holdings, and Middle East private equity firm Ithmar Capital and
Thomas H. Lee Partners located in the U.S. The conference takes place Sunday, Oct. 12 until Wednesday, Oct. 15. For more
information click here.
If you'd like to know more about the trends and development in the Middle East, here is a video of the World Economic Forum in the
Middle East 2007, again David Rubenstein is a distinguished speaker here.
Hopefully, this conference will be put online, it should be a great opportunity to learn more of the future of Middle East private equity.
Permanent Link: Middle East Private Equity
Tags: Middle East Private Equity, Middle East Private Equity Video, David Rubenstein, Steve Schwarzman, Middle East Private Equity
Conference, Middle East Private Equity Event
Link to This Resource: Middle East Private Equity Conference
http://privateequityblogger.com/2008/10/middle-east-private-equity-conference.html
Private Placement Memorandum
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Private Placement Memorandum
Overview of a Private Placement Memorandum
A private equity firm offers a private placement

memorandum to potential investors. The document explains an investment opportunity to potential limited partners, and the firm hopes
they will be interested enough to invest capital in the investment.
Private equity firms usually include in the private placement memorandum a wide range of information that a limited partner would like
to know when considering the investment. This includes summary terms and conditions proposed by the firm that a limited partner may
negotiate if the LP decides to invest. In public capital investment offerings, the Securities and Exchange Commission regulates the
document, but a private placement memorandum is not regulated and therefore the material and specifics provided to the limited
partners may vary by firm. This article will cover what is most often included in a private placement memorandum, but private equity
firms may choose to exclude any of these sections or add one that is not present.
The private placement memorandum is a document for private equity firms hoping to attract investors, and limited partners rely on the
PPM to make their decision based on the information presented in it.
Here are some general sections of the private placement memorandum:
Executive Summary: Some information usually included here would be the size of the fund, expected close date, and the management
team's experience in past funds. Additionally this section includes a brief description of the General Partner, the investment strategies
used, and the opportunities and challenges in the current market.
Firm and Fund Investment Strategies: This is more or less self-explanatory but what you want to present is the firm's past performance
and history; how it has succeeded and what strategies were used. How the firm's advantages and resources will succeed in the
specified market. This section is a detailed overview of the fund's investment strategy discussing the geographical focus of the fund,
stage and relevant factors in its market. This is also an opportunity for the General Partner to present a thorough explanation
investment strategy, process, deal sourcing and exit strategy.
Investment Professionals and Committee: This section presents the investment professionals involved in the new fund and explains
their role. An especially important detail here is the history and experience of the investment professionals. Principal investors' records
are often included here with current board positions held in portfolio companies of the firm's past funds. This is important information for
the potential Limited Partners to know as it gives them an idea of the firm's degree of involvement in portfolio companies and the
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individual partner's ability to manage a new fund. Second in this section, firms often provide information on the Advisory Board or
Investment Committee. This section varies by different firms but often larger Limited Partners will hold seats on the Advisory Board
which is of particular importance in for prospective LP's. This shows the details of the Advisory Board's members, scheduled meetings,
as well as valuation methodology and important factors when considering new investments.
Investment Performance Record: This section varies by firm because of different sizes and especially the difference between how long
a firm has been established. Generally, firms use a table format to present the fund's investment track record. This table usually
includes past fund sizes and IRR performances of the funds (typically stated in terms of gross returns rather than individual LP's net
returns over fees).
General Partners and Limited Partners Terms and Agreements: This is where the firm gives its initial proposal of terms and
agreements between the General Partner and the Limited Partners. Most importantly, the management fee, General Partner's
commitment the fund, distribution of the capital call schedules and the fund's cooperative investment policy. Of interest to the investors
is the percentage of profits that the General Partner takes, known as "carry".
Legal and Tax Concerns: Tax treatment varies by whether the investor is U.S. based or non-U.S. based, and this section will briefly
address different tax treatments and how it effects the Limited Partners.
Fund-related Investment Risks: This section typically covers three areas of investment risk: business, management and fund risk.
Business concerns would address concerns over the investment's industry and risks inherent to the industry and possible uncertainty in
the business environment. The management concerns are usually relationships to other entities, possibly a parent company. The fund-
related risks may include cross-fund investments, principal's co-investment activities or investments in public equities.
Accounting and Reporting: Included in this section is an explanation of the allocation of returns and losses and accounting for stock
options. This section gives a schedule for audited and non-audited financial statements that are delivered by the General Partner. This
gives Limited Partners an idea of the valuation of their investment and a way for keeping track of their capital commitment.
Again, this is a general overview of the typical sections of a private placement memorandum which may be subject to change by
private equity firm, as it is not regulated by the SEC. In the future I will provide an article on the important factors that Limited Partners
consider in a private placement memorandum.
Source: Tuck Center for Private Equity and Venture Capital
Permanent Link: Private Placement Memorandum
Tags: Private Equity Private Placement Memorandum, Private Placement Memorandum, Private Placement Memorandum for Private
Equity Firms, Creating a Private Placement Memorandum, Overview of Private Placement Memorandum, Private Placement
Memoranda, Private Placement Memo
Link to This Resource: Private Placement Memorandum
http://privateequityblogger.com/2008/10/private-placement-memorandum.html
Private Equity Real Estate Fund of Funds

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Private equity real estate is an emerging area of private equity that has developed successfully this decade especially. These
private equity real estate funds use various strategies to create returns from large real estate property investments, mostly through a
value-added approach that improves the worth of acquired real estate.
As of the year end of 2006, historical 5-year and 10-year compounded annualized returns of private equity real estate in the United
States have been 13.3% and 12.7%. The NCREIF Property Index reveals current returns averaging 8% since 1978. Private equity real
estate will likely see changes following the mortgage meltdown, but it is an expanding sector of the private equity industry.
Private equity real estate fund of funds are relatively new to private equity, really becoming well-known in private equity early in the
21st century. The majority of private equity fund of funds managers are located in the United States at 50%, followed by Europe with
43% and only 7% in Asia and other regions. Real estate fund of funds often attract investors because they provide an element of
diversification to a portfolio and investors with smaller capital to commit are able to invest in a fund of funds if they are not able to invest
in a large hedge fund of private equity fund. If you'd like to learn more about private equity real estate fund of funds, here is the 2008
Private Equity Real Estate Fund of Funds available for purchase.
Here is a list of the largest private equity real estate firms:
The Blackstone Group
Morgan Stanley Real Estate
Tishman Speyer
Goldman Sachs Real Estate Principal Investment Area
Colony Capital
Lehman Brothers Real Estate
The Carlyle Group
ProLogis
Beacon Capital Partners
LaSalle Investment Management
MGPA
AEW
Rockpoint Group
Apollo Real Estate Advisors
CB Richard Ellis Investors
RREEF Alternative Investments
Grove International Partners
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Shorenstein Properties
The JBG Companies
Citigroup Property Investors (CPI) Capital Partners
JER Partners
Walton Street Capital
Heitman
Aetos Capital
KK daVinci
Lubert-Adler
Starwood Capital
Fortress Investment Group
DLJ Real Estate Capital Partners
RLJ Development
List via PERE

Permanent Link: Private Equity Real Estate Fund of Funds
Tags: Private equity real estate fund of funds, private equity real estate, real estate private equity, investment in private equity real
estate, real estate investment
Link to This Resource: Private Equity Real Estate Fund of Funds
http://privateequityblogger.com/2008/10/private-equity-real-estate-fund-of.html
Private Equity Capital
New Report Shows Drop in Private Equity Capital
Private equity is feeling the effects of the financial turmoil, according to a new report released by Preqin. The financial crisis has
made it increasingly difficult for private equity firms to raise capital, as investors are more reluctant to invest in sometimes risky private
equity funds. The report shows a somewhat unsettling decline in private equity raised. In the third quarter, only $82.3 billion was raised
by 117 funds, the lowest since Q1 of 2005.
Private equity funds have raised a little more than $400 billion this year, the report suggests that most of that capital came from private
equity's peak during the first quarter of 2008. Since then capital has been very difficult to obtain for private equity funds. This is
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especially true for small and middle market funds that have limited resources for finding investors, compared to the largest private
equity funds that rely on vast resources and previous Limited Partners to maintain a steady flow of capital. Also, the big private equity
funds have an established reputation that is more appealing to wary investors than smaller, less-proven funds. Limited Partners are
looking almost exclusively to low-risk funds, making it difficult for new private equity funds to emerge.
While funds focused in the U.S. and Europe raised the most capital in the third quarter, other regions showed signs of future
competition as European private equity funds slipped especially. According to the report, "This represents an especially inactive quarter
for European fundraising, with funds focusing on Asia and the rest of world exceeding the total capital raised for Europe for the first
time in the history of the industry." Although buyout funds were the most popular type of private equity, the amount of capital raised by
buyout funds dropped significantly from earlier quarters.
Secondary source: CFO
Tags: Private equity drop, private equity decline, private equity report, private equity, private equity reports, private equity and the
financial market
Link to This Resource: Private Equity Capital
http://privateequityblogger.com/2008/10/private-equity-capital.html
Private Equity Internship
Private Equity Internship
Accepting Applicants for Private Equity Internship
Searching for a private equity internship? If you are interested in learning more about private equity and would like to
apply for an unpaid intern position, send me your resume and what area of private equity you are most interested in. Let me know what
type of internship you would like (time commitment and type of work) and I will try to find a position aligned with your preferences.
This internship is not working directly in a private equity firm, however the experience gained can be beneficial for eventually entering
the private equity industry. If you put in the effort and the time, you are guaranteed to have a better understanding of the private equity
industry and stay current on trends and norms that will help you as a professional in the industry as you apply for a private equity job. I
look forward to speaking with you.
Permanent Link: Private Equity Internship
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Tags: Private equity internship, private equity career, private equity internships, internship opportunity private equity, private equity job,
private equity unpaid internship
Link to This Resource: Private Equity Internship
http://privateequityblogger.com/2008/10/private-equity-internship.html
Stephen Schwarzman
Stephen Schwarzman
Video with Blackstone's Stephen Schwarzman
Steve Schwarzman is the co-founder of the very successful private equity firm the
Blackstone Group. In 1985, he founded the Blackstone Group with Peter G. Peterson with only $400,000 in seed capital and a shared
secretary, and since then the Blackstone Group has evolved into one of the biggest private equity firms holding $119.4 billion in assets
under management as of June 2008. Schwarzman is respected as a savvy businessman and a strong manager, making it onto the
Time 100 list last year.
This video presents a rare opportunity for students at the Harvard Kennedy Business School to hold an open round table discussion
with Mr. Schwarzman. He shares inspirational personal anecdotes, insight into the source of his success and offers some general
advice for making it in the business world.
Permanent Link: Stephen Schwarzman
E-Mail Subscribers can view the video through this link:

http://www.youtube.com/watch?v=ktdzSvP0gqQ&eurl=http://video.google.com/videosearch?q=steve+schwarzman&emb=0&aq=0&oq=
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steve+schwar
Tags: The Blackstone Group, Steve Schwarzman, Stephen Schwarzman, Blackstone Group, Blackstone Group Private Equity, Private
Equity Stephen Schwarzman
Link to This Resource: Stephen Schwarzman
http://privateequityblogger.com/2008/10/stephen-schwarzman.html
Boston Private Equity
Boston Private Equity
List of Boston Private Equity Firms
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Boston is a center for private equity in the U.S., especially in the private equity boom over the last few years private equity has
established itself in the Boston business community. Through big local buyouts like that of Toy's R Us by a Boston private equity group,
Bain Capital, and an expanding Boston market for those bigger buyouts but also smaller venture capital deals, Boston's private equity
market has grown substantially.
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While New York remains a relatively unchallenged hub for private equity activity, Boston is certainly among the top private equity cities
in the country. Although the major private equity groups in Boston compete amongst themselves, they also work together on large
deals. This is evident in the recent acquisition of Warner Music Co that was led by two Boston private equity firms, Bain Capital and
Thomas H. Lee Partners.
The growth of private equity in Boston has been largely accelerated by the success of large Boston private equity firms like Bain
Capital, Thomas H. Lee Partners, TA Associates, Berkshire Partners and Summit Partners. In addition to the more well-known Boston
Private equity firms, here is a list of Boston private equity firms that will be updated in hopes of creating a very comprehensive resource
for those interested in Boston private equity.
Here is the list of Boston private equity firms:
Advent International
Audax Group
Bain Capital LLC
Berkshire Partners
Boston Capital Ventures
Boston Community Capital
Boston Community Venture Fund
Boston Millenia Partners
Boston Ventures
Calera Capital
Charlesbank
Great Hill Partners
Heritage Partners
IDG Ventures Boston
J.W. Childs Associates , L.P.
Lincolnshire Management
Morgenthaler
Summit Partners
TA Associates
Thomas H. Lee Partners
Weston Presidio
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If you represent a Boston private equity firm and would like to be added to the list or you know of a Boston private equity group that is
not listed please send an e-mail to Theo@peoblogger.com
Permanent Link: Boston Private Equity
Tags: Boston Private Equity, Boston Private Equity Firms, Boston Private Equity Groups, Private Equity in Boston, Venture Capital
Boston, Boston Venture Capital, Private Equity Boston
Link to This Resource: Boston Private Equity
http://privateequityblogger.com/2008/10/boston-private-equity.html
Private Equity Report
Private Equity Report
New Report on Private Equity - Key Findings
The World Economic Forum has released a report based on data gathered from private equity activity in 21,000
firms from 1970 to 2007. This private equity report is nearly 200 pages and provides an extensive overview of how private equity has
changed over recent decades. While it's difficult to summarize such a large report, it does provide the key findings. Today, I am mostly
focusing on the important findings in buyout activity (LBOs especially), private equity trends and exit strategies:
WEF Private Equity Report 2008
Private equity activity has dramatically increased over recent years. Almost 40% of private equity activity occurred from January 1,
2004, of the 37 years included in the study. The total value of firms acquired through leveraged buyouts is estimated in the study to be
about $3.6 trillion, and $2.7 trillion of those transactions occurred between 2001 and 2007.
While a lot of media and public scrutiny centers around the public-to-private transactions, this activity only accounts for 6.7% of total
transactions. Instead, the majority of transactions involve acquiring private companies and corporate divisions. (I wonder if private
equity will use this to combat negative attention toward private equity over public-to-private buyouts?)
Leveraged buyout activity takes place predominantly in Western Europe and the United States, with only 9% of the total value of global
LBOs happening outside these areas. However, there is an increasing amount of private equity activity taking place beyond Western
Europe and the U.S. as other regions warm up to the private equity industry.
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Research into private equity exit strategies revealed that 39% of exits are through trade sales to another corporation, making it the
most common exit strategy. Following with 24% was exits through secondary buyouts and only 13% of private equity investments took
the exit route of an Initial Public Offering.
Private equity investors seem to favor long term investments with 58% of private equity investments' exits occurring after 5 years from
the initial transaction. The last few years have seen a decline from "quick flips" (exits after only 2 years or less from the initial
transaction) from the already low 12% of private equity deals. I would not be surprised if the bias toward long term investments
increases even more in the next couple years as investors are drawn toward more stable investments amid the financial instability.
Another key finding was the big increase in companies backed by- and operating under private equity ownership. The number of firms
entering LBO status has outpaced the number leaving LBO status so a steady margin has formed; 14,000 companies were held in LBO
ownership as of 2007, compared to just 5,000 in 2000 and 2,000 in the mid-1990s. Also, the length of time that these companies are
held in LBO status has increased.
These are only some of the more noteworthy findings in the private equity report, if you're interested in viewing the whole 189 page
report click here: the full private equity report from WEF
Permanent Link: Private Equity Report
Tags: Private Equity Report, Private Equity Report 2008, Private Equity Research, Private Equity Reports, Private Equity Data
Link to This Resource: Private Equity Report
http://privateequityblogger.com/2008/10/private-equity-report.html
Buyout Deals Drop
Buyout Deals Drop
Number of Buyouts Drops from Credit Crunch
Private equity firms have certainly felt the adverse effects of the global credit crunch, as the number of buyout deals has fallen
considerably to a four-year low.
A buyout deal often relies on a large amount of leverage to purchase a majority stake in a company's equity. The current financial
market has sharply limited the credit necessary to carry out these buyout deals, and private equity firms have suffered as a result. For
the year-to-date, global buyout activity fell by 74% to $180 billion, a remarkable decline that signifies a decline in buyouts not only in the
struggling U.S. market but globally as well.
No Credit, No Deal
The major buyout deals made earlier this decade are no longer feasible with banks increasingly hesitant to loan money for potentially
risky leveraged buyouts. Private equity firms seem to have resigned to smaller deals for the most part until credit returns to the market.
$2 billion is rumored to be the current limit for financing a deal, according to an anonymous buyout executive. This is a far cry from the
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type of large leveraged buyouts that took place just last year, like the $17.9 billion acquisition of Clear Channel Communications led by
Bain Capital and THL Partners.
More Hesitation over Buyouts

It appears that private equity firms are exercising greater caution when considering buyouts as they fear that the worst of the financial
crisis has yet to come. This is not to say that there have been no private equity deals this year, but there has been a marked decline in
the number and size of deals, and the private equity firms have relied on other sources of capital outside of bank debt. Recently,
private equity has transformed from a strong reliance on debt for financing deals to more available resources like the recent private
equity takeover of the Weather Channel with funding coming from GSO, Blackstone's hedge fund.
The drop in private equity activity is most prevalent in the United States, where buyout activity has fallen 83.5% to only %61.8 billion
year-to-date. Many private equity firms are holding large amounts of capital "waiting on the sidelines" to invest once market conditions
stabilize. Some private equity firms see distressed market conditions as a positive, seeking to capitalize on the situation by investing
the capital that they accumulated and turn a profit off a seemingly negative economic decline.
Change of Strategy
The large private equity firms have reacted to the crisis by following the age-old investment strategy of diversifying. K.K.R is reaching
into alternative investment areas such as real estate and mezzanine financing. Blackstone has similarly expanded into other areas by
strengthening its hedge fund arm, strong real estate business and its M&A advisory unit.
The credit crisis is having obvious adverse effects on the private equity world, and many industry
professionals fear that the worst has not been felt yet. However, many private equity firms have been able to survive, and even profit,
through creative investment strategies and diverting their focus from exclusively private equity to alternative areas.
Permanent Link: Buyout Deals Drop
Secondary source: Dealbook
Tags: Leveraged buyouts, buyout deal, buyout deals, buyout deals drop, credit crunch private equity, private equity decline
Link to This Resource: Buyout Deals Drop
http://privateequityblogger.com/2008/10/buyout-deals-drop.html
Private Equity Structure
Private Equity Structure
Video of Conference Discussing Private Equity Structure Changes
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Today's video deals with private equity's structure changes as discussed by several qualified private equity fund and fund of funds
managers. This video is about 45 minutes, I wish that I could edit these private equity videos so that they are shorter, I'll look into this
soon. The video is from a source that I often look to for quality videos for private equity professionals, Private Equity Exchange. The
conference also deals with exit strategies for private equity groups. A major benefit of this video is the European perspective on private
equity and it gives a good structure discussion.
If you found this video especially beneficial please send me an email at Theo@peblogger.com and I will provide similar videos.
For email subscription here is the video URL: PEX 2007 LBO for professionals - Conference 3: Industry structure change.mov
Permanent Link: Private Equity Structure Video
Tags: Private Equity Video, Private Equity Structure, Private Equity Video, Private Equity, Private Equity Structure Models, Private
Equity Structures Investors
Link to This Resource: Private Equity Structure
http://privateequityblogger.com/2008/09/private-equity-structure.html
New York Private Equity Firms
New York Private Equity Firms
Top Private Equity Firms in New York
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New York City is a major hub for private equity activity
so I've made the following list of the top private equity firms located in New York. In the near future I will be creating more articles
based on private equity in New York.
Top 15 Private Equity Firms in New York
Here is a list I've made from a list of the Top Private Equity Firms to only show the Top 15 New York Private Equity Firms by assets
raised over last 5 yrs (billions).
Goldman Sachs Principal Investment Area = 49.05 billion
Kohlberg Kravis Roberts = 39.67 billion
Apollo Management = 32.82 billion
Blackstone Group = 23.3 billion
Warburg Pincus = 23 billion
Cerberus Capital Management = 14.9 billion
AIG Investments = 14.22 billion
Fortress Investment Group = 14 billion
Clayton Dubilier & Rice = 11.38 billion
Lehman Brothers Private Equity = 10.22 billion
J.C. Flowers & Co. = 7 billion
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New Mountain Capital = 6.69 billion
MatlinPatterson = 6.67 billion
W.L. Ross & Co. = 6.65 billion
Welsh Carson Anderson & Stowe = 5.88 billion
Permanent Link: Top New York Private Equity Firms
Tags: New York Private Equity, New York Private Equity Firms List, Private Equity In New York, New York City Private Equity, New
York City Private Equity Firms
Link to This Resource: New York Private Equity Firms
http://privateequityblogger.com/2008/09/new-york-private-equity-firms.html
Private Equity Tracker
Private Equity Tracker
Private Equity Tracker Tool
Today I am adding a new resource to private equity blogger. The private equity tracker tool is a new way to follow
private equity firms and the deals and events involving the firms. I will be adding to this list over the next months to build a more
comprehensive private equity news resource. You can find a direct link to each firm's tracker page with the most recent events for that
private equity firm.
Private Equity Firm Tracker
3i Group PLC
Admiral Capital Group
Apollo Management
AXA Private Equity
Baring Private Equity
The Carlyle Group
Goldman Sachs Capital Partners
Leonard Green & Partners
KKR Private Equity
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Tags: Private Equity Tracker Tool, Private Equity Firms News, Private Equity News, Private Equity Firm information, Private Equity
News, Private Equity tools, Private Equity Blogger, top Private equity firms
Link to This Resource: Private Equity Tracker
http://privateequityblogger.com/2008/09/private-equity-tracker.html
Private Equity Resume
Private Equity Resume
Private Equity Resume Advice
Writing a private equity resume is unique from other resumes because it

generally requires experience in finance as a prerequisite for being considered for a position in private equity, so here is an article with
suggestions on how to compose a great resume.
I just found a great article on crafting the ideal private equity resume from Mergers and Inquisitions. The presumption is that the
applicant has worked in the investment banking sector or currently works as an investment banker. Another presumption is that you
hold an MBA from a good school, these two elements are not necessarily required but they are highly recommended for entering the
private equity industry.
Here are some tips from M&I as well as my own on creating a great private equity resume:
Resume Appearance: There is no excuse for a poorly written or incorrectly structured resume. If you are having trouble composing
your resume seek help. There are a lot of resources that can help you make a winning resume. Here are just a few:
Contact your old professors, or better yet, speak with someone who has a job in private equity. Even if you're confident in your resume
it doesn't hurt to have it edited by someone you respect.
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Look online for guidelines to writing a resume, but be careful to get your advice from qualified sources like Vault which focuses
specifically on business careers.
Check out a career advice book to get good tips on writing a resume, it may seem like a lot of work but resumes are your first
impression with your employer, why not put in the extra effort?
Focus on Professional Experience: While other employers in other industries focus on academic standing, personality and other things,
not strictly your professional experience, private equity is different. A potential employer wants to know everything about what you've
done at your former job, so don't spare any details that can help you appear as experienced as possible. There is a reason that private
equity firms want to hire people that have worked in investment banking or a similar financial area for at least two years: they don't want
train you, they want a prepared associate who is experienced enough to enter private equity and immediately produce results. Showing
significant work experience by emphasizing the deals you worked on and how you contributed are key in this resume. Here are some
key elements to highlight when explaining your past work experience:
The number of deals you have worked on
The types of deals you have worked on - M&A (sellside and buyside), IPOs, Follow-Ons, Convertibles, Debt
The skills you gained - LBO modeling, accretion/dilution modeling, DCF skills, valuation.
How to Write About Your Deals: The key for writing about your past deals that you've been involved in is to be unique and demonstrate
how you specifically influenced and contributed to the deal process. Rather than just listing your duties that you carried out during the
deal process, specifically mention how you helped in the deal. M&I has a great example of what NOT to do and then a re-write of what
to do:
Poor example:
$5B Sale Of Company Y To Company X
Drafted Offering Memorandum and Management Presentation and tracked status of deal with potential buyers
Managed due diligence process between Company Y and different buyers and responded to all inquiries
Better example:
5B Sale Of Company Y To Company X
Worked directly with CFO to build complex operating model of company involving 40 different properties across multiple states
Created market analysis showing favorable trends in casino construction despite subprime-related problems; led to 2 private equity
buyers remaining in the auction process until the final round
I hope this is helpful while you compose your resume and remember that while it can be tedious, this is an important step on your way
to entering the rewarding private equity industry.
Permanent Link: Private Equity Resume
Tags: Private Equity Resume, Private Equity, Private Equity Job Resume, Private Equity Career Advice, Private Equity Career, Private
Equity Resume Tips
Link to This Resource: Private Equity Resume

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http://privateequityblogger.com/2008/09/private-equity-resume.html
Private Equity Articles | What is Everyone Reading
Private Equity Articles
Popular Private Equity Blogger.com Articles
Link to This Resource: Private Equity Articles | What is Everyone Reading
http://privateequityblogger.com/2008/09/private-equity-articles-what-is.html
Top Private Equity Funds
Private Equity Funds
2008 List of 50 Top Private Equity Funds
Here is a list of the top private equity funds, ranked by size over the last five years. The top fifty private equity funds in this list account
for 75% of the world's global buyout activity and have a total buyout power of $2.76 trillion, according to IUF.
Top 50 Private Equity Funds
1 The Carlyle Group $32.5 billion

2 Kohlberg Kravis Roberts $31.1 billion
3 Goldman Sachs Principal Investment Area $31 billion
4 The Blackstone Group $28.36 billion
5 TPG $23.5 billion
6 Permira $21.47 billion
7 Apax Partners $18.85 billion
8 Bain Capital $17.3 billion
9 Providence Equity Partners $16.36 billion
10 CVC Capital Partners $15.65 billion
11 Cinven $15.07 billion
12 Apollo Management $13.9 billion
13 3i Group $13.37 billion $
14 Warburg Pincus $13.3 billion
15 Terra Firma Capital Partners $12.9 billion
16 Hellman & Friedman $12 billion
17 CCMP Capital $11.7 billion
18 General Atlantic $11.4 billion
19 Silver Lake Partners $11 billion
20 Teachers' Private Capital $10.78 billion
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21 EQT Partners $10.28 billion
22 First Reserve Corporation $10.1 billion
23 American Capital $9.57 billion
24 Charterhouse Capital Partners $9 billion
25 Lehman Brothers Private Equity $8.5 billion
26 Candover $8.29 billion
27 Fortress Investment Group $8.26 billion
28 Sun Capital Partners $8 billion
29 BC Partners $7.9 billion
30 Thomas H. Lee Partners $7.5 billion
31 Leonard Green & Partners $7.15 billion
32 Madison Dearborn Partners $6.5 billion
33 Onex $6.3 billion
34 Cerberus Capital Management $6.1 billion
35 PAI Partners $6.05 billion
36 Bridgepoint $6.05 billion
37 Doughty Hanson & Co $5.9 billion
38 AlpInvest Partners $5.4 billion
39 TA Associates $5.2 billion
40 Berkshire Partners $4.8 billion
41 Pacific Equity Partners $4.74 billion
42 Welsh, Carson, Anderson & Stowe $4.7 billion
43 Advent International $4.6 billion
44 GTCR Golder Rauner $4.6 billion
45 Nordic Capital $4.54 billion
46 Oak Investment Partners $4.06 billion
47 Clayton, Dubilier & Rice $4 billion
48 ABN AMRO Capital $3.93 billion
49 Oaktree Capital Management $3.93 billion
50 Summit Partners $3.88 billion
Permanent Link: Top Private Equity Funds
Tags: Top Private Equity Funds, Best Private Equity Funds, Largest Private Equity Funds, List of Private Equity Funds by Size, Biggest
Private Equity Funds
Link to This Resource: Top Private Equity Funds
http://privateequityblogger.com/2008/09/top-private-equity-funds.html
Private Equity Salary Cut
Private Equity Salary Cut
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Salary of Private Equity Dealmakers Could Drop 75%
The trouble in the financial sector inevitably promotes caution in the private equity industry, especially among
buyout firms and some believe that this will cause major reductions in the salaries paid to dealmakers at buyout firms. Bloomberg news
reports that private equity salaries could face major reductions--as high as a 75% cut--as a result of the credit crunch.
British financier Guy Hands makes the projection based on the idea that private equity deals will have a longer life than before--an
average of 8 years--as firms exercise more caution. This would inevitably lead to huge cuts in the salary of private equity dealmakers
who have been compensated very well in the past as more buyouts were executed. Hands believes that the current economic crisis will
force private equity firms to reevaluate their strategy and focus on safer, more long-term focused deals--a sharp departure from the
way buyout firms have operated up until this economic decline.
―Compensation for everyone in the financial services industry is clearly going to fall over the next few years,‖ Mr. Hands told
Bloomberg. ―This will be particularly true for private equity general partners who are having the reduction, both because of the time it
takes to invest and because of the time it takes to harvest.‖
Source: Bloomberg
Permanent Link: Private Equity Salary Cut
Tags: Private Equity Compensation, Private Equity Salary, Private Equity Salaries, Private Equity Management, Private Equity
Link to This Resource: Private Equity Salary Cut
http://privateequityblogger.com/2008/09/private-equity-salary-cut.html
Buyouts and Banks
Buyouts and Banks
Fed Hopes Buyout Firms Will Rescue Banks
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The federal reserve has been actively pursuing private equity as a solution to the
banking crisis. The latest and most obvious move by the Fed to attract private equity is Monday's announcement that it will loosen
regulation on how much of a bank a private equity firm can own.
The previous rules restricted non-banking entities from purchasing more than 25% stake in a bank. Now, under the new loosened
regulation, buyout firms can not only own as much as one third of a bank but also are allowed to have a stronger presence in the
boardroom. Previously, the Fed had resisted the idea of opening up banks to outside investors but the credit crisis has forced the
Federal Reserve to consider new options in private equity.
The buyout industry possesses a lot of capital and the Fed would like to see that capital invested into the struggling banking industry.
The buyout industry is estimated to hold $400 billion in capital that could be invested, according to the research company Preqin. While
Monday's announcement may heighten buyout firms' interest in the banking sector, it is not likely that the move will fix the banking
problem according to Jaret Seiberg, a financial services analyst at the Stanford Group in Washington. In a research note he wrote that
"These changes are helpful, but they do not open the floodgates to private equity investments as some investors had hoped. While this
could mitigate the current crisis, we see it as unlikely." One reason that buyout firms may be skeptical about investing in the banking
sector is the unsuccessful investments in banks already this year.
However, private equity firms have expressed some interest after the Federal Reserve's recent move. But buyout firms are expected to
wait until the Federal Reserve and Congress reach an agreement on a bailout plan. If private equity does invest in banks, many believe
it will not be in the form of big investments in major banks, but rather smaller and middle-market banks that are less subject to the
volatility of the market. It is clear that the future of the financial market will in some way be determined by private equity.
Permanent Link: Private Equity and Banks

Secondary Source: CNN
Tags: Private Equity and Banks, Private Equity Credit Crisis, Private Equity and Federal Reserve, Private Equity Firms, Private Equity
and Buyouts, Buyouts and Banks
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Link to This Resource: Buyouts and Banks
http://privateequityblogger.com/2008/09/buyouts-and-banks.html
David Rubenstein
David Rubenstein
David Rubenstein Interview on the Economic Crisis
David Rubenstein is personally one of my

favorite figures in private equity, as may be evident in past videos. Mr. Rubenstein is the co-founder of the Carlyle Group, since its
creation in 1987 the Carlyle Group has grown into a firm that manages more than $87 billion. Rubenstein is a prominent voice in private
equity, his name is almost always among the lead speakers at major private equity forums such as the Private Equity Segment of the
World Economic Forum. Currently, David Rubenstein holds the position of Managing Director of the Carlyle Group.
The following interview is an interview with Mr. Rubenstein, where he appears a bit more solumn while addressing a serious subject.
He offers his take on the current economic crisis, in particular the federal government's response to the situation. An important note is
that David Rubenstein suggests that private equity will have an important role in buying the assets that the government has acquired.
Here is the video interview of David Rubenstein discussing the current financial market:
Private Equity On Pause
David Rubenstein and President George W. Bush
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A little known fact about the Carlyle Group is that President George W. Bush once held a seat on the board of directors on one of the
Carlyle Group's first acquisitions. While President Bush did not seem to be cut out for the private equity industry, he went on to greater
success by becoming the governor of Texas almost immediately after leaving the Carlyle Group. David Rubenstein has a great account
of President Bush's time with the Carlyle Group:
Let me talk about a bad deal. At the beginning of Carlyle - early - we didn't have any funds. We didn't have any dedicated funds. And
we had a deal that seemed like it would be the greatest deal since sliced bread. It was handed to us. Marriott said to us, look, we're
going to sell our airline catering business [Caterair].It's number one in the world. Management team has been there for 10 years. We
dominate all the markets and we're not going to do an auction. We're going to sell it to you guys 'cause some of our people [Carlyle co-
founders Steve Norris and Dan D'Aniello and Bush crony Fred Malek] used to work at Marriott. You know, what could be better?
So the financing was there. And we thought, this is an easy business. So they're going to give us a company. Number one in the world.
Gold plated. Got all the equipment you need. Good management team.
Well, then the Gulf War came. And all of a sudden people stopped flying. And then those who were flying realized that they weren't
going to be getting the food that they thought they were going to get. . . . So no matter how good you think a company can be
something can go wrong. We couldn't anticipate the Gulf War. So the airline catering business has gone this way.
I mention this because it reminds us all the time we shouldn't have hubris. You know no matter how smart we think we are or how good
we are, something can go wrong. And if something seems too good in life to be true, it usually is. In this case, the only interesting thing
about the deal--and we lost all our money in it. Our money and our investors' money in it. In that deal.
But when we were putting the board together, somebody [Fred Malek] came to me and said, look there is a guy who would like to be on
the board. He's kind of down on his luck a bit. Needs a job. Needs a board position. Needs some board positions. Could you put him on
the board? Pay him a salary and he'll be a good board member and be a loyal vote for the management and so forth.
I said well we're not usually in that business. But okay, let me meet the guy. I met the guy. I said I don't think he adds that much value.
We'll put him on the board because - you know - we'll do a favor for this guy; he's done a favor for us.
We put him on the board and [he] spent three years. Came to all the meetings. Told a lot of jokes. Not that many clean ones. And after
a while I kind of said to him, after about three years - you know, I'm not sure this is really for you. Maybe you should do something else.
Because I don't think you're adding that much value to the board. You don't know that much about the company.
He said, well I think I'm getting out of this business anyway. And I don't really like it that much. So I'm probably going to resign from the
board.
And I said, thanks - didn't think I'd ever see him again. His name is George W. Bush. He became President of the United States. So
you know if you said to me, name 25 million people who would maybe be President of the United States, he wouldn't have been in that
category. So you never know. Anyway, I haven't been invited to the White House for any things. (Source)
If you are viewing this through e-mail subscription please click this link to view the video.
Permanent Link: David Rubenstein Interview
Tags: David Rubenstein, Private Equity Managers, Private Equity, Private Equity Manager David Rubenstein, David Rubenstein Carlyle
Group.
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Link to This Resource: David Rubenstein
http://privateequityblogger.com/2008/09/david-rubenstein.html
Private Equity Firm: Partner
Private Equity Firm: Partner
The Role of a Partner at a Private Equity Firm
The position of Partner at a private equity firm is a coveted one, and with reason. The private equity Partner is
rewarded significantly higher compensation than associates (although they are paid very well too). The logic behind the dramatic pay
increase is that a Partner has significant abilities in judging deals, managing employees and generating high profits for the firm.
Partners at private equity firms take on a wide range of responsibilities, but the Partner has four primary duties:
Managing the Partnership and Operations: Typically Senior Partners oversee the overall productivity and performance of the firm and
its employees and the day-to-day operational tasks are assigned to the other Partners. The degree in which each partner specializes in
a certain area varies by the firm‘s size and reach.
Sourcing Deals: The majority of deals come from Partners, who use their extensive investment knowledge and experience in the
industry, as well as their numerous contacts to find potential investment opportunities. In this way, Partners play a pivotal role in
searching out and executing deals for the private equity firm.
Supervising Investments: The degree that Partners are involved in the firm‘s investments varies by deal but generally Partners take on
at least a small role in monitoring the investment. This could be only a minimal hand in the company, such as a seat on the
investment‘s board. In other cases, the Partner takes on a very active role in the life of the investment by managing the operational
aspects of an acquired company. The Partner‘s involvement in the investment is meant to ensure its continued success which hopefully
translates to profits for the private equity firm.
Partner Relations: Finding new Limited Partners and maintaining good relationships with existing Limited Partners is another important
duty of Partners. This is crucial for Partners because bad relations with investors could translate to a capital drought for the firm‘s
private equity funds.
While these duties are the most time-consuming and have the highest priority, a Partner must also make time to keep up on industry
trends and stay ahead of the competition. Through trade shows, private equity forums and industry publications a Partner is able to
keep up with the ever-evolving private equity industry. Another task is the mentoring of the young talent by overseeing their work with
helpful criticism and advice, which has a two-fold benefit of increasing the efficiency of the firm through the Associates and grooming
future management.
As you can see, Partners have a great deal of influence over the success of a private equity firm and therefore Partners are the top-tier
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of business professionals. The position is difficult but the compensation makes it well worth the effort for most Partners and the allure of
a Senior Partner position makes the Partner role an envied rank in private equity firms.
For more info: Tuck Center for Private Equity
Permanent Link: Private Equity Firm Partner
Tags: Private Equity Firm Partner, Private Equity Partner, Private Equity, Private Equity Careers, Private Equity Positions, Private
Equity Jobs, Partner at a Private Equity Firm
Link to This Resource: Private Equity Firm: Partner
http://privateequityblogger.com/2008/09/private-equity-firm-partner.html
Private Equity Blogs
Private Equity Blogs
Why Don't Private Equity Firms Blog?
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This question of why private equity firms are not
blogging at the same pace as the rest of the business world was originally by Private Equity Database's Blog and it led to the rather
long response that follows:
First, I agree that there is a certain amount of limitation placed on private equity firms because they aren't promoting or offering a
product as well as just how vast private equity investing ranges by industry, size etc. So the nature of the business kind of inhibits
blogging.
Second, private equity initially spent a great deal of effort trying to escape the public attention rather than attract it. So opening a blog
about a firm is a little counter-intuitive to the industry, especially with so much negative scrutiny by the media and the public in general.
But to that I argue that it would benefit private equity firms to start a blog too, and it may outweigh the aforementioned negatives.
First, to the problem of how private equity is not really designed for blogging, look at the venture capital blogs. As you mentioned, there
are a lot of VCs blogging. Many VCs aren't even blogging strictly on venture capital, they offer tips and strategies or just talk about their
life. I remember a news story that talked about venture capital bloggers talking about everything...except venture capital. While I don't
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know how that translates to business for the specific VC, I do know that the ones blogging are making contacts and familiarizing the
public with venture capital. So while private equity is not automatically geared for blogging there are other avenues that the firm could
use that would help draw awareness for the firm and potentially expand their contacts.
This leads to my second argument for the benefits of private equity firms blogging: creating a firm blog enhances the accessibility for
the firm to the public. The industry has attracted criticism for its lack of transparency with investors but more so with the public, who
want to know more about the firm that is acquiring familiar public companies. Even a small effort like a blog is a step in the right
direction for the private equity industry as it works to transform its bad public image.
The biggest problem, I think, is that private equity firms are so large and impersonal by definition, so having a blog would mean either
using a willing member of management that is authoritative for the entire firm or hiring an impersonal writer that is limited to press
releases and firm/industry data. The first is pretty unlikely, the latter wouldn't be very popular.
So while I agree that this could strongly benefit whatever private equity firm takes the lead and starts blogging, I don't see it happening
anytime soon.
Permanent Link: Private Equity Blogs
Tags: Private Equity Blogs, Private Equity Firms, Private Equity Firms Blogs, Private Equity Industry Blogs
Link to This Resource: Private Equity Blogs
http://privateequityblogger.com/2008/09/private-equity-blogs.html
Private Equity and Hedge Funds
Different Private Equity and Hedge Funds
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I recently found this PowerPoint presentation
from Richard Wilson's Hedge Fund Blog. It focuses on different private equity funds and hedge funds that is pretty extensive. It
provides a great overview of how funds are structured and operate but also delves into some of the more complex aspects.
Here is the link to the PowerPoint.
Permanent Link: Private Equity and Hedge Funds
Tags: Private Equity and Hedge Funds, Private Equity Funds and Hedge Funds, Hedge Funds and Private Equity Funds, Private
Equity, Hedge Funds
Link to This Resource: Private Equity and Hedge Funds
http://privateequityblogger.com/2008/09/private-equity-and-hedge-funds.html
Goldman Sachs Private Equity
Goldman Sachs Private Equity
Goldman Sachs Private Equity | GS Capital Partners
Goldman Sachs is one of the most successful investment banking firms and the Goldman Sachs
private equity arm is no exception to the firm's reputation. For a complete look at GS Capital Partners check out this site. GS Capital
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Partners runs multiple funds with over $1 billion in assets under management, representing a considerable branch of Goldman Sachs'
business.
Here is a summary provided by GS Capital Partners:
GS Capital GS Capital GS Capital GS Capital GS Capital GS Capital GS Capital

Partners Partners Asia Partners II Partners III Partners 2000 Partners V Partners VI
Size $1.04bn $300mm $1.75bn $2.78bn $5.25bn $8.5bn $20.3bn
Year Formed 1992 1994 1995 1998 2000 2005 2007
Geography Global Asia Global Global Global Global Global
More from the Goldman Sachs Private Equity Group website:
Goldman Sachs Private Equity Group (PEG) is a leading investor in private equity funds, is a significant co-investor in direct
investments, and is an active provider of liquidity and portfolio management solutions to existing private equity investors. PEG's
comprehensive global private equity program seeks to construct a diversified private equity portfolio and considers each potential
investment's strategy, geographic focus, competitive advantages, and return profiles, including how a particular opportunity may affect
the portfolio's volatility and risk.
Based in New York, London, Tokyo, Hong Kong and San Francisco, the Private Equity Group consists of over 85 professionals. PEG
casts a wide net in an effort to identify the best private equity fund managers in the world. PEG primarily makes commitments to private
equity funds located in the United States, the United Kingdom, continental Europe, Latin America and Asia with strategies that include
leveraged buyouts, growth financings, natural resources, venture capital and distressed securities. PEG believes that its reputation and
access to the resources of Goldman Sachs may provide significant advantages to its investments. PEG maintains an –open-door policy
with respect to potential investments, and welcomes information regarding prospective private equity fund offerings and secondary
investment opportunities.
Tags: Goldman Sachs Private Equity, Goldman Sachs Private Equity Branch, Goldman Sachs Private Equity Group, Goldman Sachs
Private Equity Investment, Private Equity Goldman Sachs firm
Link to This Resource: Goldman Sachs Private Equity
http://privateequityblogger.com/2008/09/goldman-sachs-private-equity.html
Venture Capital Associate
Venture Capital Associate
The Responsibilities of a Venture Capital Associate
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An Associate position in a venture capital firm is one of
the most sought-after destination for recent business school graduates. While most gain a year or two of experience in the investment
banking sector after obtaining an MBA, Associates are generally young, smart talent hoping to succeed in a competitive and exciting
industry. The very high rate of compensation also helps attract elite young professionals to venture capital.
The common responsibilities of a venture capital Associate can be divided into three categories: due diligence, sourcing deals and
supporting portfolio companies.
Due Diligence:
Researching and talking to competitors
Talking to customers
Interviewing and gathering information from industry experts
Working with technical consultants to evaluate technologies
Conducting background checks on management
Talking with previous investors
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Building valuation models
Sourcing Deals:
Consulting and meeting with investment banking analysts
Consulting with market research firms
Attending trade shows, investment conferences and other relevant events
Networking with other VCs
Consulting lawyers and accountants
Supporting Portfolio Companies:
Helping conduct research on behalf of the company
Attending the Board‘s meetings
Supporting and advising the management team
Find and screen possible management candidates
Work with potential acquirers of the company
Help acquire other companies and find new sources of capital
These are the majority of the duties that Associates perform, and it gives you an idea of the work that an Associate does at a venture
capital firm.
Source: Tuck Center for Private Equity and Venture Capital
Permanent Link: Venture Capital Associate
Tags: Venture Capital Associate, Venture Capital, Private Equity Associate, Venture Capital Career, Venture Capital Firm Associate,
Venture Capital Jobs
Link to This Resource: Venture Capital Associate
http://privateequityblogger.com/2008/09/venture-capital-associate.html
How Private Equity Capital May Help the Economy
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As I alluded to in today's earlier post about the state of private equity, many
firms are holding a lot of assets and simply waiting through the rough economic conditions for solid investment opportunities.
If you recall about two years earlier, private equity firms were attracting a lot of criticism for the perceived secrecy of the big buyouts
they were making and the potential risk in the use of leverage to conduct these buyouts. Now, the economy is in dire need of capital to
support the financial giants that have been collapsing recently. Private equity firms possess a large amount of this capital and many
people are advocating for increased private equity investment as a sort of stimulus to the economy. This is not to say that private equity
firms haven't felt the effects of the economy's decline, much to the contrary, but the industry has maintained a fair amount of capital
throughout that many hope will revive the economy, at least in a minor way.
Dale Oesterle mentions the irony of this situation in his blog here.
For e-mail subscribers, here is the link to the BLF blog that I mentioned:
http://lawprofessors.typepad.com/business_law/2008/09/private-equity.html
Tags: Private Equity Capital, Private Equity Economy, Private Equity Reputation, Private Equity Capital Investment
Trackback: http://www.typepad.com/t/trackback/89778/33568386
Link to This Resource: Private Equity Capital
http://privateequityblogger.com/2008/09/private-equity-capital.html
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Private Equity News
Private Equity News
The State of Private Equity News Video
It seems all anyone is talking about is the recent collapse of Lehman Brothers and how the financial crises will effect the economy,
specifically private equity. While a major decline in the market is potentially harmful to private equity, it is worth noting that private
equity often thrives in down markets. This is because the nature of private equity is to buy large firms, which may be selling unusually
low in a bad market, and turn enormous profits on the acquisitions. Here is a brief private equity video that talks about the state of
private equity under the economic crisis (click the link to watch the video):
State of Private Equity
Permanent Link: Private Equity News
Tags: Private Equity News, Private Equity Video, Private Equity, Private Equity Videos, Private Equity Industry News
Link to This Resource: Private Equity News
http://privateequityblogger.com/2008/09/private-equity-news_18.html
Private Equity Investment Videos
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Watching private equity videos can be a great way to keep up
with industry news, watch great private equity lectures or just take a break from reading text articles. I've created a collection of the
private equity video blog posts, the following private equity videos have been made into blog posts:
Jim Cramer Discusses Private Equity and the Credit Crunch
The Future of Venture Capital
Private Equity in Africa
Angel Investing Video Part 1

Panel Discussion of a Venture Capital Term Sheet
Raising Venture Capital Video
Venture Capital Bloggers Video
Raising Money From Angel Investors
Private Equity Boom
While the majority of my private equity research for this blog is through reading articles, reports and white papers; I do watch a lot of
private equity videos. Some of these videos make it into posts but a lot are never included in the blog. Here are the private equity
videos that are not included in posts:
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Middle East World Economic Forum Discussing Private Equity 2007
Private Equity Real Estate Video
E-mail subscribers can view this post at: http://privateequityblogger.com/2008/09/private-equity-videos.html
Permanent Link: Private Equity Videos
Tags: Private Equity Videos, Collection of Private Equity Videos, Private Equity Videos List, Private Equity Blogger: Private Equity
Videos, Venture Capital Videos, Angel Investing Videos
Link to This Resource: Private Equity Videos
http://privateequityblogger.com/2008/09/private-equity-videos.html
Private Equity Recruitment
Private Equity and Venture Capital Recruitment
If you are searching for qualified private equity recruits for

your firm or, on the other side, if you are hoping to connect with a private equity firm then Private Equity Recruitment is a great tool.
Unlike the broad financial recruitment websites, this resource specializes exclusively on the venture capital and private equity industry.
One major benefit is the international reach of Private Equity Recruitment Ltd. which spans globally including Asia and the Middle East.
Another benefit is the size of the agency, Private Equity Recruitment hosts more jobs on their website than any other private equity
recruiter in the UK and Europe. This is a valuable resource for professionals interested in entering the private equity and venture capital
industry.
Until I can correct the link problem for e-mail subscribers, here is the URL for Private Equity Recruitment: http://www.perecruit.com/
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Permanent Link: Private Equity Recruitment
Tags: Private Equity Recruitment, Private Equity Recruiting, Private Equity Recruiters, Private Equity and Venture Capital Recruitment
Link to This Resource: Private Equity Recruitment
http://privateequityblogger.com/2008/09/private-equity-recruitment.html
Lehman Brothers
Lehman Brothers
The Future of Lehman Brothers Private Equity
Lehman Brothers
Holdings is a finance giant that has dominated the news this week with speculation that the firm would file for bankruptcy. This rumor
was confirmed when Lehman Brothers filed for Chapter 11 bankruptcy protection on the morning of September 15, 2008.
In response, Lehman Brothers' shares plummeted bringing the Dow Jones to its largest drop since the wake of September 11, 2001.
Aside from the broader economic implications, what does this mean for Lehman Brothers' substantial private equity business?
Since entering private equity in 1984, Lehman Brothers has been a major player in private equity by investing in merchant banking,
venture capital, real estate, credit related investments, infrastructure and private fund investments. The private equity department of
Lehman Brothers has amassed $30 billion in assets under management, according to the firm's website. With a dim future for the
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company, the future of the private equity department is in jeopardy.
The only hope is to seek out potential buyers that would absorb the private equity branch. According to the Street Insider, the top firms
that may buy the investment management division are limited to Bain Capital, Hellman & Friedman and Clayton Dubilier & Rice.
Lehman Brothers will likely take its time searching out potential buyers and selling off the remaining assets of the company. The fall of
Lehman Brothers Holdings is only the latest in a series of major blows to the market, following the government takeover of mortgage
giants Freddie Mac and Fannie Mae. Ultimately, the impending purchase of the Lehman Brothers' investment management division will
decide how private equity is directly effected.
Lehman Brothers Private Equity WSJ
Permanent Link: Lehman Brothers
Tags: Lehman Brothers, Lehman Brothers Bankruptcy, Lehman Brothers Investment Management, Lehman Brothers Private Equity,
Lehman Brothers Holdings
Link to This Resource: Lehman Brothers
http://privateequityblogger.com/2008/09/lehman-brothers.html
Jim Cramer on Private Equity
Jim Cramer on Private Equity
Jim Cramer Discusses Private Equity
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Most people have seen Jim Cramer excitedly shouting financial advice on
CNBC's "Mad Money." In addition to his popular TV show, Jim Cramer is a best-selling author and former hedge fund manager.
Today's post features a video interview of Mr. Cramer discussing private equity and its role in reviving the economy. He suggests
loosening the rules limiting the ability of private equity firms to buy large shares in banks. Cramer believes "breaking the private equity
rules" will inject some capital into the struggling banking sector. I can't get the size right, hopefully this looks alright.
Permanent Link: Jim Cramer on Private Equity
Tags: Private Equity Jim Cramer, Jim Cramer, Private Equity Firms, Private Equity Capital, Private Equity and the Economy, Private
Equity Videos
Link to This Resource: Jim Cramer on Private Equity
http://privateequityblogger.com/2008/09/jim-cramer-on-private-equity.html
Private Equity Council
Private Equity Council
Private Equity Council Resource
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The Private Equity Council is a information and research center based in Washington, D.C. The PEC is a
great informational resource that has extensive white papers, research and data on private equity. The website is updated fairly
frequently with research on current events effecting private equity. I recommend visiting the Private Equity Council to learn more about
private equity.
Permanent Link: Private Equity Council
Tags: Private Equity, Private Equity Council, Private Equity Council Research, Private Equity Research, Private Equity Tools
Link to This Resource: Private Equity Council
http://privateequityblogger.com/2008/09/private-equity-council.html
Bolt On Acquisition
Bolt On Acquisition
Private Equity Firms Use Bolt On Acquisitions
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A bolt on acquisition is a term in
private equity that refers to when a private equity-backed company acquires another company as a "bolt on" to enhance the private
equity-backed company's value.
This method has gained popularity particularly in down markets when private equity firms need another source to enhance the appeal
of the company prior to sale. According to a recent news article, the current economic decline has given way to a rise in bolt on
acquisitions.
This is especially evident in a new BDO survey of private equity firms in the UK. The survey reports that private equity firms still want to
make acquisitions, with 51% of the private equity firms expecting to acquire another business prior to being sold on. As valuations
decrease, 97% of private equity firms predict that at least one in four of the companies in their portfolios to undertake a bolt on
acquisition prior to exit. Additionally, 70% of the firms responded that at least have of their portfolio companies would add a bolt on
acquisition.
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Roger Buckley, corporate finance partner at BDO Stoy Hayward‘s Birmingham office observed:
―Although private equity company sales are slowing, there is a massive demand to bolt on acquisitions to existing investments. There
are over 1,200 mid-market private equity portfolio companies and bolt-on deals will underpin a lot of M&A in the mid-market for the next
few years.‖
In an uncertain global financial market, private equity firms are using bolt on acquisitions to add value of their portfolio companies.
Permanent Link: Bolt On Acquisition
Tags: Bolt On Acquisition, Bolt on acquisitions, private equity acquisitions, private equity outlook, private equity mergers and
acquisitions
Link to This Resource: Bolt On Acquisition
http://privateequityblogger.com/2008/09/bolt-on-acquisition.html
Advantages of Private Equity
Advantages of Private Equity
Top 5 Advantages of Private Equity
Investing in a private equity fund has a lot of advantages compared to other investment areas, here are just five advantages of private
equity for not only investors but also the companies that private equity firms acquire:
Companies that are backed or acquired by private equity firms are often made more efficient and produce higher profits, which benefits
now only the private equity firm but also the company. Private equity firms use skilled management teams to correct the problems and
ineffective parts of the company and many times this intervention prevents the company from further declining or even failing.
The management receives carried interest, a portion of the profits, so managers and their staff are motivated to produce good results to
investors. Although carried interest is often criticized for taking money from the investors, it is a very big incentive for managers.
By definition, private equity firms work outside the public eye and do not have to follow the same transparency standards that public
firms and funds must adhere to. This allows private equity firms to reform the companies without the constraint of having to report
quarterly to the SEC or similar distractions.
Private equity firms generally perform very rigorous due diligence on potential investments. By utilizing a team of researchers the
private equity firm is able to identify most risks that would not otherwise be found.
Private equity managers are paid very well and so it is easy to attract high caliber, experienced managers that tend to perform very
well. The same goes for lower level employees at private equity firms, they tend to be the top young business school graduates.
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Permanent Link: Advantages of Private Equity
Tags: Private Equity Advantages, Advantages of Private Equity, Private Equity, Private Equity Benefits, Benefits of Private Equity, Why
Choose Private Equity?
Link to This Resource: Advantages of Private Equity
http://privateequityblogger.com/2008/09/advantages-of-private-equity.html
Private Equity Tax
Private Equity Tax
The Private Equity Tax Debate
Private equity firms along with hedge funds have received a lot of criticism asserting that they receive preferential
tax treatment. The charge stems from a "tax loophole" involving the substantial performance fees that private equity managers, which
make up a large part of the managers' income.
The performance fees are taxed by only 15% rather than the top income tax of 35%. This has caused some public criticism, especially
among politicians who have put forth legislation to correct the tax treatment of management fees.
Private equity and hedge fund managers have protested any changes to the current tax code. Private equity managers argue that they
should not be taxed at 35%, claiming that their performance fees are different than general income. They believe that carried interest is
a logical reward for their invested time, resources and services, and the risk of loss involved in private equity.
Whether carried interest will be considered as general income is of huge importance to managers, as they stand to lose substantial
earnings through this tax reform. Here is a really well done and extensive article that looks at the possibility of increasing tax on private
equity carried interest and the possible ramifications of this.
Permanent Link: Private Equity Tax
Tags: Private equity tax, private equity taxes, private equity capital gains tax, private equity carried interest, carried interest tax
Link to This Resource: Private Equity Tax
http://privateequityblogger.com/2008/09/private-equity-tax.html
Private Equity Fund of Funds
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Private Equity Fund of Funds Manager Selection
Private equity fund of funds are investment vehicles that pool

investors' money to invest in private equity funds. A fund of funds manager is, of course, important for the success of the fund of funds,
therefore selecting a qualified fund of funds manager should be considered thoroughly.
There are three major qualifications to look at when selecting your manager: performance, management team, and the strategies and
deal funds.
Performance
Unlike traditional financial markets, the performance of private equity fund of funds is more difficult to analyze. This is because in
private equity the investor must consider four elements: the internal rate of return (IRR), multiples, timing and return of cash. These all
must be taken into consideration and weighted more or less equally when examining a manager's global performance. Additionally, the
private equity manager should have a proven long-term record, showing that he is capable of surviving good and bad financial cycles.
Management Team
When performing due diligence on a fund of funds you should follow the basics that apply to other funds, and a consistent focus is on
the management team and operations. This is a critical point for selecting a manager, while he is the head manager, his management
team often decides the success of the fund. 'Back office' operations should be a big concern for investors, and as private equity
evolves a greater transparency in the 'back office' is expected by investors. Overall, you should look for a coherent and competent
team standing behind the manager.
Strategy
In terms of strategy, many managers differ but the quality to look for here is clarity. A good manager can clearly and expertly explain
his strategy to the investors. Specifically in the area of private equity fund of funds, a manager should have prior experience in private
equity that has constructed his strategy.
Experience
The popularity of fund of funds has led to the emergence of many "me too" funds that have little to no prior experience in private equity
or managing a fund of funds. Proven experience in private equity or managing a fund is a big factor to consider when selecting a
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manager. Seniority often makes for a more knowledgeable and competent manager--although there are also very successful rookie
fund managers--but also an experienced manager usually brings a strong staff that has confidence in the manager.
These are just some major points to consider when selecting a private equity fund of funds manager, but extensive interviews and
research will ultimately weed out the less qualified managers and hopefully lead the fund of funds to success.
Permanent Link: Private Equity Fund of Funds Manager
Tags: Private Equity Fund of funds, private equity funds, private equity funds of funds manager, private equity fund of funds
management, selecting a fund of funds manager, private equity fund of funds selection
Link to This Resource: Private Equity Fund of Funds
http://privateequityblogger.com/2008/09/private-equity-fund-of-funds.html
Private Equity News
Private Equity News
Private Equity News Video
The following video is an interview of Linley Capital Managing's John Jonge Poerink, he discusses how his new firm plans to succeed
in the rough financial market. Also, Poerink speaks of the future of private equity and how big buyouts can still happen after the credit
crunch:
Permanent Link: Private Equity Outlook Video
Tags: Private Equity Outlook, Private Equity Interview, Private Equity News, Private Equity, Private Equity Videos
Link to This Resource: Private Equity News
http://privateequityblogger.com/2008/09/private-equity-news.html
Elevator Pitch
Elevator Pitch
Private Equity and Venture Capital Elevator Pitch
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The elevator pitch is the situation in which a person with a business opportunity
or idea has a chance opportunity to attract a potential investor--like a short elevator ride with a wealthy investor. Unlike formal meetings
where you are able to show data, slides or videos and give a lengthy proposal to investors, the elevator pitch is a brief oral presentation
that will hopefully interest the investor enough that he will want to hear more through a full presentation.
Be Brief and Interesting

The key to a successful elevator pitch is brevity. While you don't want to appear unprofessional by not listing enough real details, a
quick outline of your business idea will leave your audience interested. Too often, great opportunities with investors are squandered by
a boring, drawn-out presentation which would be better suited for an office than whatever casual setting. Remember, elevator pitches
take the investor's time and if it isn't short and interesting, the investor may immediately reject your idea.
Try For a Full Meeting

If the potential investors seems interested in your idea--and most investors make it very clear when they are not--then try to arrange for
a full meeting to discuss your idea, or at least offer to send the investor a more detailed business plan. The point of the elevator pitch is
not to immediately secure an investment, it is to court potential investors and spark interest in your idea.
Explain Your Idea For the Investor

Your idea may be really exciting to you, but investors are mostly interested in making money from your idea. So explain your idea in
terms of benefiting the investor, like how your idea will prevail over your competitors and how that will translate to profits. The point is to
not get too wrapped up in your idea that you forget to highlight incentives for the investor too.
The elevator pitch is a great tool for conveying your idea simply to potential investors, and while it may not always work for you, when it
does work it can be really great, just ask Joe Luciano. He understands the power of the pitch, Luciano is the owner of Motion Golf, and
in 2006 he made an incredibly successful pitch to a roomful of investors. Using the elevator pitch method he gave a short speech of
how his use of business idea for sophisticated video technology in golf could make the investors rich. One of the investors liked his
pitch so much that he invested $600,000 and has since invested more than $2 million in Luciano's company. As success stories like
this show, developing a good elevator pitch is critical for entrepreneurs looking for capital.
Permanent Link: Elevator Pitch
Tags: Private Equity Elevator Pitch, Elevator Pitch, Venture Capital Elevator Pitch, Elevator Pitch for Venture Capitalists, Angel
Investors Elevator Pitch
Link to This Resource: Elevator Pitch
http://privateequityblogger.com/2008/09/elevator-pitch.html
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PrivateEquityBlogger.com Affiliations & Media Partners
Affiliations
Affiliations & Media Partners
The Private Equity Institute "We provide both classroom and web class training by private equity
professionals from our New York City class room. Our Intensive Training course provides a comprehensive introduction to PPMs,
valuation, financial modeling, LBOs, and more. The Fund Creation course is more advanced training focusing on the practical
knowledge required to create a private equity fund. Graduates will receive a diploma and be given access to our Private Equity 2.0 web
community. Here, you will gain access to our private equity jobs database, be able to gain private equity deal experience by working
with private companies raising capital on our PESE and Deal Management Process web sites. In addition, graduates will have access
to our private equity investors database, be provided with the latest private equity news and be given discounts to private equity events.
Graduates can also use the professional profile or intern profile pages to help find positions in the private equity industry. Enroll now or
click here to ask questions."
___________________
Link to This Resource: PrivateEquityBlogger.com Affiliations & Media Partners
http://privateequityblogger.com/2008/09/privateequitybloggercom-affiliations.html
Private Equity India
Private Equity Boom in India
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Private equity is expanding
past the traditional major financial regions like the UK and United States to the recently booming economies in the East. One of these
newly emerging private equity markets is India.
Private Equity
Private equity has exploded in India, in terms of both the volume and the size of deals. Last year was a big year for India domestically,
with the number of total mergers and acquisitions and private equity deals increasing from 697 in 2006 to 867. The more impressive
increase from 2006 to 2007 is in the size of deals which rose by 82%. The following chart represents the private equity deals in India:
The United States accounts for a very large part of the private
equity investment in India. In 2007 it was estimated that the U.S. is responsible for 45% of the private equity investment into India.
Asian countries, excluding India, account for 18% and Europe only 12%. These numbers will likely change in 2008 as the U.S. private
equity deals have declined this year and China is predicted to rapidly increase its investing abroad.
Venture Capital
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As for venture capital, India has seen a similar boom with a strong start to 2008. In the second quarter of 2008, India attracted $238
million in venture capital investment, a 120% increase over an already impressive last year. Over all of 2007, venture capitalists
invested $928 million in 80 deals in entreprenuerial companies based in India. Led by large venture capital investments in
marketing/advertising companies, this year promises to be another big year for India's venture capital sector.
India has secured its place as a top destination for private equity investment. Last year, for the first time, India surpassed China in
terms of the value of private equity deals over a 12-month period. Private equity funds focused in India are expected to raise at least $5
billion in the last two quarters of 2008, more than double the amount raised between June and December of last year. If this prediction
comes true, 2008 will be an incredible year for India private equity.
Permanent Link: Private Equity India
Tags: Private Equity India, India Private Equity, Private Equity in India, Private Equity Investment in India, Private Equity Funds in India,
Venture Capital India
Link to This Resource: Private Equity India
http://privateequityblogger.com/2008/09/private-equity-india_05.html
List of Private Equity Funds in India
I've noticed in the private equity forum and from e-mail questions I have
received, that there is a lot of interest on private equity in India. This is certainly warranted, as private equity in India has grown
enormously in over the last few years. To address this I am first going to publish a list of private equity funds located in India, courtesy
of AltAssets. Tomorrow, I will write an introductory guide to private equity investment in India.
Here is the list of private equity funds in India from AltAssets:

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Aavishkaar India Micro Venture Capital Fund
Anandrathi Real Estate Fund
Avendus Advisors Pvt. Ltd.
Baring Private Equity Partners India Ltd.
BTS Investment Advisors Pvt. Ltd.
Canbank Venture Capital Fund Limited
ChrysCapital
Citi Alternative Investments
Evolvence Advisory Services Pvt. Ltd.
Frontline Strategy
Gaja Capital Partners
GVFL Ltd.
GW Capital Pvt. Ltd.
HSBC Private Equity Management Mauritius Ltd
ICICI Venture Funds Management
ICOS Capital
IDFC Private Equity
IFCI Venture Capital Funds Ltd
IL&FS Venture Corporation Ltd.
India Value Fund
Indian Angel Network
Indian Direct Equity Advisors
Infinity Venture Fund
Jina Ventures
JumpStartUp
Karnataka Asset Management Company Pvt.Ltd.
Kerala Venture Capital Fund (P) Ltd.
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Kotak Private Equity Group
Mefcom Capital Markets Ltd.
New Path Ventures
Passion Fund
PSi Inc.
Punjab Venture Capital Ltd.
Rabo India Finance
Rajasthan Venture Capital Fund (RVCF)
Redclays Capital - Private Equity and Venture Capital
SAIF Partners
Samara Capital
Sicom Venture
SIDBI Venture Capital Limited (SVCL)
Siemens Venture Capital
State Street Global Advisors India
Techcap India
The Carlyle Group Dubai
The View Group
Tishman Speyer
TPG
UTI Ventures
Ventureast
Walden Nikko India Management Co. Ltd.
Warburg Pincus India Pvt. Ltd.
India Private Equity Firms
2i Capital
Fire Capital
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If you have a fund to add to the list or there is another region which you would like me to look into just send a quick e-mail to
Theo@peblogger.com.
Permanent Link: Private Equity India Funds List
Tags: Private Equity India, Private Equity, Private Equity Investment in India, Private Equity Funds List, List of Private Equity Funds in
India, Private Equity Funds List in India, India Private Equity Funds
Link to This Resource: Private Equity India
http://privateequityblogger.com/2008/09/private-equity-india.html
Private Equity Compensation
Private Equity Compensation
Private Equity Compensation Defies Credit Crunch
The number of private equity deals have declined as the credit crunch hurts the financial industry, but in terms of
compensation and hiring private equity has remained strong in 2007.
According to a Private Equity Analyst study, the salaries for North American private equity professionals rose by 5.3%, from $190,000
rose to $200,000 in 2006. When you factor in bonuses, private equity compensation increased 25%, to $375,000. If you thought that
was high, there is still the remaining factor of carried interest which brings the total to $401,000 from $315,000.
Hiring increased too, of the 167 private equity firms surveyed, the majority of the firms responded that they were adding staff more than
reducing. This compares pretty impressively to the investment banks that have been cutting staff with mass lay-offs.
Other optimistic notes from the study are that of the participating private equity firms only 5% expect to diminish in size. Also,
compensation consultants expect the pay for entry-level positions to stay the same or even rise in 2008.
So why is the private equity industry surviving while other financial sectors are making huge cuts in staff and salaries? A major factor
may be the cushion of management fees. Private equity firms receive notoriously high management fees that are paid throughout the
life of the deal, which sometimes lasts at least 10 years.
The study is not completely optimistic--the marked decline in deals is worrying many in the industry for instance--but in a struggling
economy the study reveals good news for those considering entering private equity and those currently working at a private equity firm.
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Source: WSJ and PEA
Permanent Link: Private Equity Compensation
Tags: Private equity compensation, private equity salaries, private equity compensation report, private equity income, private equity
money, private equity salary data
Link to This Resource: Private Equity Compensation
http://privateequityblogger.com/2008/09/private-equity-compensation.html
Professional Networking
Professional Networking
Private Equity and Venture Capital Networking Tips
The private equity job market is very competitive and it may be difficult to break into the industry. While a large
part of securing an interview at a private equity or venture capital firm is having the proper credentials (i.e. MBA and financial work
experience), another important aspect is networking.
By putting in some extra work networking you make a contact who leads you to a job opening, or you may just learn valuable tips from
other private equity or venture capital professionals. No matter your field, networking is critical for advancing in the financial world. Here
are a few basic networking opportunities you may have overlooked:
Linkedin.com: The biggest and probably the best networking website is LinkedIn. This website's sole purpose is to connect
professionals and make business contacts, so having an updated and active LinkedIn account is an easy networking tool that often
leads to great contacts. Make sure that your profile is professional and shows all your skills and past work experience. A photo will lend
some personality to your profile too. Join the private equity linkedin group, if you haven't already.
Facebook.com: Another networking website that is Facebook. Although Facebook has a more social networking focus, many business
people use this site as a tool for professional networking. Word of caution: if you use Facebook for its social features, like connecting
with college friends, then make sure there are no comments or photos on your profile that you wouldn't be comfortable with a potential
employer seeing.
IFA Life: A reader suggested another networking tool, IFA Life,a new professional networking website for financial planners and
investment professionals. The site is predominantly in the U.K. but is expanding to the U.S. too.
Join forums: The internet provides so many opportunities to connect with other private equity and venture capital industry contacts, and
forums are great for this. The Private Equity Forum is connected to the 9,000+ member private equity group and is a good place to ask
questions and meet people. There are also many forums exclusive to venture capital or angel investing.
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Attend events: I live in New York City so there is always a networking event or private equity lecture to attend. This goes for most major
cities too, especially areas with major financial sectors like Chicago and Boston. Sites like this, are great for keeping up with events.
Also, check out online conferences "webinars" that are often led by well-known speakers.
These are some basic but great opportunities to make other contacts and become more familiar with the private equity industry. If you
have any suggestions for other professional networking opportunities please send an email to Theo@peblogger.com
Permalink: Professional Networking
Tags: Private equity networking, networking private equity, private equity networking opportunities, private equity, professional
networking, how to network in private equity
Link to This Resource: Professional Networking
http://privateequityblogger.com/2008/09/networking.html
Positions in Private Equity
If you're considering applying for a job in private equity, here is a brief introduction.
Private equity jobs are typically separated by primary areas: number crunching; appraising and executing deals; and originating deals.
"The Number Crunchers"
The number crunching area consists of the junior staff. These employees are usually offered short two year contracts and their main
duty is to analyze potential investments. The number crunchers look at the accounts of the companies that the fund is considering and
constructing financial models for calculating how much these companies are worth.
Appraising and Executing Deals
After the number crunchers finish calculating and analyzing the investments, the next set of people take over the deal. These people,
sometimes called the principals, take the information that the number crunchers gathered and decide whether the investment is
beneficial to the firm and what the price should be set at. If these people decide that the investment works for the private equity firm
then they help execute the deal.
"Originators"
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This leads to the "originators" who are more senior than those who appraise the deals. These people are typically the fund's partners
and their responsibility is to oversee the deal while it is being executed. Their duties also include originating new deals by finding more
companies to invest in. These people use their senior status to build relationships with top executives in companies, possibly using that
connection to coordinate a deal later. After the deal has been completed, the principals and partners nurture the company. This
nurturing role may involve a position on the company board and advising a strategy that will lead to increased profits.
Necessary Skills for a Job in Private Equity
In order to be seriously considered at any position in a private equity firm, you generally need an excellent academic record--usually an
MBA from a quality university. In addition, many recruiters want professional experience of at least a year in investment banking or a
relevant industry. The salaries in the private equity industry ranges by position, but data suggests that private equity compensation is
exceptionally high.
Permanent Link: Private Equity Positions
Tags: Private equity jobs, jobs in private equity, private equity careers, careers in private equity
Link to This Resource: Private Equity Positions
http://privateequityblogger.com/2008/09/private-equity-jobs.html
Hedge Fund List
Hedge Fund List
Hedge Fund List - By State
The lines between hedge funds and private equity firms is blurring. Many hedge funds invest
along side or even into private equity firms and many investment firms offer hybrid private equity - hedge fund portfolios.
Thanks to a member of one of our online networking groups I recently found this list of hedge funds by state. This is list is not complete
and the industry changes so rapidly it is surely becoming more outdated each month, that said it is hard to find this information online
so hopefully this may help you.
___________________________
CT:
Badon Hill Asset Management, L.L.C.

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Basso Capital Management, L.P.
Blue Orchid Capital
Bridgewater Associates Inc
DCF Capital
Diamondback Advisors CT, LLC
Dune Partners, L.L.C.
Fossel Capital
JD Capital Management, L.L.C.
Kideral International
Lone Pine Capital, L.L.C.
Monitor Capital, Inc.
Newbury Partners, L.L.C.
Norfolk Markets
North Sound Capital
Norton Capital Management, LLC
P.A.W. Partners
Pirate Capital, L.L.C.
Renaissance Investors, LLC
SAC Capital Advisors, L.L.C.
Sageview Capital, L.L.C.
Silvermine Partners, L.L.C.
Sky Investments
SkyWorks Leasing, LLC
Strategic Value Partners, L.L.C.
The Patriot Group, L.L.C.
Tontine Capital Partners, L.P.
Tudor Investment Corporation
Viking Global Investors, L.P.
Weston Capital Management, L.L.C.
XT Capital Partners, L.L.C.
------------------------------
-------------------------------------
IL:
Balyasny Asset Management
Citadel Investment Group, L.L.C.
Eagle Marekt Makers
Evanston Capital Management, L.L.C.
Frontaura Capital, LLC
Group One Trading, L.P.
Ritchie Captial
Sanborn & Kilcollin Partners, L.L.C.
Sidley Austin, L.L.P.
--------------------------------------------------------------------
MA:
Adamas Partners, L.L.C.
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Babson Capital Management, L.L.C.
Cambridge Place Investment Management, L.L.P.
Convexity Capital Management, L.P.
FDO Partners, L.L.C.
Fidelity Investments
Fred C. Church Inc.
Fresco Faux Finishing
FTN Midwest Securities
Highland Capital Partners
IBS Capital Corporation
Kendall Investments, L.L.C.
North Bay Capital Management, L.P.
Nyes Ledge Capital Management
O.A.K. Associates
Old Mutual Asset Management
Pine Cobble Capital
Robeco Boston Partners Asset Management
Sankaty Advisors, L.L.C.
Sirios Capital Management, L.P.
Sonar Capital Management, L.L.C.
TA Associates
Thomas H. Lee Partners, LP
Tidal Capital Management, L.L.C.
Tudor Investment Corporation
Wellington Management Co., L.L.P.
-------------------------------------------------------------------
NY:
Apollo Management, L.P.

Arden Asset Management, L.L.C.
Aristeia Capital
Arnhold & S. Bleichroeder Advisers, L.L.C.
Arnold and Porter, L.L.P.
Asset Alliance
Auda Advisor Associates, L.L.C.
Avenue Capital Group
Barclays Capital
BlueBay Asset Management, Plc
BlueMountain Capital Mngmt, L.P.
Cantillon Capital Management, L.L.C.
Cantor, Weiss & Wurm Asset Management
Capital Z Investment Partners
Capra Asset Management, Inc.
Caxton Associates, L.L.C.
Cerberus Capital Management, L.P.
Clear Asset Management, Inc.
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Clearpoint Learning Systems
Copper Arch Capital, L.L.C.
Corbin Capital Partners
D. E. Shaw and Company, L.P.
D.B. Zwirn & Co., L.P.
DiMaio Ahmad Capital
Drake Management, L.L.C.
Elliott Associates, L.P.
Eminence Capital
Endeavor Talent Agency
Evercore Partners
Fairfield Greenwich Advisors, L.L.C.
Fursa Alternative Strategies, L.L.C.
Glenrock Asset Management
GLG Partners
Golden Tree InSite Partners
GoldenTree Asset Management
Gravity Capital Management, L.L.C.
Greenlight Capital, Inc.
Group One Trading, L.P.
GSCP (NJ), L.P.
GSO Capital Partners
Harvest Volatility Management, LLC
HBK Capital Management
HealthCor Management
HFR Asset Management
Highbridge Capital Management
Icahn & Co.
Icahn Management, L.P.
IntroPLAY, L.L.C.
J. J. Newport Group, Inc.
JL Advisors, L.L.C.
Kepler Asset Management
Kingdom Ridge Capital, LLC
Kingdon Capital Management, L.L.C.
Knight Capital Group
Knott Partners, L.P.
Magnetar Capital
MAK Capital
Marathon Asset Management, L.L.C.
Maverick Capital, Ltd.
MFP Investors, LLC
Miura Global Partners
Narragansett Asset Management, L.L.C.
North Sea Capital Management
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North Shore Asset Management, L.L.C.
Oaktree Capital Management, L.L.C.
Och-Ziff Capital
Octavian Advisors, L.P.
Olympia Capital Management
OpHedge Investment Services
Ospraie Advisors
Ospraie Management LLC
Penson GHCO
Pequot Capital Management, Inc.
Perella Weinberg Partners
Phoenix Partners Group
PixiesDidIt!, Inc.
PV Capital Management
Quest Select Capital Management
RBC Capital Markets
Rosenblum Silverman Sutton NY, Inc.
Royal Capital Management, L.L.C.
SAB Capital Management, L.P.
Sandell Asset Management Corp.
Schottenfeld Qualified Assoc L.P.
Seminole Management Company, Inc.
Sigam Capital Management, LLC
Silver Creek Capital Management, L.L.C.
Sire Management Corporation
Spring Mountain Capital
Steadfast Financial, L.L.C.
Straus Asset Management, L.L.C.
Taconic Capital Advisors, L.P.
Tailwind Capital Partners, L.L.C.
TCS Capital Management, L.L.C.
The Archstone Partnerships
Third Point Management Company
TM Capital Management, Inc.
TPG Capital
Trafelet & Company, L.L.C.
Trillium Trading, L.L.C.
Trivium Capital Management
Two Sigma Investments, L.L.C.
Tyndall Management, L.L.P.
Tyndall Management, L.L.P.
Union Bancaire Private Asset Mngmt
Voyager Management, L.L.C.
W. R. Hambrecht & Co.
West Side Advisors
York Capital Management
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Permanent Link: Hedge Fund List
Tags: Hedge Fund list, List of hedge funds, top 100 hedge fund managers list, alpha hedge fund list, free hedge fund list, hedge fund
list 100, Hedge Fund Manager list, Hedge Fund of Funds List, List of hedge fund firms, list of hedge fund manager names
Link to This Resource: Hedge Fund List
http://privateequityblogger.com/2008/08/hedge-fund-list.html
Management Buyout
Management Buyout
Financing a Management Buyout
A management buyout is when a company's existing managers purchase a large or majority share in the
company. This form of acquisition requires the managers of the firm to use a large amount of money, often this capital comes from
private equity investors. In return for providing the capital, private equity investors receive shares of the company which will hopefully
increase in value under the management buyout. Managers will take the company private to realize the company's potential
performance and possibly attract public investors later.
This buyout may be leveraged using debt or directly through the investors' capital. The managers contribute too. Although they do not
have the means that investors have, managers invest what they can to purchase a small share of the company. The terms of the
contract varies between buyouts but the investors usually develop an exit strategy of 3-5 years. The primary goal is the same for
managers and investors: to increase profitability. Management buyouts can be risky for investors and the managers too but if it is
successful both parties often net huge gains.
Permanent Link: Management Buyouts
Tags: Management buyouts, leveraged buyouts, private equity management buyouts, private equity buyouts, private management
buyouts
Link to This Resource: Management Buyout
http://privateequityblogger.com/2008/08/management-buyout.html
Venture Capital News
Venture Capital News

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Venture Capital Video on the Future of Venture Capital
The venture capital industry has suffered noticeably in the first half of this year. The number of venture-backed companies reaching the
initial public offering stage is the lowest it has been since 2003. This brief venture capital news video from CNBC discusses this decline
with the president of the National Venture Capital Association:
Venture Capital Fallout
Permanent Link: Venture Capital News
Tags: Venture capital news, venture capital IPOs, Venture capital initial public offerings, venture capital industry news
Link to This Resource: Venture Capital News
http://privateequityblogger.com/2008/08/venture-capital-news.html
Private Equity Africa
Private Equity Africa
Private Equity Investment in Africa Video
Africa is developing good governance and bolstering financial institutions to attract private equity investment.
There are obvious problems preventing private equity in Africa most importantly stability. However, private investment has increased
especially this decade with Asian investment strengthening the continent's economy. Until Africa can modernize its financial sectors
with heightened regulation and political reform, private equity investment will realize its potential. The following two part video explains
the developments that are taking place in Africa and what to expect in the future:
Part One:
Part Two:
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Permanent Link: Private Equity Africa
Tags: Private Equity Africa, Private Equity Investment in Africa, Private Equity, Private Equity Africa Investment, Private Equity in Africa
Link to This Resource: Private Equity Africa
http://privateequityblogger.com/2008/08/private-equity-africa.html
Private Equity Risk
Private Equity Risk
Private Equity Focuses on Risk Management
According to an article today from the Financial Times, private equity firms are focusing more on risk
management and regulatory measures.
This new concentration on risk management is partly a response to this year's financial instability. Large private equity firms like the
Carlyle Group and Citigroup are reaching out to risk management firms in hopes of curbing private equity risk and receiving a third
party assessment of the private equity firm's risk management.
For the full article click here.
Permanent Link: Private Equity Risk
Tags: Private Equity Risk, Private equity risk management, private equity, private equity groups risk, private equity firms risk
management
Link to This Resource: Private Equity Risk
http://privateequityblogger.com/2008/08/private-equity-risk.html
Private Equity China
Private Equity China
Private Equity in China Video
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China's economy has grown impressively this decade and private equity firms are entering the region hoping to capitalize on the
economic growth. The following video is an introduction to private equity in China from the Berkeley China Initiative. This segment
examines the sources of private equity as well as the increasing size of private equity deals in China.
Permanent Link: Private Equity China
Tags: Private Equity Asia, Asia Private Equity, China Private Equity, Private Equity in China, Private Equity Firms in Asia, Private
Equity Videos
Link to This Resource: Private Equity China
http://privateequityblogger.com/2008/08/private-equity-china.html
How to Improve the Private Equity Industry's Reputation
The private equity industry has suffered from a negative public perception largely stemming from a lack of
transparency. The annual Davos World Economic Forum discussed how the private equity industry could improve their reputation, here
are some of the solutions offered by the co-founder of the Carlyle Group David Rubenstein:
Improving Transparency: The most important change that the private equity industry must address is the lack of transparency over how
the industry operates. To do this private equity groups must appeal to more than their investors by reaching out to labor unions, public
groups and communities effected by deals.
Opening to the Media: The media has played a major role in portraying the private equity industry as secretive and untrustworthy. This
stereotype is furthered by the private equity industry's reluctance to respond with openness toward media. Recently, private equity has
made attempts to improve its relationship with the media and its critics but more needs to be done to repair its poor public image.
Focusing on Benefits: Private equity has been charged with primarily focusing on profits while the public suffers. As I've mentioned
previously, a report on private equity revealed that in the majority of acquisitions by private equity groups employment in the company
actually rises. Reports and data like this should be used by private equity groups to combat criticism. Despite some highly publicized
negatives, the private equity industry has positive effects that it should capitalize on to improve its public image.
Permanent Link: Private Equity Industry
Tags: Private Equity Industry, Improving the private equity industry, private equity reputation, private equity pr, private equity public
relations, private equity industry and the public
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Link to This Resource: Private Equity Industry
http://privateequityblogger.com/2008/08/private-equity-industry_03.html
Carried Interest
Carried Interest
Private Equity Carried Interest
Carried interest is the percentage of profits that the general partners of a private equity fund receive as an
incentive for good performance. The carried interest compensation typically ranges from 20-30% of profits which is a substantial
amount of money for the fund's investors.
Private Equity Carried Interest
A private equity fund is a partnership created to obtain a significant (often majority) stake in an expanding or underperforming
company. Outside investors, the limited partners, provide most of the funding capital typically 90-97%. The remaining funding of 3-10%
is provided by the general partners of the fund who in turn receive management fees. The typical compensation set up for private
equity fund managers is 1-2% of the total fund assets and the carried interest. This arrangement is often very beneficial for the
manager and serves as a method for investors to motivate and reward good performance by the general partners.
Carried Interest Tax
There is a large amount of controversy surrounding the taxation of private equity carried interest. Currently, carried interest is taxed as
long-term capital gains but advocates for private equity tax reform would like carried interest to be taxed as ordinary income. The
change would raise taxes for carried interest from the current 15% to as high as 35%. The most recent attempt to alter the taxation of
carried interest was proposed by Republican Senator Charles Grassley but private equity advocates challenged the proposal and it is
unlikely that private equity tax reform will occur anytime soon.
Permanent Link: Carried Interest
Tags: Private equity carried interest, carried interest, carried interest in private equity, definition carried interest, what is carried interest,
private equity carried interest tax, carried interest tax
Link to This Resource: Carried Interest
http://privateequityblogger.com/2008/08/carried-interest.html
Theo O'Brien
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Theo O'Brien
PrivateEquityBlogger.com Author
My name is Theo O'Brien and I'm the author of PrivateEquityBlogger.com. I am an investment research
professional based in New York City and write daily articles here on various topics related to private equity.
To contact me please send an email to Theo@PEBlogger.com. Thanks for visiting.
Permanent Link: Theo O'Brien
Link to This Resource: Theo O'Brien
http://privateequityblogger.com/2008/08/theo-obrien.html
Germany Venture Capital
Germany Venture Capital
New Private Equity Report on Germany Venture Capital
German private equity hit its stride in 2000 when the number of new private investments jumped from about
€500m to €4.5billion. Much of this success can be attributed to venture capital investment; Germany was awarded the European
Venture Capital success story of 2000 for its remarkable growth. The major growth in the German technology sector necessitated new
forms of financing, venture capital funding provided the necessary capital and reaped huge profits from technology investments.
Germany is one of the most attractive locations for venture capital firms according to a new survey conducted by the National Venture
Capital Association. The surveyed limited partners rank Germany second globally on their venture wishlists, the United States
continues to be the favored location for venture capitalists. Germany earned this high spot by impressing investors with clean energy
and medical devices and equipment.
While the NVCA survey shows Germany ahead of the UK, from 2006 to 2008 the UK has had a higher venture capital investment
volume but that lead seems to be slipping. German venture capital volume has remained strong increasing while the rest of Europe and
the UK venture investment has declined.
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As larger buyout deals slow following the global credit crunch many limited partners have turned to smaller venture capital deals.
However the credit crunch has also presented problems for venture capital; venture capital firms are struggling in exit strategies so
fewer venture capital-backed companies are reaching IPO‘s. The emerging ―cleantech‖ sector is expected to provide many new
investment opportunities to counter most adverse effects from the credit crunch.
German venture capital has stayed strong through the worst times of the economic slowdown and the horizon appears bright as
Germany attracts global venture capital investment through clean technologies and an impressive medical sector.
For the full German Private Equity report and more reports from private equity insight click here.
Permanent Link: Germany Venture Capital
Tags: Germany venture capital, venture capital in Germany, German venture capital, venture capital firms in Germany, venture capital
outlook in Germany, German private equity, Germany Private Equity
Link to This Resource: Germany Venture Capital
http://privateequityblogger.com/2008/08/germany-venture-capital.html
Private Equity MBA
Private Equity MBA
Private Equity is a Top Destination for MBAs
Private equity is a top destination for business school graduates because it carries some great benefits and
private equity is a challenging, rewarding atmosphere for bright young talent.
A story by the Wall Street Journal suggests that the biggest incentive is monetary. The lowest-level employees at private equity firms
earn on average $215,000 a year. That salary increased 29% from the previous year, so MBAs can expect to begin their private equity
career earning a high three figure salary.
The emergence of hedge funds may also benefit MBAs breaking into the private equity industry by providing competition for buyout
firms. Private equity recruiters have responded to hedge fund competition by increasing incentives offered to MBAs, hoping to retain
their access to the elite recruitment pool. Private equity firm managers have spread the carried interest--the profit private equity firms
receive from buyout deals--among the lower-level positions in firms. In comparison to the 29% pay increase from 2006 to 2007, firm
managers' salaries only increased by 9.3%. Although some predict a decline in private equity, it will certainly remain a top destination
for young MBAs.
WSJ source
For more on private equity MBAs see the list of The Top Private Equity Education Programs
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Permanent Link: Private Equity MBA
Tags: Private equity MBA, Private equity MBAs, MBA graduates, private equity jobs, private equity business school
Link to This Resource: Private Equity MBA
http://privateequityblogger.com/2008/08/private-equity-mba_18.html
List of Largest Private Equity Real Estate Firms
The Private Equity Real Estate Magazine reveals the PERE 30, the top thirty private equity firms investing in real
estate. The combined total raised by all thirty private equity firms was $190 billion over the last five years. The Blackstone Group and
Morgan Stanley Real Estate topped the list, together the two firms raised more than $36 billion in the past five years.
The associate editor of the PERE Magazine commented "With real estate growing rapidly as an institutional asset class, these 30 firms
are primed to continue growing at a tremendous rate and influencing real estate markets around the world."
Here is the list of the largest private equity real estate firms:
The Blackstone Group
Morgan Stanley Real Estate
Tishman Speyer
Goldman Sachs Real Estate Principal Investment Area
Colony Capital
Lehman Brothers Real Estate
The Carlyle Group
ProLogis
Beacon Capital Partners
LaSalle Investment Management
MGPA
AEW
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Rockpoint Group
Apollo Real Estate Advisors
CB Richard Ellis Investors
RREEF Alternative Investments
Grove International Partners
Shorenstein Properties
The JBG Companies
Citigroup Property Investors (CPI) Capital Partners
JER Partners
Walton Street Capital
Heitman
Aetos Capital
KK daVinci
Lubert-Adler
Starwood Capital
DLJ Real Estate Capital Partners
RLJ Development
Permanent Link: Private Equity Real Estate List
Tags: Private Equity Real Estate, List of private equity real estate firms, list of private equity real estate, list of private equity firms, top
private equity real estate firms, top private equity, top real estate private equity
Link to This Resource: Private Equity Real Estate
http://privateequityblogger.com/2008/08/private-equity-real-estate_17.html
Angel Investing
Angel Investing
Angel Investing Video- Part 3
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Here is the last angel investing video in the series--if you missed them here is part 1 and part 2. This angel investing video is a bit
longer (30 mins) and the panel of angel investors share practical tips for startup companies seeking angel capital. In my opinion, this
video is the most important and honest discussion of how to meet and obtain capital from angel investors. The panel gives some great
tips on how to separate your proposal from others and what mistakes that many startup companies make.
Permanent Link: Angel Investing Video- Part 3
Tags: Angel investors, angel investors videos, angel investors advice, angel investors funding
Link to This Resource: Angel Investing
http://privateequityblogger.com/2008/08/angel-investing_16.html
Updated Schedule of Private Equity Conferences
Private Equity Analyst is the Dow Jones' monthly newsletter on private equity, and in September it will be
hosting industry leaders for a private equity conference.
Private Equity Conference 2009
The Dow Jones' Private Equity Analyst Conference 2009 takes place September 16-17, 2009 at the Waldorf in New York City. The
private equity conference is a great place to get to know other private equity professionals and gain insight from distinguished industry
leaders like the CEO of the Blackstone Group and venture capital giant David Rimer of Index Ventures. All this comes at a pretty high
price tag of $2,595, but this conference is a smart investment for private equity professionals who can afford it.
The best returns often come during the worst of times. It is a phrase that you'll hear from buyout firms, big and small, from venture
firms, from secondary firms and even from limited partners. They know that out of the troubles of the '70s, late '80s, and the collapse of
the tech bubble have come deals that have made reputations and paved the way for big returns. The current global crisis is, of course,
unprecendented, but the past is one reason why the private equity industry, unlike so many others, is looking at the situation
optimistically rather than pessimistically.
Yes, they know keeping companies alive will be difficult, but they also feel that there will be incredible opportunities as well. But just
what will prove to be winning bets? Will buyout firms find success in doing deals without leverage? Will venture capital firms generate
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green in doing clean-tech deals? Will distressed firms find the right companies to buy? Will limited partners have picked the right
managers?
The 16th Annual Private Equity Analyst Conference will tackle these questions while also giving attendees insight into what's next for
their firm and the industry. --PEA Conference
For more information on this private equity conference click here.
Permanent Link: Private Equity Conference
Tags: Private equity conference, private equity conferences, private equity analyst, private equity analyst conference in New York, New
York private equity conferences, list of private equity conferences, schedule of private equity conferences, private equity conference
resource, PEA conference.
Link to This Resource: Private Equity Conference
http://privateequityblogger.com/2008/08/private-equity-conference.html
Private Equity Investment in Real Estate
Private equity investment in real estate has increased in recent years, here is an overview of private equity real estate:
Private equity real estate is a sometimes risky, but often lucrative investment area that has become
increasingly popular in the last few years. Private equity real estate typically involves a private equity firm collecting money from
investors to create a private equity fund, which then looks for potentially profitable real estate to purchase. The private equity fund
creates a portfolio of real estate investments that the fund manager believes will be relatively low-risk while still lucrative.
Private equity real estate funds three major investing strategies:
Core-Plus: This strategy is generally low risk with low returns. The Core-Plus strategy involves investing primarily in core properties,
with a small amount requiring some form of enhancement.
Value Added: This strategy usually generates higher returns than Core-Plus, but carries greater risk. The idea is to buy property, make
some improvement on it to raise the property's value and then sell it at a higher price than originally purchased. Value-added
improvements range from solving management/operational problems, physical improvements, or solving capital constraints.
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Opportunistic: This approach is generally the riskiest, but sometimes the most profitable. The opportunistic strategy usually involves
investing in properties that require a high degree of improvement and other more risky potentially profitable real estate investments like
raw land and niche property sectors.
Drawbacks to Private Equity Real Estate
High Entry Fee: Due to the substantial amount of capital needed for investing in real estate many funds require very large minimum
investments.
Low Liquidity: Private investment in real estate requires investors to have limited access to their money because it is locked up in long-
term investments. Some real estate investments can last more than ten years while the property is improved.
Volatility: As recent failures in the housing market demonstrate, the real estate market is subject to both boom and bust cycles. For
investors the real estate market is sometimes incredibly profitable but there is also a high degree of risk as housing prices can fall and
the fund can fail.
The private equity real estate industry has increased in size since 2000. While the housing crisis has hurt many in the financial industry
it has also led to very cheap real estate that private equity funds are purchasing for huge profits.
Permanent Link: Private Equity Real Estate
Tags: Private equity, private equity investment in real estate, private equity real estate, private equity investing in real estate, private
investors real estate, private investing real estate, definition private equity real estate
Link to This Resource: Private Equity Real Estate
http://privateequityblogger.com/2008/08/private-equity-real-estate.html
Angel Investing
Angel Investing
Here is the second angel investing video in a series. This video deals continues where the previous video left off with a panel of angel
investors describing the role that angel investors have in the development and expansion of a startup company, as well as sharing tips
for startup companies that want to attract angel investors.
Permanent Link: Angel Investors Video- Part 2
Tags: Angel investors, angel investors videos, angel investors advice, angel investors funding
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http://privateequityblogger.com/2008/08/angel-investing_14.html
Angel Investing
Angel Investing
This is the first video in a series about angel investing, describing the role that angel investors have in the development and expansion
of a startup company, as well as sharing tips for startup companies that want to attract angel investors.
Permanent Link: Angel Investing Video- Part 1
Tags: Angel investors, angel investing, angel investors videos, angel investors advice, angel investors funding
http://privateequityblogger.com/2008/08/angel-investing.html
Venture Capital Term Sheet
Venture Capital Term Sheet
What Venture Capital Investors Want in a Term Sheet
A term sheet is a document outlining the basic conditions and material guidelines for a business agreement. The
venture capital term sheet is key because it establishes the venture capital firm's involvement in the company and covers the shares
and expected returns for the investors. This short venture capital video covers some of what venture capitalists want and do not want in
a term sheet:
The first speaker, an angel investor, talks about the control issue. He says that the most important thing he looks for in a term sheet is
some kind of control through either a board position or observer rights. A venture capitalist says that valuation is most important
because he primarily wants to make good returns on his investments. The second venture capitalist shares a structural problem that he
does not want to see in a term sheet. He does not want convertible differed with a discount to the next round because it hopes that the
company does not do too well too early.
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Permanent Link: Venture Capital Term Sheet
Tags: Venture capital, venture capital term sheet, venture capital investors, venture capital terms, VC term sheet, venture capitalists
discuss term sheet
Link to This Resource: Venture Capital Term Sheet
http://privateequityblogger.com/2008/08/venture-capital-term-sheet.html
The Private Equity Industry's Bad Reputation
Private equity is, by definition, a private industry that operates outside the traditional, public investment system.
The huge impact that the private equity industry has on the financial market, and more recent high-profile buyouts have caused
concern outside the industry and led calls for greater transparency in private equity. So why does private equity have such a bad
reputation?
Key factors that contribute to private equity's bad reputation:
Size: The relatively new development of private equity, specifically the buyouts of large companies, has caused much public concern
because the private equity industry is less than transparent but private equity greatly effects financial markets.
Media: Private equity enjoyed little attention from the media while private equity groups made smaller deals. Then, when the size of the
deals increased and the impact of private equity was realized, the media struggled to define an industry that few really understood.
Now, private equity firms are making an effort to work with the media and explain the private equity process.
Public Interest: Private equity is a global industry so there is less involvement at the local level, and therefore a stigma is attached to
private equity that it operates outside the public interest. Critics argue that private equity is exclusively motivated by capital and does
not contribute locally. The substantial inflow of foreign capital to private equity funds does not help this image.
Employment: There is a belief that when private equity firms takeover companies jobs are lost. A private equity firm may cease control
of an underperforming company to help it realize its full profit potential. During the reorganization and restructuring some jobs are lost,
but according to a recent study private equity firms often create more jobs, boosting employment.
Permanent Link: Private Equity Industry Reputation
Tags: Private equity, public relations, private equity reputation, private equity industry, private equity public view, private equity outlook
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Link to This Resource: Private Equity Industry
http://privateequityblogger.com/2008/08/private-equity-industry.html
Venture Capital Board
Venture Capital Board
How to Build a Good Early Stage Board
Building an effective company board is crucial, especially for early stage development. Fred
Wilson shares some great tips on building a good early stage company board:
Have at least one founder on the board. Many VCs like to move the founders out of the way. They think they will be difficult and
meddle. That's always a risk, but the benefit of having founders on the board vastly outweighs any downside in my mind. Having too
many founders on the board is bad too. You want a diverse set of people on your board, not any one concentrated group.
Keep the number of VCs on the board to two or three. The number of VCs on the board is in inverse proportion to the success of the
deal.
Local board members are better. They will come to the meetings. Avoid too many board members who live elsewhere. They'll call into
the meetings. Trust me. And that sucks.
Have at least one and ideally two industry insiders on the board who are independent of the founders and the VCs. They should bring
operating experience. They should be mentors to the CEO. They should be local so they come to the meetings.
Do the meetings first thing in the morning when people are fresh. No laptops and no blackberries other than the laptop that drives the
presentation if one is needed.
Bring the senior management to the board meetings. They should know the board and the board should know them.
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Try to do a dinner the night before at least four times a year with all the directors attending. Don't bring senior management to these
dinners. They should be for board bonding which is key to a well functioning board.
Always send the agenda and board materials at least one day in advance of the meeting and expect/demand that the members read it
before coming to the meeting.
Do not spend the meeting going through the materials slide by slide. People can read, expect that they will.
Do spend the meeting reviewing where the business is, where it needs to go, and what strategic decisions need to be made to get
there.
Remember that the board works for the Company as much as the management works for the board. Expect board members to do what
you need from them and manage them to make sure they do.
Keep your board to seven members or less. Five is ideal in my experience but sometimes you need seven to get the right diversity.
Two insiders, one to three VCs, and one to two industry people is ideal once the company gets to a certain scale. (A VC)
Permanent Link: Venture Capital Board
Tags:Venture capital board, Building a Good Early Stage Board, Building a Company Board, Build a Early Stage Board
Link to This Resource: Venture Capital Board
http://privateequityblogger.com/2008/08/building-good-board.html
New Professional Resource: Private Equity Forum
As I've emphasized in several previous posts, private equity is about who you know. That's why a private
equity forum is such a great resource for private equity professionals hoping to meet recruiters, trade strategies and build contacts. The
private equity forum was created by the private equity investment group and is superior--in terms of updating and membership--to any
other private equity forums that I've found.
Permanent Link: Private Equity Forum
Tags: Private equity forum, private equity, private equity forums, forum on private equity
Link to This Resource: Private Equity Forum
http://privateequityblogger.com/2008/08/private-equity-forum.html
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Venture Capital Fundraising Job | Open Position
Venture Capital Fundraising
Open VC Fundraising Position
This position has been closed.
Tags: Venture Capital Fundraising, Venture Capital, Venture Capital Fundraising Jobs, Venture Capital Sales, Venture Capital
Marketing, Capital Raising for Venture Capital
Link to This Resource: Venture Capital Fundraising Job | Open Position
http://privateequityblogger.com/2008/08/venture-capital-fundraising-job-open.html
Private Equity Jobs | New York | Boston | SF | Chicago | London and more
Private Equity Jobs
Private Equity Jobs
Our team is now starting to publish select private equity jobs which are open within the industry. We see this as both a service to
private equity professionals who may consider a move and to firms who are looking to find those individuals with relevant work
experience. Below please find a link to our first listing to be published:
Venture Capital Fundraising
Permanent Link: Private Equity Jobs
Tags: Private Equity Jobs, Private Equity Job, Jobs in Private Equity, Private Equity Job Listings, Private Equity Job Postings, Private
Equity Positions, Entry Level Private Equity Job
Link to This Resource: Private Equity Jobs | New York | Boston | SF | Chicago | London and more
http://privateequityblogger.com/2008/08/private-equity-jobs-new-york-boston-sf.html
Mezzanine Financing
Mezzanine Financing
Mezzanine Financing Booms During Credit Crunch
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Mezzanine financing presents an alternative solution for firms seeking capital that cannot--or choose not to--
obtain a bank loan. Mezzanine financing is the use of short-term loans provided by private equity firms. Mezzanine loans have an
unusually high rate of return to counter the inherent risk to investors. A major result of the credit crunch is the reigning in of bank loans,
this has formed a big capital gap for middle-market companies. Many middle-market firms have responded by seeking mezzanine
financing.
According to a new report, mezzanine financing-focused private equity groups have benefited at the banking industry's expense. In the
first half of 2007 mezzanine funds raised $2.3 billion, in the first half of 2008 mezzanine funds raised $24 billion. The failures of many
U.S. banks has contributed to mezzanine financing replacing traditional sources of capital for an increasing number of midmarket firms.
Permanent Link: Mezzanine Financing Booms
Tags: Mezzanine financing, mezzanine loans, mezzanine financing loans, mezzanine debt, mezzanine, private equity
Link to This Resource: Mezzanine Financing
http://privateequityblogger.com/2008/08/mezzanine-financing.html
Private Equity Networking
Private Equity Networking
Tips on How to Network In Private Equity
These are some of my favorite more general private equity networking tips. Networking is an especially
important for private equity, because no matter which aspect you are involved in so much of the work is personal. It's all about who you
know; whether it is finding potential investors or meeting entrepreneurs. So here are some basic but helpful private equity networking
tips, I'll be adding more in the future:
Be aware of the impression you make- Are you someone who gives help or advice for the sake of helping out another professional or
are you someone who looks only to advance yourself? If you are greedy and care only for your personal success you will come off as
such a person and people will not want to do business with you. Building relationships that benefit both parties will ultimately reward
you in return.
Be excited about what you do- When you're talking to other professionals you don't want to complain about your job or talk about the
least attractive aspects of it. You should be excited and therefore exciting to listen to so that your audience wants to know you and
possibly even do business with you.
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Prepare and practice your self-introduction- Of course you understand your job but you have to be able to explain clearly what you do
and what makes that interesting. Sometimes first impressions really are everything, so eloquently and confidently introducing yourself
is a crucial aspect of networking.
Anticipate rejection and overcome it- Not everyone is going to be interested, so take rejection in stride and move on to better prospects.
I appreciate rejection because then I don't waste my time on someone who isn't really interested so I can find someone who is.
Bring business cards...everywhere- You never know where you are going to meet a contact so bring business cards anywhere you go.
Sometimes I find myself making a great contact at a friend's dinner party or sitting next to me on an airplane.
Repeat People's First Names- This plays to the more personal side of networking, where you are building more personal business
relationships. Thanks to David Drake of LDJ Capital for this addition.
These are just a few of my favorite networking tips, if you have some other networking tips you'd like to share please send me an e-
mail at Theo@peblogger.com.
Permanent Link: Private equity Networking
Tags: Private equity networking, private equity, networking in private equity, private equity networking tips, tips for private equity
networking
Link to This Resource: Private Equity Networking
http://privateequityblogger.com/2008/08/private-equity-networking.html
Top Venture Capitalists
Top Venture Capitalists
The Top Venture Capitalists in Technology
The Forbes annual Midas 100 list is the definitive collection of the top venture capitalists focused in technology.
The Midas List is comprised of venture capitalists who use venture capital to create wealth for their investors and build valuable,
enduring companies. Here are first 10 of the 100 top venture capitalists. Click here for the full list.
Top 10 Venture Capitalists in Technology
1 L. John Doerr Kleiner Perkins Caufield & Byers
2 Michael Moritz Sequoia Capital
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3 Ram Shriram Sherpalo
4 David Cheriton Stanford University
5 Andreas von Bechtolsheim Sun Microsystems
6 William Ford General Atlantic LLC
7 Lawrence Sonsini Wilson Sonsini Goodrich & Rosati
8 Asad Jamal ePlanet Ventures
9 Ronald Conway Angel investor
10 Navin Chaddha Mayfield Fund
Permanent Link: Top Venture Capitalists
Tags: Top venture capitalists, top ten venture capitalists, top venture capitalists in technology, top 10 venture capitalists technology, top
tech venture capitalists
Link to This Resource: Top Venture Capitalists
http://privateequityblogger.com/2008/08/top-venture-capitalists.html
European Private Equity
European Private Equity
European Private Equity Report- Q2
A new report reveals that despite a rough first quarter, European private equity recovered in a small way
during the second quarter of 2008. The improvements in Q2 are increases in both volume and value of 9% and 15% over the first
quarter.
However, this quarter's success is overshadowed by the heavy losses endured last quarter. YTD estimates show a drops in volume
(9%) and value (53%) from last year. Although the European private equity market is much weaker than last year, there is hope in the
completion of two deals worth in excess of EUR 2bn during the second quarter.
Buyouts
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The value of buyouts in the second quarter stayed pretty steady remaining above the EUR 24bn level, with only a very slight decrease.
The number of buyouts had a minor increase from 160 to 173 deals.
The trend toward small-cap continues as the volume of deals in the smallest bracket increased 3% and value rose considerably from
143m to EUR 6bn.
On the other hand, the mid-market sector declined over the second quarter, volume dropped 18% and value fell 28%.
Positively, the largest bracket has jumped in terms of value by 58% above the first quarter. The UK remains the leader in European
buyouts with 36% of the overall total.
Growth Capital
Two major deals that were collectively worth EUR 3.5bn led to huge success in growth capital in the last three months. The growth
capital segment increased in terms of value by 238% from EUR 1.8bn to 6bn. Growth capital also improved in terms of volume,
increasing 17% in the second quarter.
Also, six of the top ten growth capital transactions were over EUR 100m. This is a significant leap from the first quarter's biggest deal of
only EUR 88m.
Early Stage
So far, in terms of volume this has been a good year for early stage private equity. The second quarter exactly mirrored the first, with
89 early stage deals made. This is a 24% increase in volume over last year's first two quarters.
It is a different story for early stage, in terms of value. The value of early stage deals fell 37% from the first quarter; at only EUR 278m,
this is the lowest total for early stage in 18 months.
Germany and the UK continued to perform very well in the second quarter.
For the full European Private Equity report and more reports from private equity insight click here.
Permanent Link: European Private Equity Report
Tags: European private equity, European private equity report, private equity in Europe, Europe private equity, private equity Europe
Link to This Resource: European Private Equity
http://privateequityblogger.com/2008/08/european-private-equity.html
Raising Venture Capital
Raising Venture Capital
Raising Venture Capital Video
This is a really good video on raising venture capital. Two venture capital professionals discuss what it takes to find receive venture
capital and how a startup should look for it.
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They offer seven tips for entrepreneurs seeking venture capital:
Make sure your idea is unique, and marketable.
Focus on a simple, concise business plan.
Be honest and realistic with investors.
Be patient, raising capital takes time and lots of it.
Set goals beyond development stage, consider costs after first-round financing such as infrastructure and marketing.
Learn from experienced people in the industry.
Interview the interviewer as much as they interview you. You will be working with the venture capital firm for a long time, so make sure
their style works for you rather than grabbing the first offer.
Permanent Link: Raising Venture Capital
Tags: Venture capital, venture capital funding, venture capital videos, venture capital finance, raising venture capital
Link to This Resource: Raising Venture Capital
http://privateequityblogger.com/2008/08/raising-venture-capital.html
Private Equity Associate Skills
A private equity associate is the typical entry-level position for MBA graduates. An associate candidate should be able to perform at all
stages of the deal, from making the deal to operations and even fund raising.
A worthy candidate should possess three core skills:
Technical skills- Firms often specialize in a certain sector or domain. An associate's responsibility is to gain expertize in that area.
Analytical skills- Associates must be able to understand business models, research and collect relevant data, and conduct an extensive
analysis on potential investments. Most MBA programs should prepare candidates for this area of the job to a small extent, but further
self-preparation is recommended.
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Interpersonal skills- Not only are interpersonal skills important for succeeding in the firm, a large part of a private equity associate's job
is networking with contacts--from investors to service providers. Interpersonal skills are essential for success in the private equity
industry.
Private equity associates are expected to interpret data rapidly, interpret it effectively and come up with a conclusion. Although an
associate's duties vary by firm, that any associate should possess.
Permanent Link: Private Equity Associate
Tags: Private Equity Associate, private equity careers, private equity, private equity associate skills, finding a job as an associate
Link to This Resource: Private Equity Associate
http://privateequityblogger.com/2008/08/private-equity-associate.html
Private Equity Italy
Private Equity Italy
Private Equity Investing in Italy
Private equity investing in Italy has fallen from the global credit crunch but private equity deals have
continued only with more caution and selectivity. Private equity investing in Italy has been on the rise over the last few years after
coming to prominence in the mid-90s, and the impact has been generally positive. A report on the Economic Impact of Private Equity
and Venture Capital in Italy shows that buyouts have positively effected both revenues and employment in acquired companies.
Venture capital had a similar effect on Italy's economy, increasing staff in venture capital-backed companies and dramatically improving
performance.
Last year was big for private equity in Italy, but the crisis over bank lending has made many private equity groups wary and reduced the
number of deals made this year. After banks gave huge loans without proper due diligence the market for financing in Italy has dried up
somewhat and there has been a big push for greater prudence. Banks have reacted by selling off non-majority assets and turning their
focus to the businesses which they can control. In what has been a highly profitable country for private equity, it is now more difficult to
make big deals but not impossible.
Permanent Link: Private Equity Italy
Tags: Private Equity investing in Italy, Private equity Italy, Private Equity Investing in Italian Companies, Private Equity funds investing
in Italy, Private Equity firms investing in Italy
Link to This Resource: Private Equity Italy
http://privateequityblogger.com/2008/08/private-equity-italy.html
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How Hedge Funds and Private Equity Connect
Private equity and hedge funds have developed a strong relationship benefiting both partners. Private equity
groups own many hedge funds and make long-term investments in hedge funds. Hedge funds have entered the private equity world
too, joining with major players in the private equity industry to make large buyout deals. The attraction for hedge funds is the large
amount of capital flowing into private equity from institutional investors and the hope that hedge funds can boost performance through
buyouts. In 2006, the average hedge fund returned 13.9%, while the average buyout fund returned 25%.
Hedge funds aren't limited to big buyouts, they have started lending capital to smaller startups and middle-market firms. The move to
private equity is logical, hedge funds have always tried to capitalize on often risky opportunities to make money. However, the risk may
be too great for hedge funds in private equity, because hedge funds are known for making short investments. Private equity buyouts
and even smaller venture capital investments are typically longer investments. Another risk is the illiquidity in private equity, which may
be a problem for hedge funds if investors want to cash out their investment. Hedge funds are not afraid of risk so the relationship
between private equity and hedge funds will probably only grow stronger in the future.
Permanent Link: Private Equity and Hedge Funds
Tags: Hedge funds, private equity, private equity and hedge funds, private equity investing in hedge funds, hedge funds investing in
private equity
Link to This Resource: Private Equity and Hedge Funds
http://privateequityblogger.com/2008/08/private-equity-and-hedge-funds.html
Private Equity Asia
Private Equity Asia
Private Equity Investment in Asia
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The incredible economic growth in Asia has attracted many private equity investors, hoping to
diversify their portfolio while taking advantage of the vast investment opportunities that the region offers. The boom is led by the
emerging economies of China who the IMF predicts to have a 10-11% growth rate and India expected to grow at 8-9%. While both
countries have some political restraints, reform is in process and investment has opened up considerably in recent years.
The primary draw for private equity investment in Asia is the impressive returns many private equity funds have enjoyed recently. In
2007, private equity funds in Asia received three times the capital invested. The struggling U.S. economy has inevitably marked a
decline in Asian private equity investment for 2008. Despite this, the Asian markets remain strong ensuring that the region will be a
critical location for private equity.
Permanent Link: Private Equity in Asia
Tags: Private equity Asia, Private Equity in Asia, Asian Private Equity Industry, Private Equity, Asian Private Equity Outlook
Source(s): SCM's 2008 report and Center For Asian Private Equity Research
Link to This Resource: Private Equity Asia
http://privateequityblogger.com/2008/08/private-equity-asia.html
Venture Capital Bloggers
Venture Capital Bloggers
Venture Capital Bloggers Video
Here is an interesting video from Innovation Economy about how blogging is effecting venture capital. Some of the venture capital
bloggers interviewed say that they strongly prefer a VC firm that blogs because it shows that they are confident and accessible.
Blogging is proving to be less of a casual trend and more of a way to get recognition for your company; something that venture
capitalists should consider.
Permanent Link: Venture Capital Bloggers Video
Tags: Venture capital video, venture capital blogs, venture capital, venture capital outlook
Link to This Resource: Venture Capital Bloggers

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http://privateequityblogger.com/2008/07/venture-capital-bloggers.html
Venture Capital Interview Questions
Venture Capital Job Interview Questions
Possible Venture Capital Interview Questions-Part 3
With any interview you want to be prepared, and being prepared means understanding the industry which you are trying to enter and
the type of employee that industry recruiters are searching for. Via Vault, here are some possible questions that you may encounter
during a venture capital interview. This is the third and final addition to a series that is split into three areas: expertise, venture capital
process and personality. If you missed them, here is Part 1 and Part 2.
Personality questions - These questions are more general and apply to most job interviews.
Where do you want to be in five years? If you are applying pre-MBA be sure to say that you hope to obtain an MBA by that time and be
working in the venture capital industry.
Would you ever want to be an entrepreneur? If you are pre-MBA it's okay to say yes because it's pretty typical for young professionals
to be more open to entrepreneurship, but it's more tricky if you are trying to get a partner-track position. In that case it is usually better
to downplay any desire to be an entrepreneur because firms hiring for a partner-track position want someone dedicated exclusively to
that position and bringing in a lot of money.
What will you do if you don't get a job here or in the venture capital industry? Express your desire to work within the venture capital
industry, but if that doesn't work out you would try elsewhere in private equity or a related field.
What did you like about your old job and why did you leave? I have been asked this question at every interview I have had, so be
ready. This is a good opportunity to express your excitement for working in venture capital. Tell how other jobs just weren't satisfying
and venture capital seems like the best match for your personality (here's an opportunity to name your strengths). Don't complain too
much about your past job, you may come off as a difficult or bitter person.
What's the thing you are most proud of? Have some great stories that highlight your abilities, it's okay to brag a bit here.
Permanent Link: Possible Venture Capital Interview Questions-Part 3
Venture Capital Career Articles:

Venture Capital Interview Questions 1
Venture Capital Interview Questions 2
Tags: Venture Capital, Venture Capital Career, Venture Capital Interview, Venture Capital Job Guide, Getting a Job In Venture Capital
Link to This Resource: Venture Capital Interview Questions
http://privateequityblogger.com/2008/07/venture-capital-interview-questions.html
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Venture Capital Job Interview Questions- Part 2
during a venture capital interview. This is the second part of a series that is split into three parts: expertise, venture capital process and
personality. Click here for part 1.
Process Questions - This section allows you to prove that you are a capable candidate for a position in venture capital.
How do you value an investment? Say that you would value the investment low as low as possible while still working out a deal with the
entrepreneur. Using several methods you would arrive at a number and begin discussions with the entrepreneur based off that number.
Figure out the ideal, realistic return that your firm could get from the investment and what is the lowest money you would need to invest
to get that ideal return. Be well versed in measuring an investment's worth because it is a critical aspect of venture capital and you can
really stand out if you do your homework.
When you evaluate a business plan, what's the most critical element you look for? A pretty safe answer is management, how well a
company is operates under management is a crucial factor to consider for an investor.
Why do you want to work at a venture capital firm? This may seem obvious: do not mention money or trendiness.
Would you want to invest in companies geographically near or far from our offices? You want to keep the companies you invest in near
your venture capital firm's offices so that monitoring and support is easy and available. But although that is the ideal arrangement, you
should be open to distant companies as new opportunities for expanding the firm and to be able to capitalize on companies that are
being overlooked by your competitors because of the geographical challenge.
What investment areas do you find interesting? Be honest, find out what area really appeals to you then do some research on that
area. It's always better to be honest rather than just feeding the venture capitalists what they wants to hear. Many of them are able to
see through this, so just be excited and well-versed in your favorite area.
Do you have any questions for me? This is a golden opportunity for you to separate yourself from other candidates, use it well.
Research the history of the venture capital firm including past investments, management staff and performance. Ask about the firm's
past investments, maybe why the firm invested in ''x'' investment or why they didn't. A big theme for this section is just do your
homework, understand the venture capital firm well enough that your questions reflect your knowledge.
Permanent Link: Possible Venture Capital Interview Questions-Part 2
Link to This Resource: Venture Capital Job Interview Questions- Part 2
http://privateequityblogger.com/2008/07/venture-capitla-job-interview-questions.html
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during a venture capital interview. This is the first of a series that is split into three parts: expertise, venture capital process and
personality.
Expertise Questions - Be prepared to answer questions about your past working experiences and things you learned from those
experiences.
What are the major trends in your industry? - Start by explaining the big picture, highlighting the most apparent causes and effects
showing that you can explain trends and understand market forces. Then finish with more detailed and subtle factors effecting the
industry that you learned exclusively through your past positions.
Can you explain why your former company took the path they did? Give more insight to show that you were actively involved in the
company.
When you did that project, did you use a certain technology? Be prepared to cover all the past jobs listed on your resume and mention
specifics on how each project or company succeeded.
What companies in your industry might make interesting investments? This is a pretty standard question for venture capital interviews
so be ready with detailed ideas.
Permanent Link: Venture Capital Job Interview Questions - Part 1
Link to This Resource: Venture Capital Job Interview Questions
http://privateequityblogger.com/2008/07/venture-capital-job-interview-questions.html
Raising Money From Angel Investors Video
Founder of the New York Angels, David S. Rose, talks about raising capital through angel investors. Rose begins with a history of
angel investors and gives advice on how to successfully pitch to angel investors:
Permanent Link: Raising Money From Angel Investors Video
Tags: Raising Capital, Raising Money From Angel Investors, Angel Investors, Sources of Raising Capital, Capital Sources
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Link to This Resource: Raising Money From Angel Investors
http://privateequityblogger.com/2008/07/raising-money-from-angel-investors.html
Is Your Company Venture Capital Worthy?
The Venture Capital Workbook points out just how little funding actually comes from Institutional Venture Capital Funds compared to
how many startups waste their energy only on venture capital. So, how do you know if your company is venture capital worthy?
The VC Workbook offers a ten question test to help you figure out if your company is appealing enough for venture capital funds.
Answer the questions on a scale of 0-10, 0 meaning that the question does not cover the question at all, and 10 meaning your
company totally applies to the question.
Does your company offer a unique service or technology?
Can your business carve a considerable market share against existing competitors?
How much funding will be put toward research and development and toward reaching the market?
What is the ease of the market?
What level of customer service with your product need?
Who large is the market that your product will serve?
Can your product create a gross margin over 50%?
Does your management team have the skills and capacity to succeed?
Are you and your team committed to your company's success?
Can your company achieve $25 million annual revenue within 3 years, and $50 million within 5 years? This question must be answered
as a "ten" in order to pass the test, if this is not a "ten" then your company may not be suited for institutional venture capital.
Total your score, if you have an 80 or above you pass and you may be a candidate for institutional venture capital backing. If you did
not pass then it may be your company is either not ready for institutional venture capital or you should consider other means of
financing like angel investors or public investors.
Note: The test provided by the Venture Capital Workbook is by no means an exact measurement of your company and is only intended
to give an idea of your company's chances of obtaining venture capital.
Link to This Resource: Is Your Company Venture Capital Worthy?
http://privateequityblogger.com/2008/07/is-your-company-venture-capital-worthy.html
Chartered Alternative Investment Analyst
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A chartered alternative investment analyst (CAIA) is a designation awarded to qualified investment professionals that pass the CAIA
program.
How to Become a CAIA?

To become a CAIA you must satisfy three requirements:
Complete the CAIA Program which encompasses hedge funds, private equity, real estate commodities and managed futures. The
course is divided into Level 1 and Level 2. Level 1 focuses more on the analytical aspect of investing and managing. Level 2 puts the
skills gained from the first level into practice with decision-making exercises and risk management techniques. This is all geared toward
developing a better understanding of both the technical and practical aspects of alternative investing. The program is administered by
the CAIA Association.
Another requirement for becoming a CAIA is that the candidate has professional experience (full-time employment within the bank
regulatory, banking and financial or related fields). This can be either: A.) One year professional experience and a bachelor's degree
OR B.) Four years professional experience.
Finally, in order to become a CAIA the candidate must complete the online Membership Agreement, provide 2 professional references,
and pay membership dues.
Richard Wilson, who is also starting a Chartered Hedge Fund Associate program, shares some tips here on passing the CAIA program
and a breakdown of how it's scored.
Link to This Resource: Chartered Alternative Investment Analyst
http://privateequityblogger.com/2008/07/chartered-alternative-investment.html
Pitching Venture Capitalists and Angel Investors
The initial presentation of your startup company to venture capitalists or angel investors is a crucial aspect in successfully expanding.
The Instigator Blog offers 5 quick tips on pitching venture capitalists and angel investors:
Briefly Tell Your Story: You will quickly lose your audience's attention if you are not entertaining or if you drone on for too long. Share
your story in an entertaining way about how your company formed and why you need the investors' money.
Change the Pace Throughout: Speed up during the overview and less detailed parts of your presentation but slow down for the more
complex and important areas. This allows you to captivate your audience while still delivering the details.
Have Stylish Slides: Image isn't everything, but it is something. Having "sexy" visuals will help keep your audience's attention, so
adding some style to your slides can go a long way for your presentation.
Don't Over Emphasize Your Product: Investors are interested in you and your company primarily, so don't dull your investors by listing
all the benefits of your product.
Finish Strong: Although many save all those little details and projections for the end, it is better to end with a memorable finish that
leaves your audience excited about your and your company.
Link to This Resource: Pitching Venture Capitalists and Angel Investors
http://privateequityblogger.com/2008/07/pitching-venture-capitalists-and-angel.html
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Here are some basic tips for scoring an interview with a venture capital firm.
As some of you may already be aware of, venture capital firms are flooded with eager business school graduates trying to break into
this exciting field. Getting an interview at a venture capital firm is difficult, and ultimately other factors will decide whether you get the
job (like how well you actually perform in the interview and your academic background). But how can you even get the interview?
Here's a few basic tips on getting an interview at a venture capital firm:
Network- The venture capital industry thrives on contacts and referrals, so make a point of building a large list of contacts. Even if you
don't get a job working for these people, they may know someone hiring.
Experience- Venture capital job competition is fierce and having some experience in venture capital whether through some related
work experience or even a brief internship will boost your chances at being seriously considered. Any relevant experience will work in
your favor.
Research- Get out there and involved in the industry, understanding your field is key. Visit trade shows and forums to get a better grasp
on venture capital. If possible, use VentureOne and VentureXpert to study the industry and find the most popular and expanding
investment sectors.
Vault
Link to This Resource: Venture Capital Interview
http://privateequityblogger.com/2008/07/venture-capital-interview.html
Angel Investor Network
Trying to find an angel investor can be difficult, if you don't know where to start. Angel investor networks help you court angel investors
by specific interests or regions, a good starting point for your quest for capital. So here is a comprehensive list of angel investor
networks separated by geographical location:
National Angel Investor Networks
Active Capital: Restricted to only entrepreneurs that can sell securities in their company, also some businesses cannot join based on
industry or the company structure. Helpful for companies raising $1 million or less, but has potential for up to $5 million. Fees: vary by
state.
Investors' Circle: A nonprofit angel investor network that focuses on socially responsible businesses. The target industries for
entrepreneurs are: energy and environment, food and organics, education and media, health and wellness, community and
international development. This angel investor network does not permit companies raising more than $10 million. Sign your company
up before August 1st to be considered for the Fall Venture Fair.
Tribe of Angels: Jewish angel investor and business network, focuses on smaller investments ranging from $50,000 to $1 million.
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The Gathering of Angels: An opportunity for startup companies to show their business proposal to accredited angel investors. Six
companies present for 20 minutes followed by 2-5 minute Q&A with the investors. Also included is three hours of virtual coaching to
prepare for the proposal. Fee: $2,500.
Pacific Northwest Angel Investor Networks
Portland Angel Network: This network favors early-stage investing and you must be based in Oregon or Clark County, Washington.
Alliance of Angels: Companies must be headquartered in the Pacific Northwest. This is a members-only site where you can view
business proposals, and there is no cost for submission or screening of business plans.
Vancouver Angel Technology Network: Introduces early stage technology companies to investors, all located primarily in British
Columbia. The angel investor network consists of seasoned technology veterans and 30 to 40 usually attend the meetings where
companies meet angel investors.
Southwest Angel Investor Networks
Arizona Angels: Invests exclusively in Arizona-based companies, with over 100 angel investors.
Desert Angels: Similarly focused only in Arizona companies, but with only about 50 angel investors.
Northeast Angel Investor Networks
Common Angels: Limited to Boston area companies, this large angel network favors early-stage software companies.
Maine Angels: This angel network is ideal for companies hoping to raise from $50,000 to $250,000. Although the Maine Angels tend to
invest in local companies they are open to other locations.
Silicon Garden Angel Investors Network: Invests in East Coast companies with a somewhat smaller than most networks' average
investment ranging from $20,000 to $250,000.
Tech Valley Angel Network: This angel investor group invests in early-stage businesses in northeastern New York and New England.
California Angel Investor Network
Fast Angels: Tech focused group that invests primarily in Silicon Valley companies. Motto-"Act Faster, act smarter."
The Angel's Forum: Invests in seed and early-stage business ventures. The Angel's Forum invests primarily in consumer products,
enterprise software, industrial products, Internet and e-commerce, medical devices and service, as well as clean-tech.
Band of Angels: Large and established angel network invests in a variety of high-tech companies with over 100 angel investors.
Sierra Angels: 50 member strong angel group that focuses on companies in the Northern Sierra region including Nevada, California
and other close locations. The average investment ranges from $250,000 to $2,000,000.
South Angel Investor Network
The Network of Business Angels and Investors: Invests in traditional and technology companies. Georgia-based.
Houston Angel Network: Nonprofit organization that links startup companies with accredited angel investors. This angel investor
network invests in companies based in Texas or willing to relocate to Texas.
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If you have any additions please e-mail me at Theo@peblogger.com, also angel investor networks that would like to provide their own
brief summary can contact me.
Link to This Resource: Angel Investor Network
http://privateequityblogger.com/2008/07/angel-investor-network.html
China has become the new frontier for private equity investors or private equity funds hoping to attract Chinese investors, also venture
capitalists are staking their claim there. With a thriving economy and a booming financial expansion--thanks to a reformation of laws
governing private investment--Americans in private equity hurrying to China is akin to miners in the Gold Rush. Today, I will look at
some of the differences between China's private equity and U.S. private equity.
Difference of Private Equity in China

Whereas American funds tend to invest in middle-market or big businesses, China's private equity funds are more like late-stage
venture capital investors. Chinese funds look for proven businesses with established positions in the market, eliminating as much risk
as possible before investing. Also, while American funds typically avoid the technology sector, China's private equity funds strongly
invest in tech areas like pharmaceuticals, agriculture and energy.
Instead of the big takeovers that America's private equity is known for, most funds in China purchase only a minority stake in
companies. This is because China's entrepreneurs especially distrust investors and are unwilling to give up a majority share to outside
investors. The size of investments tend to be smaller in China because the cost for expanding and operating a business is significantly
less.
Tax and regulation reform have led China's financial growth, and more changes for China's private equity sector are in the works,
making China a crucial area for American private equity investors.
Link to This Resource: Private Equity in China
http://privateequityblogger.com/2008/07/private-equity-in-china.html
Private Equity Gatekeeper
Private Equity Gatekeeper
What is a Private Equity Gatekeeper
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Limited partners are always looking for access to the top private
equity funds--preferably those with proven returns. Some private equity investors turn to third-party investment advisers to connect
them with private equity funds. These advisers are referred to as "gatekeepers."
Institutional investors may have little or no knowledge of private equity investing or a specific industry sector like energy or technology.
Therefore an investor will use a gatekeeper for advice. Private equity gatekeepers know a great deal about the industry and thoroughly
track buyout and venture capital funds. The advisers then issue recommendations to their limited partner clients on which funds they
think will provide great returns. On the general partner side, a placement agent may be used to secure capital from investors.
Tags: private equity gatekeeper, private equity fundraising, private equity third party adviser, limiter partner advisers, limited partner
gatekeeper, private investor gatekeeper
Link to This Resource: Private Equity Gatekeeper
http://privateequityblogger.com/2008/06/private-equity-gatekeeper.html
Private Equity Firm Apollo Management L.P.
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Apollo Management L.P. was founded by Leon Black in 1990, as well as founding Apollo Advisers
with a number of other partners. Apollo Management is based in Purchase, New York with offices in Los Angeles and London as well.
Currently, Apollo Management has $16 billion in assets under management. According to AOL Finance, "Its most recent fund -- Fund
VI, L.P. – has $12 billion in assets. The firm has struck 76 deals and has posted average annual returns of 34%."
Apollo has a record of investing in distressed or underperforming companies and improving the value of the investment for resale to
another buyer or for a public offering. We will be adding more information about Apollo from the news and private equity reports.
Resources and articles about Apollo Private Equity
Apollo offers $1.01 billion for Countrywide
Please see our profiles of other private equity firms from the PE Tracker Tool.
Tags: Apollo Management, Apollo Management LP, Apollo Advisors, Apollo Capital Management, Apollo Private Equity, Apollo private
equity firms, Apollo Management Private Equity
Link to This Resource: Apollo Private Equity
http://privateequityblogger.com/2008/06/apollo-private-equity.html
Baring Private Equity Partners
Baring Private Equity is a private equity firm that invests globally through regional funds in Russia, Asia, India
and Spain.
Baring Private Equity's website provides the following summary: 'With approximately $3.4 billion in funds under management, BPEP
has one of the most extensive on-the-ground networks of any international private equity provider. Its network provides the resources
and investment expertise to help entrepreneurs around the world build world-class businesses.
BPEP finalized its MBO from parent company ING Group in August, 2004. Under the terms of the agreement, the investment teams
managing the regional funds have acquired ownership of their respective management companies and operate under the Baring
Private Equity International brand.'
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For more Private Equity Tracker Profiles visit this link.
Tags: Baring Private Equity, Baring Private Equity Partners, Baring Private Equity Profile, Private Equity Tracker Profile, Private Equity
Baring Russia, Baring Private Equity Asia
Link to This Resource: Baring Private Equity
http://privateequityblogger.com/2008/06/baring-private-equity.html
AXA Private Equity
AXA Private Equity
AXA Private Equity Group | New York
AXA Private Equity is a leading private equity and venture capital firm. The private equity firm invests in multiple
areas including buyout, small cap buyout, venture capital, late venture, fund-of-fund, mezzanine, and co-investments in unlisted
companies. AXA has offices in New York, Paris, Frankfurt, London, Singapore, Milan, Zurich and Vienna.
AXA Private Equity Summary
The firm‘s direct investments target leveraged buyouts in mid caps and small caps, expansion capital, recovery or turnarounds, and
emerging market investments. It seeks to invest between €3 million ($3.81 million) and €350 million ($445.57 million). For Buyouts, the
firm seeks to invest up to €250 millions ($353.63 million) per transaction in companies with enterprise value between €100 million
($141.45 million) and €2000 million ($2,829.08 million). It typically, invests up to €500 million ($707.27 million) with fund‘s co-investors.
The firm prefers to acquire a controlling equity stake in its portfolio companies. For small-cap leveraged buyouts and expansion capital,
it invests in family-owned companies that requires growth capital or whose capital is being restructured
The firm targets companies based in France, Germany, and Italy. It invests up to €40 million ($56.58 million) per transaction. For
expansion capital, the firm seeks to acquire minority interests in mature companies with investments up to €100 million ($141.45
million) with co-investors. It also invests in listed companies on secondary markets but to a limited extent. For small-cap buyouts, the
firm acquires controlling interests in companies with enterprise value less than €100 million ($141.45 million); generating initial sales
exceeding €15 million ($19.09 million); and a five-year sales target of between €70 million ($89.11 million) and €150 million ($190.96
million)...[to read more on AXA Private Equity visit BW's Profile]
For more Private Equity Tracker Profiles visit this link.
Tags: AXA Private Equity, AXA Banque, AXA Private Equity Profile, Private Equity Tracker Profile, Private Equity firm AXA
Link to This Resource: AXA Private Equity

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http://privateequityblogger.com/2008/06/axa-private-equity.html
Subordinated Senior Debt
Subordinated Senior Debt
Differences Between Subordinated and Senior Debt
Private Equity Info offers a great clarification of the differences between senior debt and subordinated debt:
Senior debt refers to debt that is in first-lien position. In the event of a default and subsequent liquidation, the senior lender (often a
commercial bank), has first priority in recouping its investment. When a company goes bankrupt, stake holders divide the proceeds
from selling the company‘s assets. The senior lender is first to be re-paid, followed by the subordinated debt holders, followed by equity
holders. Because senior debt‘s first priority repayment presents a lower-risk position compared to subordinated debt or equity
investors, the senior debt is expected to have more favorable interest rates associated with it, commensurate with the lower risk
assumed.
Subordinated debt, also known as mezzanine or junior debt is a second-level of debt. Such debt is referred to as subordinate, because
the debt providers (lenders) have subordinate status in relationship to the senior debt. Because of this, subordinated debt is a higher-
risk investment for the lender and therefore commands is a higher interest rate. Further, mezzanine debt often carries equity
components with it such as warrants or other convertible securities that provide an option for the debt holder to convert the debt into
equity within a specified time frame.
Source: PEI
Tags: subordinated debt, senior debt, subordinated debt and senior debt, differences between senior and subordinated debt, senior
debt lender, private equity debt, private equity subordinated debt
Link to This Resource: Subordinated Senior Debt
http://privateequityblogger.com/2008/05/subordinated-senior-debt.html
3i Group PLC
3i Group PLC
Private Equity Profile | 3i Group PLC | Jonathan Russell
The following piece is part of our effort to provide profiles of as many private equity firms as possible. We
update the private equity profiles regularly, to see more private equity tracker profiles follow this link.
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3i Group PLC
3i Group PLC is a European private equity firm managing €12.6 billion in total assets. The private equity group has offices in fourteen
countries and focuses investments in growth capital, infrastructure, buyouts and private equity. The businesses 3i Group invests in are
primarily: Oil, Gas and Power, Technology, Media, Business Services, Healthcare, Consumer, General Industrial and Financial
Services.
Story #1: The Wall Street Journal reports that the managing director at 3i Group PLC, Jonathan Russell, has condemned the European
Commission's plans to "regulate small and medium-sized companies as anti-competitive and punishing." Read more...
Tags: 3i group, 3i group plc, 3i group private equity, private equity 3i, private equity europe, private equity tracker profiles, 3i group plc
private equity, European private equity firms
Link to This Resource: 3i Group PLC
http://privateequityblogger.com/2009/05/3i-group-plc.html
Hedge Fund Manager List | Contact Details of Hedge Funds
Hedge Fund Manager List
Lists of Hedge Fund Managers | State by State
Over the last 12 months our team has received around 100,000 emails from professionals who
have came and visited our websites. Many of these emails are in regards to accessing particular resources to help in career or
potential client searches.
Below please find various state by state hedge fund manager contact lists available for under $100 each. These contain contact details
for various funds and may be instantly downloaded.
List of Hedge Funds in Massachusetts
List of Hedge Funds In Connecticut
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List of Hedge Funds in New York
List of Hedge Funds in California
List of Hedge Funds in Chicago and State of Illinois
List of Hedge Funds in Dallas, Houston & State of Texas
If you have been directed to this post via email we apologize for the less than personal response, please email us again if you have any
further questions or concerns.
Tags: List of Hedge Fund Managers, Hedge Fund Manager List, List of Hedge Funds in, Hedge Fund Managers in, Hedge Fund List,
Directory of hedge funds, hedge fund directory, hedge fund contact details
Link to This Resource: Hedge Fund Manager List | Contact Details of Hedge Funds
http://privateequityblogger.com/2008/02/hedge-fund-manager-list-contact-details.html
Private Equity Consulting
Private Equity Consulting
Private Equity Consulting Services
Private Equity Consulting Services is available a comprehensive consulting group providing services in the following areas:
Private Equity Marketing Private equity marketing materials, training, third party marketing due diligence, pre-marketing operational/risk
analysis and third party marketing for private equity fund general partners who would like to raise assets from single and multi-family
offices.
Private Equity Advertising - My private equity website attracts over 25,000 pageviews each month. Please see the Private Equity
Advertisement page for more details.
Private Equity Research & Writing - I have a team of private equity researchers and writers who help me complete various private
equity research and writing assignments on-demand.
If you would like to discuss ways that Private Equity Consulting Services can help you and your firm please contact me to discuss rates
at Theo@peblogger.com. I look forward to speaking with you.
Tags: Private equity consulting, private equity consulting services, private equity consultants, private equity consultant, private equity
consulting services, private equity consultancy, private equity marketing, private equity consultant group, private equity services
Link to This Resource: Private Equity Consulting
http://privateequityblogger.com/2007/11/private-equity-consulting.html
Private Equity Law Firms | Private Equity Attorneys

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Private Equity Law Firms | Attorneys
Directory of Private Equity Attorneys and Law Firms
Private equity firms, along with hedge funds, have often tested the legal
limits of investing and have been the subject of lawsuits by institutional investors and various entities, even the federal government.
The risky practices of the private equity industry can sometimes lead to the courtroom and many buyout firms have found it wise to
work closely with attorneys.
Private equity firms do not only seek lawyers for protection from lawsuits but lawyers often advise private equity firms on organizing
funds' structures, drawing up and negotiating contracts. The boom in the private equity buyout industry led to the rise of many law firms
specializing in private equity and the relationship between attorneys and private equity remains an important one.
We are in the process of compiling a directory of private equity attorneys as a resource for private equity firms. Any law firms focused in
the hedge fund or private equity industry can contact me about being added to the directory at Theo@PEblogger.com
Directory of Private Equity Law Firms

The private equity law firm directory is in the process, please contact me for to be added.
Tags: Private equity attorney, private equity attorneys, private equity law, private equity lawyers, private equity lawyer, private equity
legal, private equity attorneys directory, list of private equity attorneys, Private Equity Law Firms, directory of private equity law firms
Link to This Resource: Private Equity Law Firms | Private Equity Attorneys
http://privateequityblogger.com/2007/11/private-equity-law-firms-private-equity.html
Apollo Management
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Apollo Management
Apollo Management | Private Equity Firm
Apollo management was founded by Leon Black in 1990 and since then has grown enormously to be ranked
twelth in the Private Equity International list of the largest private equity firms. Headquartered in Purchase, New York, but also has
offices in London and Los Angeles. Apollo Management has raised just under $14 billion in capital as of 2007.
Apollo Management favors investing in underperforming--and sometimes distressed--companies. Apollo is known for having the
operational and management resources for successfully restructuring and fixing portfolio companies. However, Apollo Management
does invest in well-performing companies as well, like when Apollo teamed up with Texas Pacific Group (combining as Hamlet
Holdings) to buy Harrah's Entertainment.
Tags: Apollo Management, Apollo Management L.P., Apollo Management private equity, list of private equity firms, Apollo
Management profile, Apollo Management history, Leon Black Private equity
Link to This Resource: Apollo Management
http://privateequityblogger.com/2007/10/apollo-management.html
Private Equity Education
There are many opportunities for people hoping to break into the private equity scene, so here are some quality private equity
education opportunities that I've found:
Top Private Equity Education Programs
Harvard Business School- Private Equity and Venture Capital: This program is designed for executives with substantial field experience
runs from rel="nofollow" target="_blank" Sept. 7-11, 2008 for $7500. Also, there is a similar program offered called Private Equity and
Venture Capital-China taking place Oct. 15-18, 2008 for RMB 55,000.
Dartmouth offers a private equity focused MBAs. Also the Tuck School of Business is friendly to private equity students, offering
internships in the industry, private equity clubs and private equity fellowships.
The Thunderbird Private Equity Center has a focus on the global private equity and venture capital industry, advancing students,
investors and professionals' understanding.
I will be adding more to this list, eventually making it into a guide of credible opportunities for those hoping to advance their career
through education in private equity. If you have any potential additions please e-mail me at Theo@peblogger.com
Link to This Resource: Private Equity Education
http://privateequityblogger.com/2008/07/private-equity-education.html
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The Carlyle Group
The Carlyle Group
Private Equity Firm | The Carlyle Group
The Carlyle Group

was ranked by Financial Week as the #1 private equity firm from their list of the top private equity firms. The Carlyle Group was
founded by David Rubenstein and Stephen Norris in 1987 and has grown into the "World's largest private equity firm," according to
PEI.
The History of the Carlyle Group
The Carlyle Group is one of the world's largest private equity firms, with more than $89.3 billion under management. With 64 funds
across four investment disciplines (buyouts, growth capital, real estate and leveraged finance), Carlyle combines global vision with
local insight, relying on a top-flight team of 525+ investment professionals operating out of offices in 21 countries to uncover superior
opportunities in North America, Europe, Asia, Australia, the Middle East/North Africa and Latin America.
While open to opportunities wherever they can be found, Carlyle focuses on sectors in which it has demonstrated expertise: aerospace
& defense, automotive & transportation, consumer & retail, energy & power, financial services, healthcare, industrial, infrastructure, real
estate, technology & business services and telecommunications & media.
In a world awash with information, insight is often in short supply. Carlyle‘s edge is its ability to leverage the local insight of its
investment professionals, collaborating across the firms‘ investment disciplines from deal sourcing and due diligence through portfolio
company development. The result: a broader view of potential investment opportunities and deeper level of expertise, creating value for
Carlyle portfolio companies that translates into superior returns for Carlyle investors.
Carlyle‘s team of investment professionals includes 203 M.B.A.s, 34 J.D.s and 11 Ph.D./M.D.s from many of the world‘s most
prestigious universities.
Carlyle‘s conservative investment philosophy and disciplined investment process has generated extraordinary returns for its investors.
Since its founding in 1987, the firm has invested $49.4 billion in 836 transactions.
More than 1,200 investors from 72 countries entrust Carlyle with their capital and their reputations. As one means of aligning its own
interests with those of its Limited Partner investors, Carlyle has committed more than $3.6 billion of its own capital to its funds. (Source)
The Carlyle Group Resources and Articles
Carlyle Group cuts 10% of staff
Big Deals. David Rubenstein and His Partners Have Made Billions With the Carlyle Group, the World‘s Hottest Private Equity Firm.
How Have They Made All That Money? Why Are They in Washington?
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Tags: The Carlyle Group, The Carlyle Group Private Equity, The Carlyle Group Private Equity Firm, Best Private Equity Firm, Top
Private Equity Firm, David Rubenstein, Private equity The Carlyle Group
Link to This Resource: The Carlyle Group
http://privateequityblogger.com/2007/10/carlyle-group.html
New York Private Equity
New York has been generally considered the center of financial activity in modern history, with London posing
a constant threat to that status. New York is a hub for private equity activity hosting vast resources for private equity firms and a global
platform for entering foreign markets. A large percentage of private equity firms are based in New York, and most private equity firms at
least have a branch located in the New York City area. As globalization becomes increasingly crucial for a private equity firm's success,
New York City will likely attract more and more private equity firms.
The New York Private Equity Network is available exclusively to professionals at private equity and venture capital funds in the New
York City area.
New York Private Equity Firms List
Coming soon: List of private equity firms in New York.
Tags: New York Private Equity, Private Equity New York, New York City Private Equity, Private Equity New York Firms, New York
Private Equity Firms, List of Top New York Private Equity Firms, New York Private Equity Firms list, New York Venture Capital
Link to This Resource: New York Private Equity
http://privateequityblogger.com/2007/10/new-york-private-equity.html
Private Equity Books
Private Equity Books
List of Private Equity Books

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I am compiling a list of all the highly recommended private equity books, and highlighting the ones that I have
read so far. I hope that this will be a useful resource for professionals interested in reading private equity books. Currently, the private
equity book that I am reading is Lessons From Private Equity Any Company Can Use by Orit Gadiesh and Hugh MacArthur.
Here is my list of Private Equity Books:
Review of Lessons from Private Equity Any Company Can Use by Orit Gadiesh and Hugh MacArthur
Term Sheets and Valuations by Alex Wilmerding
Tags: Private Equity Books, Private Equity Book, Books on Private Equity, Private Equity Book Review, Private Equity Research
Link to This Resource: Private Equity Books
http://privateequityblogger.com/2007/10/private-equity-books.html
Mezzanine Financing
Mezzanine financing refers to a combination of debt and equity financing. Mezzanine financing is typically used by expanding
companies that need money but don't want to go public and risk losing ownership of the company. Mezzanine lenders offer the
company the desired funds and do not require collateral. However, mezzanine lenders charge unusually high interest rates (often 20-
30%) because the risk for the mezzanine lender is very high.
In addition to high interest rates, mezzanine lenders can convert their loan to equity or ownership if the company defaults on the loan.
So, although there is a major risk that the lender may lose a lot of money on the loan, the borrower also faces significant risk.
Mezzanine financing particularly attracts privately-owned companies, because it is a way to secure funds from lenders that have no
active interest in the company. The dual risks to the mezzanine lender and the borrowing company make the exchange much more
involved and lasting. Thus, the mezzanine lender carefully looks to reduce risk by investing in an established, promising business.
Companies hoping to attract mezzanine funding usually submit detailed proposals that assure the lender that the investment will be
profitable.
Link to This Resource: Mezzanine Financing
http://privateequityblogger.com/2008/07/mezzanine-financing.html
Recruiting Private Equity Executives
In a shaky private equity industry, a Forbes article suggests a survival instinct has kicked in for private equity firms.
Of course, capital is the primary focus of private equity firms, but in order to survive in these uncertain financial times many have
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shifted their focus to human capital. Strong leadership will likely be the difference between a collapsing firm and a successful one. So
having capable veteran executives has become a vital element in private equity. But how do firms find a worthy candidate? Ana Dutra
heads the leadership development division for executive recruiter Korn/Ferry International and she confesses that finding the best
candidate is not an exact science. However, she says there is a method most executive recruiters use.
Firms sometimes use a rating system that analyzes, among other things, the candidate's entrepreneurial energy and experience in
turnaround circumstances. One private equity executive recruiter said that the key is focusing long-term on a good adaptable
candidate, as the industry is very fast-paced and subject to major changes. Most recruiters agree that hiring a seasoned veteran who
brings leadership credentials is critical for firms, especially in today's shaky market. As the private equity industry expands into
emerging markets having a strong executive will likely prove to be the edge on the new firms.
Link to This Resource: Recruiting Private Equity Executives
http://privateequityblogger.com/2008/07/recruiting-private-equity-executives.html
Private Equity Firms Will Face Public Ratings
Private equity firms will soon have to add another measure hoping to improve disclosure in the industry.
On December 1, the S & P will introduce a public ratings system for the companies that private equity firms buy, and the debt they use
to finance the buyouts. Deals with debt between € 500 million to € 1 billion will have a private rating only available to the investors
involved in the deal. This marks another in recent attempts to increase transparency in the industry. The private equity industry has
responded by encouraging more openness among members.
Full article here.
Link to This Resource: Private Equity Firms Will Face Public Ratings
http://privateequityblogger.com/2008/07/private-equity-firms-will-face-public.html
Private Equity Database
Private Equity Database
Private Equity Database | Careers and Jobs
Here are the top databases that I've found with large numbers of private equity jobs:
For those of you searching for 100k+ salary jobs, Finance Ladder hosts more than 35,000 jobs in the finance industry paying at least
six figures. Basic membership is free, too.
The standard in financial career databases is eFinancialCareers. This site shows at least 800 open private equity positions.
As I previously mentioned, Private Equity Jobs Database tracks hundreds of private equity jobs and is routinely updated and monitored.
In addition, it lists profiles of major private equity recruiters and has a number of resource links. Basic access is free and upgrading to
premium is $60 for three months (with a 100% money back guarantee).
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If you have another favorite private equity job site you'd like added, please e-mail me at Theo@peblogger.com
Tags: private equity database, private equity job database
Link to This Resource: Private Equity Database
http://privateequityblogger.com/2007/08/private-equity-database.html
Better Business Plan
An impressive business plan is key to attracting investors, here are Forbes' ten critical components to a good business strategy.
A cover sheet and table of contents: Include all the obvious like your company's name, contact info, and a outline of what to expect in
the proposal.
Executive Summary: communicate all the key elements of your proposal, and for the potential investors explain how much money you
want and how you will use it.
Market Opportunity: Explain the product or service you are selling, and the buyers you target.
Industry Analysis: Introduce your competition in the industry and argue why your business will succeed against competitors.
The Team: This section should present profiles of your business's founders, partners or officers that shows investors the skills and
qualifications each member of your business possesses.
Business Model: Cover the operational structure of your business, from revenue sources (advertising, product sales, etc.) to the cost
structure (salaries, rent, maintenance etc.). Explain why these costs are necessary.
Financial Projections: Offer a detailed first year income statement, balance sheet and cash flow statement. A good idea is to include
these three elements for three years beyond that. Also, give a "break-even analysis" that shows how much revenue is needed to cover
the initial investment.
Stress-Test the Projections: Give worst-case, average-case and best-case scenarios of how your business could fare, so you can be
financially prepared.
Sources and Uses of Funds: Tell investors how you plan to spend their money and why you need the money. Startup companies often
make the error of underestimating expenses, be realistic and research any possible startup costs.
Appendices: Finish your business plan with a supporting documents such as resumes, industry data, credit histories and any relevant
information that doesn't belong in the basic outline of your business.
Full Forbes article.
Link to This Resource: Better Business Plan
http://privateequityblogger.com/2008/07/better-business-plan.html
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Private Equity Dictionary
Private Equity Industry Dictionary is a nice resource if there is ever a private equity phrase or word that you don't understand. It is pretty
comprehensive and has easy-to-understand definitions.
Link to This Resource: Private Equity Dictionary
http://privateequityblogger.com/2008/07/private-equity-dictionary.html
Private Equity Vs Venture Capital
Private Equity Vs Venture Capital
Comparing Private Equity and Venture Capital
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It can be a blurry line between private
equity and venture capital, PrivateEquityInfo seeks to clarify the distinction with the following:
While both venture capital and private equity firms provide cash in exchange for equity positions in companies, the main distinction is
the juncture in which the investment is made. With the exception of turnaround investments, private equity firms tend to invest in more
established businesses with a history of positive, and preferably reliable, cash flow whereas venture capital firms tend to invest in
earlier-staged companies with a less proven market presence.
The distinction between the terms venture capital and private equity described above applies to the vernacular used in the United
States. That is, in the United States, the two terms are used as if they are distinctly different types of firms investing in different stages
of corporate growth. In Europe, however, the terms venture capital and private equity may be used somewhat interchangeably in that
British English uses the term venture capital to describe a specific subset of the private equity market. Therefore, in Europe, when
someone speaks about private equity, they may in fact be referring to what someone in the United States would call a venture capital
firm.
Using the distinction drawn in the United States, the private equity data module available on PrivateEquityInfo specifically excludes
venture capital firms unless a firm blurs the distinction by operating across the spectrum.
Tags: private equity vs venture capital, private equity versus venture capital, private equity venture capital, buyouts and venture capital
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Link to This Resource: Private Equity Vs Venture Capital
http://privateequityblogger.com/2007/07/private-equity-vs-venture-capital.html
Equity Leveraged Buyout
Equity Leveraged Buyout
Removing the Leverage from Leveraged Buyouts
Robert Profusek of Jones Day and James Woolery of Cravath Swaine & Moore talk with CNBC about the changes in private equity
deal-making, such as the lack of leverage in buyouts.
Tags: leverage buyouts, leveraged buyout, lbo, equity leverage buyouts, using leverage in a buyout
Link to This Resource: Equity Leveraged Buyout
http://privateequityblogger.com/2007/07/equity-leveraged-buyout.html
Teacher Pension Fund
Teacher Pension Fund
Teacher Pension Fund Invests with Private Equity
The Ontario Teachers' Pension Plan has decided to try its hand at private equity.
According to CNBC, Jan 27, 2007:
The approach is working. Over the last four years, the plan's private equity portfolio has garnered an average return of 24%, reports
CNBC's Melissa Lee. The Ontario Teachers' fund employs an in-house private equity staff of 55.
"We operate the fund as a business--for us that's very important," said Ontario Teachers' Claude Lamoureaux. "And our [private equity]
people, they have the same attitude."
A teacher who signs on for the pension plan may still be cashing its checks 70 years down the line. For that reason, the fund focuses
on long-term investments--including the Toronto Maple Leafs and Canada's Yellow Pages--that will bring stable returns over time.
Tags: teacher pension fund, teacher's pension fund, pension fund private equity, teacher pension private equity
Link to This Resource: Teacher Pension Fund
http://privateequityblogger.com/2007/07/teacher-pension-fund.html
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Glenn Hutchins
Glenn Hutchins
Video of Silver Lake Partners' Glenn Hutchins
Glenn Hutchins, co-founder of Silver Lake Partners, talks at the Davos 2008 conference about the current situation and future of
technology buyouts. Despite a big decline in the markets, he is optimistic about investors' appetite for risk and the liquidity of the
market.
Tags: technology buyouts, tech buyouts, glenn hutchins, glenn hutchins silver lake partners, silver lake partners, technology silver lake
partners
Link to This Resource: Glenn Hutchins
http://privateequityblogger.com/2007/07/glenn-hutchins.html
Alternative Investments Jobs
Alternative Investments Jobs
Alternative Investments Job Opportunities
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Many of my readers are recent graduates from business schools and looking to enter private
equity. Others have worked in finance and would like to make the transition to working in alternative investments. These qualified
individuals often send me their resumes and this page will become a resource for private equity firms, hedge funds, executive recruiters
and investment-related employers to promote their job opportunities.
If you would like to have your job listing added here, please send an e-mail to Theo@PEblogger.com
Tags: Private Equity jobs, private equity job opportunities, private equity job listings, buyout jobs, alternative investments jobs,
alternative jobs
Link to This Resource: Alternative Investments Jobs
http://privateequityblogger.com/2007/07/alternative-investments-jobs.html
Iceland Private Equity
Iceland Private Equity
Yucaipa Cos. Invests in Icelandic Company
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Ron Burkle's holding company Yucaipa Cos., executed a deal in an unexpected location, Iceland. The firm
primarily focuses on private equity and has a history of leveraged buyouts in the grocery store chains and retailers. The Wall Street
Journal reports the story:
(June 30, 2009) Yucaipa Cos., Ron Burkle‘s investment firm, has done a deal that some might describe as a bit off the beaten path,
investing in Icelandic shipping and logistics company Hf. Eimskipafelag Islands.
Yucaipa is taking a 32% stake in the company, called Eimskip for short, in exchange for EUR15 million ($21 million) and forgiveness of
some Eimskip debt. Eimskip Chief Executive and President Gylfi Sigfusson said in a statement that he believes ―the support of a
foreign investor into Iceland is a very significant step for our whole economy and demonstrates that there are investors willing to
support Iceland going forward.‖ Click here to read the rest of the story...
Tags: Icealand Private Equity, Yucaipa private equity holdings, private equity ron burkle, icelandic private equity investments, investing
in Iceland
Link to This Resource: Iceland Private Equity
http://privateequityblogger.com/2007/07/iceland-private-equity.html
Private Equity Guide
Private Equity Guide
Writing the Private Equity Guide Book
To further expand this website and provide more resources for

those interested in private equity, I am writing a book on the private equity industry.
I am constantly asked for a comprehensive guide to private equity and although there are great resources available online, an inclusive
private equity guide will help those hoping to learn more about the buyout world. I have written over 300 articles for this blog and will
condense this information to a easy-to-read book. This blog will be updated with more information on the book as it becomes available.
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Tags: private equity guide, private equity guides, private equity guide book, private equity book, private equity books, private equity
resource, private equity guidebook
Link to This Resource: Private Equity Guide
http://privateequityblogger.com/2007/07/private-equity-guide.html
Private Equity Placement Agent
Private Equity Placement Agent
What is a Private Equity Placement Agent?
Private equity firms need to gather a lot of capital to start a fund and placement agents play a very important
role in the fundraising process. Private equity general partners will rely on placement agents as intermediaries to institutional investors.
A controversy centered around the use of placement agents to attract public pension fund investments--especially the New York
Pension Fund. New York Attorney General Andrew Cuomo has accused private equity and hedge funds of participating in pay-to-play
transactions with pension funds. Private equity firms have used placement agents to secure capital commitments for funds although the
use of such middlemen may change as states consider adopting tougher regulation on placement agents. On the other hand, limited
partners often use gatekeepers.
Tags: private equity placement agent, private equity placement agents, private equity fund placement agent, placement agent fees,
buyout placement agent, venture capital placement
Link to This Resource: Private Equity Placement Agent
http://privateequityblogger.com/2007/06/private-equity-placement-agent.html
Liquid Preference
Liquid Preference
Calculating Liquid Preference for a Startup Business
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What is liquidation preference?
Liquidation preference refers to preferred shareholders' rights to receive a certain amount for the preferred shares they hold in
preference to common shareholders in the event that the company goes into liquidation.
The scope of liquidation preference varies between different term sheets. Some may be extremely favorable to investors, some may be
less. However, the purpose of liquidation preference is such that in the event a company goes into liquidation, preferred shareholders
will always get something back for their preferred shares before common shareholders get anything. In other words, they will always
get more than common shareholders. It is possible that common shareholders will get nothing if the company does not even have
enough assets to settle the preference amount.
Example A:
Venture Tech Ltd. has 5,000,000 common shares outstanding.
In a Series A financing, Investors A invests $2,000,000 in return for 2,500,000 Series A Preferred Shares (i.e., purchase price per
share = $0.8).
The term sheet of this Series A round provides that:
In the event of a liquidation event, the preferred shareholders will be entitled to receive in preference to common shareholders an
amount equal to 2 times the purchase price per share, plus declared and unpaid dividends (the "Initial Payment"). After the Initial
Payment has been made in full, any assets remaining shall be distributed to the preferred shareholders (on an as-converted basis) and
common shareholders on a pro rata basis.
NOW, Venture Tech Ltd. goes into liquidation and the sale price is US$6 million.
Assuming no declared and unpaid dividends, and all other senior debts, e.g., employees' wages, secured debts, etc., have all been
settled:
How much will the preferred shareholders get?
They first get US$0.8 x 2 = US$1.6 for every preferred shares they hold.
Therefore, the Initial Payment is US$1.6 x 2.5 million = US$4 million.
This gives US$2 million ($6 - $4 million) remaining, which shall be distributed to the preferred shareholders and common shareholders
on a pro rata basis.
Therefore, preferred shareholders will get a further US$2 million x 2.5 / 7.5 = US$666,666.
I.e., a total of US$4,666.666.
The common shareholders will get a total of US$2 million x 4 / 7.5 = US$1.333,333.
Total = US$4,666,666 + US$1,333,333 = US$6 million

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Example B:
Following example A above, let's say this time the sale price is US$10 million.
They will get a total of $4 million (the Initial Payment) + $6 million x 2.5 / 7.5 = $6 million
The common shareholders will get a total of $4 million.
Example C (company favored):
Let's give it a twist. This time everything is the same as above except that the total amount the preferred shareholders will get for each
preferred share they hold is capped at 4 times the purchase price per share.
In other words, they first get 2 times the purchase price per share in preference to common shareholders (i.e., the Initial Payment as in
Example A and B). All remaining assets will then be distributed among them and common shareholders until the preferred
shareholders have received 4 times the purchase price per share (plus unpaid but declared payment, and the Initial Payment). All
remaining assets thereafter will be distributed among all common shareholders on a pro rata basis.
NOW, let's do the math:
Putting aside the sale price, since the maximum total amount the preferred shareholders can get is capped at 4 times the purchase
price per price, they in any event will get no more than 4 x $2 million = $8 million (however high the sale price may be).
What is the break even point for the sale price?
Let y be the break even sale price:
(y - 4) (2.5 / 7.5) = 8 - 4
y = 16
Therefore, the break even sale price is US$16 million.
Therefore, the sale price must be at least US$16 million for the preferred shareholders to get US$8 million. If the sale price exceeds
US$16 million, they will still get only US8 million, since the maximum amount they can get is capped.
That's why by setting a cap on the liquidation amount the preferred shareholders can get is company-favored.
Written by Andy Lau, article source
Tags: calculate liquidation preference, liquidation preference, what is liquidation preference, how to calculate liquidation preference,
venture capital liquidation preference, how to find liquidation preference
Link to This Resource: Liquid Preference
http://privateequityblogger.com/2007/06/liquid-preference.html
Private Equity 2008
Private Equity 2008
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Private Equity Hiring Trends for Spring 2008
Ignore today's negative news about the Private Equity Jobs overall market and related job growth - the media is
painting a much worse scenario that what is real - there are still great opportunities for private equity jobs if you now how and where to
look for them. Especially if you target small to medium sized hedge funds that are not in as leveraged a position as the much larger
Wall Street firms and that are concentrating on deals that the larger firms cannot afford to work with.
Private Equity Jobs via Niche Firms
A lot of the strong growth that is occurring in the private equity jobs market is occurring with smaller or niche private equity firms, not
the larger firms on Wall Street that many job seekers target automatically. You want to identify a niche job board that targets private
equity jobs and then upload your resume to it and/or look at private equity jobs via this type of a site.
Many of these smaller hedge fund firms are hiring because they don't have the capital needs of the larger firms and/or need external
funding. In most cases these types of firms are working with less borrowed money and as a result, the credit market does not
negatively impact their growth and related job opportunities.
Since the credit markets are experience so much turbulence these smaller private equity funds are unearthing more investment
opportunities that are more aligned with good business practices, as again, they are utilizing their own capital, not borrowed funds.
And, many of these smaller deals would not generate the type of ROI that larger hedge funds need to stay in business; enabling the
smaller firms to work on deals that are smaller but lucrative.
So, target these smaller funds for a private equity job as you move forward, as they can be a valuable source for a position based on
their leveraging their smaller size and the overall financial structure of their deal flow. And, starting out in a smaller firm can be a good
career move as you will develop a broader skill set based on your working.
From Private Equity Jobs.com, article source
Tags: private equity jobs, private equity 2008, private equity career, private equity 2008 report, private equity careers, private equity job
data
Link to This Resource: Private Equity 2008
http://privateequityblogger.com/2007/06/private-equity-2008.html
Private Equity Job Board
Private Equity Job Board
Explaining How to Use Private Equity Job Board
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One of the greatest benefits to working with a private equity job board is the laser
sharp focus of this type of a job board. A highly specialized job board is a great place to post your resume and for researching the
overall private equity job market, as it is highly targeted for this specific industry. Some recommended strategic points you need to be
aware of if you want to work effectively with a private equity job board.
1. Understand what the private equity job board's privacy policy is as it relates to you posting a resume or CV. Meaning, if you are
presently employed, you may not want your employer to know you are looking for new opportunities, so make sure the private equity
job board has a way to anonymously post your resume.
2. Utilize the job board to carefully research any positions that may be a "fit" with your present experience, educational background and
compensation to date.
3. Don't respond to positions that you are not well qualified for, as you will be wasting your time and turning off a potential employer that
you may want to work with at a later date. It can be a smaller world than you think!
4. Have an accurate professionally (don't enhance your background) resume written for uploading to the private equity job board that
acts as a selling document for your personal brand.
5. If the private equity job board has a newsletter it is in most cases a good idea to sign up for this, as it will keep you plugged in to
what is going on the private equity industry as well as give you some sense of available jobs.
6. Don't spam (blast out your e-mail) to a broad number of private equity job boards with the hope that your resume will be seen by
more recruiters and private equity job hiring firms - you want to carefully target your marketing campaign (resume) and don't want to
look desperate by posting too aggressively via multiple job board sites.
7. Research the background carefully of each private equity job board that you are assessing - you want to work with a job board that is
managed by a market savvy executive management team that understands the industry, has strong contacts and/or wants to build a
long term relationship with you as a candidate.
8. Recruiters typically utilize private equity job boards as a source for candidates. It is important to treat a recruiter with respect and
work with them just as you would with an employer. As, they may have broad contacts in the private equity market and can help you in
your search process.
Tags: private equity jobs, private equity job board, private equity job website, private equity jobs, private equity employment
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Link to This Resource: Private Equity Job Board
http://privateequityblogger.com/2007/06/private-equity-job-board.html
Finding a Private Equity Job Working with recruiters
It's critical to know how to work with a private equity jobs recruiter if you want to get your resume in front of the
right private equity hiring firm and to give personal brand broad distribution to a group of targeted private equity job recruiters. Here are
some basic rules of the road to utilize to work for/with private equity jobs recruiters:
1. Understand that most recruiters are "retained" to find private equity job candidates that would be a good fit for a private equity job
that they are work on. They are all busy looking for that "right" candidate - so, when you are on the phone with them make sure you
have a career highlights script you want to review with them, which can be a summary of your background to date.
2. Always take a call from a private equity jobs recruiter - they are an important source for jobs and it is always in your best interest to
have some meaningful dialog with them about your background, compensation and/or optimum private equity job you are looking for.
3. Some of the specific points you want to discuss with a private equity jobs recruiter include: what their specific focus is in terms of
jobs (hedge fund jobs, private equity jobs, back office financial services), will they treat your resume in confidence and not shotgun
blast it out to companies and via the web, do they concentrate on a specific geographical are, what is time-line to hear back from them.
4. Identify a small number of private equity jobs recruiters that you want to work with who are focusing on private equity jobs and
maintain some regular contact with them. Building a long term relationship with them is a good thing, as they have access to a steady
flow of private equity jobs that you might not find via any other source.
5. If a recruiter contacts you about a private equity job then ask for a job description first and then analyze it to understand if it matches
your skill sets; if not, don't waste their time, as they will remember this moving forward and refer them to someone that you know may
be a better fit or simply let them know your background is not a good fit.
6. Do refer your friends/associates to your recruiter network for any type of private equity job - they will remember you for the valuable
referral and this will help to cement a relationship with them - it's called building valuable mind-share.
7. Compensation is typically come up in conversations with private equity jobs recruiters - be honest with them about your current
position (don't pad your numbers!) and what you'd like to make for your next position. They can give you valuable perspective about
what other peers are making in the private equity jobs marketplace.
8. Remember private equity jobs recruiters are paid a percentage fee based on the total compensation package that they negotiate
for/with you - it is in their best interest to get the absolute best compensation package for you.
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9. Always ask a private equity jobs recruiter where they will be sending and/or posting your private equity jobs focused resume; you
don't want your resume being posted across web sites without your permission or knowledge, for obvious reasons.
Tags: Private Equity Jobs, Private equity job, private equity career, private equity jobs recruiting, private equity recruiters, private equity
recruitment, private equity fund jobs
Link to This Resource: Private Equity Recruitment
http://privateequityblogger.com/2007/06/private-equity-recruitment.html
Private Equity Exit Strategy
Private Equity Exit Strategy
Private Equity Business Exit Strategy
The following was written by Dave Kauppi, a Mergers and Acquisitions adviser and President of MidMarket Capital. He explains why
private equity might be your best business exit strategy:
I must admit that I have had a bias against my clients selling their businesses to private equity firms until I discovered that there are
some situations where it might be the best exit strategy. Our firm represents business sellers primarily in the information technology
and healthcare industries. Because the valuation multiples in these industries can get a little rich, they do not normally fit the more
conservative EBITDA models of the private equity industry.
We normally achieve a better initial valuation from industry strategic buyers that build other synergy factors into their purchase
valuation models. In this article we will present some situations where the private equity model is a superior solution for the business
seller. We will also present, as one of my colleagues calls it, the "mathamagic" of a good private equity acquisition. Below are four
scenarios where private equity may be the best solution.
1. A company in need of growth capital
2. A company where one partner wants to retire and sell and the other partner wants to continue to run the business for several more
years
3. A business owner that has 85% or more of his net worth tied up in the business and is "business poor"
4. The business owner that is nearing retirement and wants to take some chips off the table from a position of strength
Before we explore these in greater detail, below are the general investment criteria for most private equity buyers:
1. Strong Management
2. Leading market share or Rapidly Growing Market
3. Established brands and/or strong customer relationships
4. Strong sales and distribution capabilities

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5. Platforms with potential for expansion into new products, services and technologies
6. A minimum EBITDA level (private equity firm specific) - Small $2 million to $5 million, Medium $5 million to $10 million, and Large
greater than $10 million
7. A minimum transaction size and equity investment level (private equity firm specific)
8. Management teams interested in retaining an ownership stake
A hypothetical transaction:
The business owner is 50 years old and has reached a crossroads point in his company. The business is doing $25 million in revenue
and producing an EBITDA of $3 million. The owner is considering taking the company to the next level with either a major capital
expenditure or a major expansion of his sales effort. However, he is at the point where he should be diversifying his assets and not
plowing an even greater percentage of his net worth back into his business. He loves his business and is not ready to retire.
If he sells to a strategic buyer, for example, he may get a higher initial price. For this example, let's say that he can get $25 million from
an industry strategic buyer. A private equity firm that specializes in his industry offers him a company valuation of $21 million and wants
him to invest some of that equity back into the company and have he and his team remain on board to run the company. The
"mathamagic" is as follows:
Sale price $21 million
Total debt used to fund the transaction(65%)$13.65 mil
Total equity investment required $7.35 million
Private equit firm portion (70%) $5.145 million
Owner reinvestment portion (30%)$2.205 million
The beauty of this model for the owner is that the private equity firm welcomes the equity reinvestment by the seller at the same
leverage that the PE firm employs. You might think that if the owner invested $2.205 million into a company valued at $21 million that
his ownership percentage would be 10.5% ($2.205 million divided by $21 million).
Because the PE firm relies on debt leverage, the owner gets to reinvest with his ownership equity on a par with the PE firm. Therefore,
his $2.205 million represents 30% of the equity in this company and he now owns 30% of a $21 million company. One could argue that
he really owns 30% of a $25 million company based on the strategic company valuation. The economics of the initial transaction are:
Company selling price $21 million
Owner equity reinvestment $2.205 million
Owner pre tax cash proceeds $18.795 million
Owner value creation
Value of 30% interest in $25 mil company $7.5 mil
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Add cash proceeds from the sale $18.795 mil
Total post sale value $26.295 mil
Now let's look at how this can get really exciting. First, the owner has secured his family's financial future by taking the majority of his
company value in cash allowing him to greatly diversify his asset portfolio. He still gets to run his company. He receives an industry
standard compensation package with bonuses as an employee CEO. He gets to retire in another five years, which was his original
schedule, when the PE firm exits from their investment.
He now has a deep pockets partner to actively pursue his growth strategy. With a private equity firm that specializes in his industry, this
is very smart money. They leverage their industry contacts and industry expertise to expand markets and distribution.
They actively pursue tuck in acquisitions to add to the organic growth that they help orchestrate. For purposes of this example, we will
assume that the PE group invites the previous owner to invest in these tuck in acquisitions at the same leverage so that his ownership
is not diluted. Over the next 3 years they make several small acquisitions totaling $12 million and they employ the same 65% debt. The
total equity requirement is $4.2 million. The previous owner reinvests $1.26 million to retain his 30% position.
Fast forward 2 more years (typically 5 year holding period) and the company is now at $100 million in revenue and is a valued target of
a big strategic industry player. The PE firm sells the company for $225 million. Our owner's final cash out is valued at $67.5 million. Not
a bad outcome for our business owner. Below is a more in depth look at the situations that this strategy can be successfully employed:
A company in need of growth capital - This is a cross roads decision for an owner. He recognizes the potential in his market, but in
order to capture it, he must make a substantial investment back into the business either in the form of debt or his own capital. He
determines that having a deep pockets partner with industry presence and momentum provides him a superior risk reward profile.
A company where one partner wants to retire and sell and the other partner wants to continue to run the business for several more
years - often a successful business is run by two partners with a meaningful difference in age. One may be 65 years old and is a 70%
owner in the business and the junior partner is 50 years old and a 30% owner. The senior partner decides that he wants to retire and
wants the junior partner to buy him out.
The junior partner does not have access to the capital required. Now he is faced with the company being sold to an industry buyer and
he looses his desired management control and his normal retirement timeframe. This is an ideal situation for a PE group to acquire the
senior partner's equity and retain the rest of the management to run and grow the business.
A business owner that has 85% or more of his net worth tied up in the business and is "business poor" - This is a fairly common
situation and sometimes for marital harmony, the business owner decides to unlock the liquid wealth in his business. The spouse is
often in competition for her mate's time with the mistress - translation the business that occupies 60 plus hours of his time per week
and much of his thought outside of business hours.
That is bad enough, but when every spare dollar is plowed back into the business to support his growth goals, that can be the breaking
point. The conversation might be something like, "You keep telling me we are wealthy, so where is the vacation, the new house, the
spending money we should have?" It just might be the right time to recognize your life's priorities.
The business owner that is nearing retirement and wants to take some chips off the table from a position of strength - I can not stress
enough how important this can be to your family's financial future. You are 60 years old and you want to retire in five years. Your
company is doing great and you still have the energy and desire to run your business. Why would you sell now? There are several
compelling reasons.
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This strategy requires the business owner to view the business sale and their retirement as separate, contingent events. One answer is
to move up your sale timeframe, but not necessarily your exit timeframe. While this scenario may be difficult to envision at first, it can
be very advantageous.
Too many owners wait too long and end up selling because of a negative event like a health issue, loss of a major account, a shift in
the competitive landscape, or family demands. So, the best decision is to sell your company to a PE group 5 years before you plan to
retire, put the bulk of your net worth into a diversified portfolio of financial assets, and agree to run the company for the PE firm for five
years.
An additional, unsettling factor for business owners contemplating retirement are potential changes to the tax code. Democratic party
leaders, including the major presidential contenders, have put forward proposals to change the current tax structure. Business owners
and other wealthy citizens should pay close attention. Most of the proposals would increase personal income tax rates and other forms
of taxation.
For example, the current 15% tax rate on capital gains, previously scheduled to expire in 2008, has been extended through 2010 as a
result of the Tax Reconciliation Act signed into law by President Bush in 2006. However, in 2011 this lower rate will revert to the rates
in effect before 2003, which were generally 20%. It could potentially go higher, if the federal budget deficit worsens and Congress
adopts a tax the wealthy philosophy. The 2 democratic candidates are in favor of a 25% or higher capital gains tax rate.
Finally, the baby boomer retirement issue presents another compelling reason to sell now and retire later. Experts project a doubling in
the number of businesses that will hit the market looking for a buyer by 2009. According to the Federal Reserve, in 2001 50,000
businesses changed hands. That number rose to 350,000 in 2005 and is projected to increase to 750,000 by 2009.
As the overall population ages and sellers outnumber buyers, the laws of supply and demand point to an erosion in valuations for
business sellers. At this point, the trend looks to be gradual. However, as we have seen recently in the prices of certain stocks and debt
obligations, a rush to the exits can precipitate a sudden, calamitous drop in prices.
As I said at the beginning, I had a somewhat narrow view on selling businesses to private equity groups based strictly on the initial
company valuation compared to potential strategic buyers. I am now enlightened and can more objectively view the potential outcomes
for the business owner that encompass the owner's retirement timeframes and risk reward profile. A private equity firm can provide an
initial - secure your family's future - cash out. An industry specialized PE firm with a track record can provide, not just the first bite, but
often a very exciting second bite of the apple when you exit together in five years.
Source
Tags: private equity exits, private equity exit strategy, private equity exit strategies, venture capital exit strategy
Link to This Resource: Private Equity Exit Strategy
http://privateequityblogger.com/2007/06/private-equity-exit-strategy.html
Venture Capital Women
Venture capital is a male-dominated industry, but it doesn't have to be.
In the first quarter of 2006, 4.8% of all venture capital money backed female-owned companies. However, female entrepreneurship has
risen drastically from 1997 to 2006 by 42%. Another important point is that men and women are nearly tied on the percentage that
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obtain angel funding, when a proposal is submitted. So what can be concluded from this data is that while there are a large number of
female-owned businesses, not enough women are trying to obtain funding from angel investors or venture capital funds. If more
female-owned companies tried to attract investors they would stand roughly the same chance of success male-owned companies.
Link to This Resource: Venture Capital Women
http://privateequityblogger.com/2008/07/venture-capital-women.html
KKR IPO
KKR IPO
KKR Delays IPO to 2009
Kohlberg, Kravis & Roberts (KKR) is still planning on launching an initial public offering, but it has delayed
that IPO to 2009. The worsening financial crisis forced KKR to push back its offering of shares to the public on the New York Stock
Exchange.
KKR Private Equity has struggled throughout 2008, posting major quarterly losses. In the three month period ending September 2008,
KKR Private Equity lost $649 million in the value of its investments. According to the WSJ:
Those include some of the firm's biggest deals struck at the peak of the buyout boom. It marked down by about 28% in the value of its
stake in Energy Future Holdings Corp., the Texas Utility formerly called TXU. That investment is now flat after being marked up. KKR
has also now written down its investment in European semiconductor company NXP BV at by 50% of its original cost.
It also saw its minority investment in publicly traded Sun Microsystems drop by $63 million. In January 2007 KKR invested $700 million
in the Silicon Valley tech firm, which announced sharp losses last week.
"Some of our investments faced reduced valuations during the third quarter as a result of the extraordinary turbulence in the global
capital markets,'' said KKR co-founder George Roberts in a statement.
KKR originally filed to go public in June 2007 just weeks after rival Blackstone Group LP's celebrated IPO. It quickly shelved the
offering after the subprime mortgage market began to collapse.
Tags: KKR IPO, KKR Initial public offering, IPO Kohlberg Kravis Roberts, KKR Private Equity, KKR LLC IPO
Link to This Resource: KKR IPO
http://privateequityblogger.com/2007/06/kkr-ipo.html
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Private Equity Acquisition Strategy
Private Equity Acquisition Strategy
Private Equity Firm's Ideal Acquisition Strategy
While venture capital firms tend to invest in earlier stage growth

companies, private equity groups tend to focus on more mature businesses, often contributing both equity and debt (or some hybrid) to
the transaction. Private equity investors (also called financial sponsors or buy-out firms) invest in non-public companies and typically
hold their investments with the intent of realizing a return within 3 to 7 years. Generally, investments are realized through an initial
public offering, sale, merger or recapitalization.
What do these firms look for in a potential acquisition?
* Strong management team.
* Ability to generate cash.
* Significant growth potential.
* Ability to create value.
* A clearly defined exit strategy.
CREATING VALUE
While private equity firms employ various strategies to create value in their investments (such as the consolidation of a fragmented
industry), a common strategy is to acquire a "platform" company and grow the platform through further "add-on" acquisitions. Add-on
acquisitions are typically smaller in size, but complementary to, the platform investment. Ideally, the synergies of the combined entity
create a more efficient whole, both operationally and financially.
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LEVERAGE AND CASH FLOW
Private equity groups typically use leverage (debt) to increase the return on the firm's invested capital. The amount of leverage
employed is normally determined by the target's ability to service the debt with cash generated through operations. The ability to
generate cash allows the private equity investor to contribute more debt to the transaction. Because of the aggressive use of leverage,
often, the cash flow a business generates in the early years following the acquisition is almost entirely consumed by the debt service.
Furthermore, if the strategy is to grow the business, and it usually is, growth also consumes cash. For this reason, private equity
investors are keenly focused on the cash flow of the business. Because cash flow is the basis for valuation, the ability to improve
operations to generate increased cash flow will also yield a greater return on investment upon exit.
EXIT
Private equity groups make money from both the cash flow of the acquired business and from the proceeds generated upon exiting the
business. The exit provides the investor a mechanism to monetize the firm's equity. This is also referred to as "a liquidity event". The
exit provides the financial sponsor with a finalization of the investment and an opportunity to distribute profits. In fact, a significant
component of a private equity professional's compensation is based on this profit distribution, called "carried interest", or just "carry".
Profits upon exit go to back into the cash account to fund new acquisitions.
Written by: Andy Jones, President and Founder of Private Equity Info.com
Tags: Private Equity Acquisition, private equity info, private equity strategy, buyout acquisition, buyouts, private equity buyout
Link to This Resource: Private Equity Acquisition Strategy
http://privateequityblogger.com/2007/06/private-equity-acquisition-strategy.html
KKR Private Equity
KKR Private Equity
Kohlberg, Kravis, Roberts & Co. Private Equity
Kohlberg, Kravis, Roberts & Co. is a big name in private equity and ranked fourth in the PEI 10 largest
private equity firms in the world.
Here is the summary of KKR Private Equity via the firm's website:
In recent years, the global growth of private equity has captured more and more public interest. Such interest is understandable. Funds
managed by KKR and other private equity investors play significant roles in the financial markets, own portfolio companies that employ
large numbers of people, and invest on behalf of public and private pension plans that have millions of individual beneficiaries. At KKR,
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we take great pride in the accomplishments we‘ve made over the last three decades, and believe our investments have had a positive
impact on our portfolio companies, their stakeholders, and the economies in which we operate.
Our approach is to work as partners with the management of our portfolio companies and remain deeply involved in the operations of
our businesses. In this way, we help build globally competitive franchises, many of which have increased employment, innovation, and
research and development during our ownership. The key beneficiaries of our investments are people who receive support from
pension funds, endowments, and foundations — which provide the majority of the capital for our funds. More than 20 state and local
public pension plans, representing nearly 9 million members, have committed nearly one-half of the capital raised for our recent funds.
As a global leader in private equity investing, our achievements to date include the first leveraged buyout in excess of $1 billion, several
of the largest buyouts in history, the first friendly tender offer in the buyout of a public company, and the largest completed or
announced buyouts in the United States, the Netherlands, Denmark, India, Australia, Turkey, Singapore, and France.
Resource #1: KKR IPO
Kohlberg, Kravis & Roberts (KKR) is still planning on launching an initial public offering, but it has delayed that IPO to 2009. The
worsening financial crisis forced KKR to push back its offering of shares to the public on the New York Stock Exchange.
KKR Private Equity has struggled throughout 2008, posting major quarterly losses. In the three month period ending September 2008,
KKR Private Equity lost $649 million in the value of its investments... Click Here to Read More
Tags: KKR Private Equity, Kohlberg Kravis Roberts and Co, KKR financial, KKR Funds, KKR Private Equity Funds, KKR First Data,
KKR LLC, KKR Investments, KKR IPO, KKR Initial Public Offering
Link to This Resource: KKR Private Equity
http://privateequityblogger.com/2007/06/kkr-private-equity.html
Private Equity Half Year Performance
U.S. private equity firms held strong in the first two quarters of 2008, only 3% behind last year's performance.
Down 14 firms from this point last year, the 185 U.S. private equity firms managed to raise $132.7 billion in the first six months of 2008.
Although the industry is declining, the number shows that private equity is still a large part of the economy.
Leveraged buyout fund-raising fell 20% compared to last year, but venture capital and mezzanine funds have countered big buyout's
weak performance. Venture capital fundraising increased 15% and mezzanine funds set a first half record of $24 billion (almost entirely
from Goldman Sachs Capital Partners' $20 billion fund).
European private equity also had a fortunate first half of the year, increasing %15 from this time last year.
Source: Fox Business and Dow Jones Private Equity Analyst
Link to This Resource: Private Equity Half Year Performance
http://privateequityblogger.com/2008/07/private-equity-half-year-performance.html
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Private Equity Job
If you're looking for a job in private equity, here is a great tool.
Private Equity Jobs Database tracks hundreds of private equity jobs and is routinely updated and monitored. In addition, it lists profiles
of major private equity recruiters and has a number of resource links. Basic access is free and upgrading to premium is $60 for three
months (with a 100% money back guarantee).
Link to This Resource: Private Equity Job
http://privateequityblogger.com/2008/07/private-equity-job.html
Private Equity Career
Private Equity Career
Private Equity Career | Private Equity MBA
The private equity career market is highly competitive, with MBAs flooding the industry. In 2006, 13% of Harvard Business School MBA
graduates went to work for private equity firms, making it the class's most popular choice. Similarly, one tenth of Stanford MBA
graduates entered the private equity industry that year. As the buyout boom has restarted in the last couple years, it is getting more
and more difficult to find a job at a private equity firm, even with a MBA from a prestigious school.
There's the obvious financial incentive, the average salary after graduation for MBAs in private equity is $111,296 and an expected
$280,441 after working five years. But also there is the lure of working with other talented business people and playing a big part in
shaping a company that other industries just don't offer. Despite 2008's slowdown in the industry, private equity continues to be one of
the most desirable industries for MBA graduates. With high financial incentives and impressive performance from private equity firms, a
private equity career will continue to be a top destination for young professionals.
Tags: Private Equity Guide, Private Equity Career, Career in Private Equity, Private Equity MBA, Private Equity Job, Private Equity Job
Statistics
Link to This Resource: Private Equity Career
http://privateequityblogger.com/2008/07/private-equity-career_08.html
Venture Capital Industry Decline
Zero Venture-backed IPOs in Second Quarter of 2008

As I recently described, an initial public offering is when a company first issues common stocks or shares to the public. This is a critical
opportunity for venture capital investors to collect returns, but the National Venture Capital Association reports that there were no
venture capital-backed IPOs in the second quarter this year.
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The number of venture-backed IPOs fell from an average of seven per month last year to zero in the second quarter of 2008 (April,
May June). Mergers and acquisitions volume similarly declined in Q2, the number of M&A deals dropped from 70 to 50 in the last
quarter.
This illustrates the recent decline in the venture capital industry following the boom that began this decade, the NVCA President said
that the start-up industry's fall "represents a serious problem that will have long reaching economic implications if not addressed."
Read the full report here.
Link to This Resource: Venture Capital Industry Decline
http://privateequityblogger.com/2008/07/venture-capital-industry-decline_08.html
Private Equity Analyst
The Private Equity Analyst is a comprehensive monthly print newsletter that provides news and information about all areas of private
equity from venture capital to mezzanine financing. Started in 1988, the Private Equity Analyst has built a reputation as a top news
source for private equity firms. Just one catch, a one year subscription is $1495!
Link to This Resource: Private Equity Analyst
http://privateequityblogger.com/2008/07/private-equity-analyst.html
Exchange-Traded Funds
Similar to an index fund, an exchange-traded fund follows an index or a commodity, but it is traded like a stock. The exchange-traded
fund's price varies throughout the day, and does not have a net asset value calculated at the end of each trading day. Most ETFs have
been passively managed, but recently the SEC authorized actively managed ETFs.
Benefits of an Exchange-Traded Fund
An exchange-traded fund is traded like a stock, so the investor can buy on margin or sell short. Plus there is no minimum investment
required, so an investor can own as little as one share in the fund.
Like an index fund, many exchange-traded funds are passively managed, which reduces management expenses considerably.
Many investors love the diversification that an exchange-traded fund offers.
Link to This Resource: Exchange-Traded Funds
http://privateequityblogger.com/2008/07/exchange-traded-funds.html
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A private equity fund of funds pools capital from investors and invests in private equity limited partnerships.
Benefits of a Fund of Funds
Private equity investing is typically reserved to wealthy individuals with substantial money for investing, usually more than $250,000.
Fund of funds require smaller investments and so present an alternative for smaller private equity investors.
Fund of funds offer the benefit of diversification by investing in a variety of different funds, and even different industries.
Disadvantage of a Fund of Funds
A fund of funds charge an additional layer of fees for the fund of funds manager.
The minimum requirement is still substantial and may be too much of a commitment for some investors.
Link to This Resource: Private Equity Fund of Funds
http://privateequityblogger.com/2008/07/private-equity-fund-of-funds.html
Private Equity Outlook
A recent report on private equity revealed the most pessimistic outlook in five years.
Of 100 private equity executives Grant Thorton surveyed, 85% predicted deals would be smaller in the coming year. The majority of
those executives also expect the number of deals to drop. Industry experts believe that this slump is a reflection of the credit crunch
and declining economy.
The report was not all bad news, at least for the private equity-owned companies. 84% of the surveyed executives expect their portfolio
to grow in the next 12 months, 34% predict major growth. Employees for private equity-owned companies also have some good news,
only 2% of those PE executives plan to reduce portfolio company staff, rather the majority plan to increase staff.
With the crunch expected to last at least a year, private equity executives are taking a longterm view.
Link to This Resource: Private Equity Outlook
http://privateequityblogger.com/2008/07/private-equity-outlook.html
Private Equity Investors
Private equity investors are a great source of capital for companies, here's a profile of private equity investors.
Private equity investors are generally wealthy individuals who commit large sums of money to start-up businesses. Many private equity
investors are successful entrepreneurs who offer small businesses helpful advice, experience, contacts and of course, money. Private
equity investors search for companies with high-growth potential, hoping for high returns of their investments. A private investor is
usually easier to attract than a venture capital fund. This is not to say that private investors will throw away their money, but with a good
business proposal and some luck many small businesses have secured large investments this way. For small businesses raising
capital, private equity investors can be a great alternative to larger venture capital and private equity funds
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Link to This Resource: Private Equity Investors
http://privateequityblogger.com/2008/07/private-equity-investors.html
Private Equity Group
The Private Equity Investment Group has over 5,000 members and connects private equity, venture capital, and angel investor
contacts to create strategic partnerships, refer deals, trade models and co-adapt new strategies. In the future, the Private Equity
Investment Group plans to hold webinars and networking events.
Link to This Resource: Private Equity Group
http://privateequityblogger.com/2008/06/private-equity-group.html
Leveraged Buyout
A leveraged buyout (LBO) is a hallmark of private equity firms, here is an explanation of what a leveraged buyout is.
A leveraged buyout occurs when a company acquires another company using a significant amount of borrowed money. The purpose of
leveraged buyouts is that it allows companies to make major acquisitions without having to commit major capital. The company making
the leveraged buyout will sometimes use assets from the acquired company as additional collateral on the loan. The rationale for a
leveraged buyout is that financing a buyout through leverage creates potentially higher returns. Also, because income flowing to equity
is taxed but interest payment toward debt are not taxed, the company making the buyout is able to pay a higher price.
There are some qualities that make a company more prone to a leveraged buyout:
Hard assets (used as collateral)
Minimal existing debt loans
Good history of consistent cash flows
Prime opportunities for increasing cash flows from operational changes
Temporary market conditions reducing share price
Leveraged buyouts
Link to This Resource: Leveraged Buyout
http://privateequityblogger.com/2008/06/leveraged-buyout.html
Initial Public Offering
An Initial Public Offering (IPO) is when a company first issues common stocks or shares to the public. For smaller companies, this is a
chance to gain capital for expansion and large privately owned companies opening up to be publicly traded. Investors take a risk
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investing during the IPO because it is difficult to predict how the shares will do without prior data and the IPO is typically a turbulent
transitioning period for the company. The Initial Public Offering is one way that private equity firms receive returns on their investments.
Link to This Resource: Initial Public Offering
http://privateequityblogger.com/2008/06/initial-public-offering.html
Private Equity Fund
A private equity fund is a pooled investment vehicle that invests in unregistered equity securities. A private equity fund is managed by a
private equity firm. The fund invests directly in a private company or "buys out" a public company resulting in a delisting of public equity.
Capital investments from the fund are used to strengthen and expand a healthy business, or restructure the operations of an
underperforming business. Private equity investors make a long-term commitment hoping for a reversal of a distressed company or an
event that results in a liquidation of assets like the a big company purchasing the company or an Initial Public Offering.
Link to This Resource: Private Equity Fund
http://privateequityblogger.com/2008/06/private-equity-fund.html
Private Equity Impact on Jobs
Private equity funds take control of underperforming companies and restructuring and reforming the operations, and invest capital into
healthy businesses for greater expansion. So, in theory, private equity helps create jobs. A recent study tested how private equity
effects jobs. The study followed 42 large companies acquired by 8 major private equity firms from 2002-2005 and found that after initial
job losses, the companies were able to exceed the initial job losses and relative rates of job gains their competitors within two years of
the takeover. The results suggest that private equity acquisitions create more jobs:
The combined worldwide workforce of the 42 firms grew 8.4%.
U.S. domestic jobs in private equity-backed firms increased 13.3%, much higher than the 5.5% increase for all U.S. businesses.
Non-manufacturing companies backed by private equity expanded total employment by 8.4%
Private equity-backed manufacturing firms had the highest gains with a worldwide employment increase of 8.6%
Click here to download the full report.
Link to This Resource: Private Equity Impact on Jobs
http://privateequityblogger.com/2008/06/private-equity-impact-on-jobs.html
Private Equity Starting Salary
Private Equity Starting Salary
Headhunter Talks of Private Equity Starting Salaries
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Private equity firms are in a competition with Wall Street to offer top salaries for top talent. With all the money private equity firms
reaped in the boom years, buyout recruiters had a lot of money to recruit with. Private equity headhunter, Brian Korb, talks about the
huge starting salaries being offered.
From CNBC: "Korb said private equity is able to attract the cream of the crop – On average a new recruit who goes to a private equity
firm receives $450,000 in total compensation. That compares with $300,000 in total compensation for Wall Street.
And then there‘s the bonus – at private equity you can expect $250,000 your first year, while Wall Street pays a measly $40,000 -
$60,000"
Tags: buyout starting salary, private equity salary, private equity starting salary, private equity compensation, private equity analyst
salary
Link to This Resource: Private Equity Starting Salary
http://privateequityblogger.com/2006/12/private-equity-starting-salary.html
Private Equity Lobbies Against Taxes
The chief trade group for private equity firms has spent $740,000 in the first quarter of 2008 lobbying against proposals that raise taxes
on buyout firms and executives.
The group, Private Equity Council, includes major private equity players: Blackstone Group, LP, the Carlyle Group, TPG Capital and
Bain Capital Partners. The group worked to prevent legislation that would change taxes on private equity partnerships. Private equity
and hedge fund groups worked together to stop another proposal that would raise taxes on the share of investment profits received by
managers to as high as 35 percent. (Source: Forbes)
Link to This Resource: Private Equity Lobbies Against Taxes
http://privateequityblogger.com/2008/06/private-equity-lobbies-against-taxes.html
Private Equity Firms Directory
There are a variety of private equity firms and many directories, so I've this list of directories and will be adding more in the near future.
The following includes venture capital firms/funds, private equity firms/funds and angel investors groups:
PrivateEquity Directory:includes a recent list of 1,252 private equity firms, with simply a link to the firm.
Venture Choice Directory: a venture capital- and private equity-focused directory that is constantly updated to include new firms and
remove expired ones.
VCLocator Directory: includes 6000+ venture capital firms, VClocator boasts of having more venture capital firms than all its
competitors.
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Private Equity Info Directory: A comprehensive collection of directories to many investment avenues such as private equity, mezzanine
investors, and small business investment companies. (Pricey subscription needed though.)
Link to This Resource: Private Equity Firms Directory
http://privateequityblogger.com/2008/06/private-equity-firms-directory_23.html
Morgan Stanley Hires In Japan to Build Private Equity
Morgan Stanley has hired Yoshihiko Shigenari to head the private equity unit in Japan. The New York Times notes that Japan is the
second-largest economy, yet Morgan Stanley has not invested in the country since 2000 (buying eAccess Ltd). This move signifies
Morgan Stanley's revamping of their private equity division and suggests greater investment in a market left largely untapped by the
company.
Source links: DealBook, NoBosh
Link to This Resource: Morgan Stanley Hires In Japan to Build Private Equity
http://privateequityblogger.com/2008/06/morgan-stanley-hires-in-japan-to-build.html
Top Private Equity Firms
Here is a ranking of today's most powerful private equity firms, for the full list with information on recent buyouts and management
styles click here.
The Blackstone Group ()
Kohlberg Kravis Roberts & Co.
The Carlyle Group
Texas Pacific Group
Bain Capital
Providence Equity Partners
Apollo Advisors
Warburg Pincus
Cerberus
Thomas H. Lee
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Link: http://money.cnn.com/galleries/2007/fortune/0702/gallery.powerlist.fortune/index.html
Link to This Resource: Top Private Equity Firms
http://privateequityblogger.com/2008/06/top-private-equity-firms.html
Private Equity Firms
Private equity is an asset class that includes equity securities of companies that are not traded publicly. A private equity firm raises
funds and invests in these securities following various strategies like venture capital, leveraged buyout or mezzanine capital.
A private equity firm will obtain a majority or influential minority stake in a company and use that position to restructure the
management, capital and organization. The anticipated outcome is an improved company that will translate into high returns for the firm
through either:
A merger or purchase: the company either fuses with another company or is bought by another company. Either of these options can
generate big money for shareholders.
IPO (Initial Public Offering): An IPO allows the public to purchase shares in the company. This is generally a high-yielding stage for a
company and therefore the private equity firm also benefits.
Recapitalization: This is when cash is distributed the shareholders.
Link to This Resource: Private Equity Firms
http://privateequityblogger.com/2008/06/private-equity-firms.html
Private Equity Boom
Buyout Boom
Private equity has become an estimated three billion dollar industry, but this was not the case just a few years ago. The following is a
video on the resurgence of private equity:
Link to This Resource: Private Equity Boom
http://privateequityblogger.com/2008/06/private-equity.html
The Venture Capital Decline
According to the WSJ, the venture capital industry is shrinking dramatically. The dot com bubble's burst led many to abandon the once-
fertile venture capital industry, and in recent years the number of venture capital firms has fallen.
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In 2007 the number of venture capital firms investing in U.S. companies was 844, 40 less than in 2006. This compares to the almost
1,200 firms in 2000--during the dot com period. Another startling figure is that of these 844 firms, 224 did not fund any new companies.
The National Venture Capital Association's President Mark Heesen predicts even further decline in future.
This year the industry has shown signs that the decline in venture capital firms will continue. Venture Beat reports that in the first
quarter of 2008 venture investment fell 8.5%.
John Cook remarks on the effect on Seattle's venture capital industry. Although there are many high-profile venture capital firms in the
region, there is a subtle decline in Seattle.
Link to This Resource: The Venture Capital Decline
http://privateequityblogger.com/2008/06/venture-capital-decline.html
Venture Capital Firms
Venture capital firms are typically private partnerships funded by pension and endowment funds, corporations, venture capitalists, and
largely wealthy individuals. The venture capital firm opens a fund, pooling money from investors to expand smaller companies.
Starting a Fund
A venture capital firm will attract investors and pool their money in a fund. This fund is operated by the venture capital firm which
discovers promising startup and smaller companies to invest the fund's money in. The purpose is to profit from the company's future
success. Investors supply various amounts of money, amassing a substantial sum for the manager to invest.
Investing
The firm or fund has an investment profile and invests accordingly, for example a fund may focus on electronics and invest in emerging
electronics companies. The hope is that the capital provided to the company will help it grow to a point that it generates high returns to
the venture capital fund's investors. Profits result from expansion through an initial public offering (IPO) or another company purchasing
the company. If either a public offering where the public is able to buy shares of the company or an acquisition occurs then the fund
cashes out. If the venture is a success the investors receive more money than their initial investment.
Risk
Venture capital is naturally a risky business and venture capital firms suffer many failed investments, but a company that succeeds
often generates huge profits that overshadow other losses for the fund.
Link to This Resource: Venture Capital Firms
http://privateequityblogger.com/2008/06/venture-capital-firms_21.html
Angel Investors and Venture Capital
Expanding startup companies hope to attract both angel investors and venture capital funds. These investors provide the capital that is
necessary for getting a small company off the ground. Although angel investors and venture capital funds serve a similar function, there
are important differences between the two.
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The key differences between angel investors and venture capital funds:
By Definition: Angel investors are affluent, private investors who invest in smaller companies. Although some angel investors organize
into networks or groups and pool investments, angel investors generally invest alone. A venture capital fund is different because it is a
substantial pooled investment, drawing on numerous wealthy investors.
Investment Size: Angel investors typically invest under $1 million. An angel investor's investment is used to expand the company to the
size that attracts larger venture capital investments, mostly above $1 million.
Investment Focus: Angel investors focus on the earlier stages of a company, expanding the company with the angel's investment to a
more marketable size toward venture capital funds. Venture capital funds do invest in the earlier stages, but venture capital funds also
invest with the purpose of taking the company to the IPO stage and beyond.
Attracting Investments: Angel investors vary in investment areas and act privately. Venture capital funds generally focus on emerging
sectors like technologies, and have greater accountability for investments. This makes attracting angel investors seem easier than a
venture capital fund's investment
Expected Returns: Both angel investors and venture capital funds tend to expect high returns for their investments to counter the
frequent losses. Stereotypically, angel investors expect a slower, smaller return on investments than venture capital fund.
Link to This Resource: Angel Investors and Venture Capital
http://privateequityblogger.com/2008/06/angel-investors-and-venture-capital.html
Venture Capital Fund Management Fees
Venture capital fund managers demand considerable payment for their services, this fee is negotiated with investors in the contract.
Venture capital fund managers are compensated similarly to hedge funds, recieving an annual fees involving a share of the invested
money and the success of the fund. A common arrangement is 2 and 20: every year the manager receives 2% of the capital invested
and 20% of net profits of the fund. This is not a rule and often varies with different investors and companies. In recent years venture
capital funds have increased from the 20% arrangement to compensate for frequent failed ventures.
Link to This Resource: Venture Capital Fund Management Fees
http://privateequityblogger.com/2008/06/venture-capital-fund-management-fees.html
Venture Capital and Private Equity Events
Here is the most comprehensive calendar of upcoming venture capital and private equity events. There are many various events listed
there in many locations.
Here is another calendar, which is smaller but limited to angel investors and venture capital.
Companies looking for angel investors or venture capitalists should regularly check for events like the November 3 & 4 Perfect Venture
Conference IV. These events are a great opportunity for startup companies to meet interested potential investors.
Link to This Resource: Venture Capital and Private Equity Events
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http://privateequityblogger.com/2008/06/venture-capital-and-private-equity.html
Angel Investors
Angel Investors
Angel Investors Definition
An angel investor is a wealthy individual who provides capital to an expanding small business. An
angel investor typically invests his own private money, unlike collective venture capital funds. The angel invests in the startup process
and has a personal stake in the company's success.
Similar to venture capital investments, angel investors are vulnerable to a high risk of failure, but if the company is successful the
possible returns are equally high. Startup businesses often fail, costing angel investors large sums of money. Angel investors
compensate for this by demanding a high percentage of any success. Angel investors are an important way for small businesses to
gather the capital necessary for major expansion.
Link to This Resource: Angel Investors
http://privateequityblogger.com/2008/06/angel-investors.html
Venture Capital Firms Directory
vFinance offers a comprehensive directory of over 1,400 venture capital companies. The only drawback is that it is a couple years old,
so many of the companies listed no longer exist and there are many companies that are not listed. Nonetheless, this directory is a great
resource. It provides a short summary of the company and its recent progress.
Link to This Resource: Venture Capital Firms Directory
http://privateequityblogger.com/2008/06/venture-capital-firms-directory.html
Venture Capital Firms
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Venture capital firms are typically private partnerships funded by pension and endowment funds, corporations, venture capitalists, and
largely wealthy individuals. The venture capital firm opens a fund, pooling money from investors to expand smaller companies.
Starting a Fund
A venture capital firm will attract investors and pool their money in a fund. This fund is operated by the venture capital firm which
discovers promising startup and smaller companies to invest the fund's money in. The purpose is to profit from the company's future
success. Investors supply various amounts of money, amassing a substantial sum for the manager to invest.
Investing
The firm or fund has an investment profile and invests accordingly, for example a fund may focus on electronics and invest in emerging
electronics companies. The hope is that the capital provided to the company will help it grow to a point that it generates high returns to
the venture capital fund's investors. Profits result from expansion through an initial public offering (IPO) or another company purchasing
the company. If either a public offering where the public is able to buy shares of the company or an acquisition occurs then the fund
cashes out. If the venture is a success the investors receive more money than their initial investment.
Risk
Venture capital is naturally a risky business and venture capital firms suffer many failed investments, but a company that succeeds
often generates huge profits that overshadow other losses for the fund.
Link to This Resource: Venture Capital Firms
http://privateequityblogger.com/2008/06/venture-capital-firms.html
Top Venture Capital Firms
The 2007 Entrepreneur list of the top 100 venture capital firms are ranked by the number of deals the firm made in 2006. The following
are the top ten, click here for the full venture capital firms list:
Maryland Technology Development Corporation
Draper Fisher Jurvetson
Tech Coast Angels
New Enterprise Associates
Khosla Ventures
Sequoia Capital
Village Ventures
Austin Ventures
Band of Angels
Omidyar Network
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Link to This Resource: Top Venture Capital Firms
http://privateequityblogger.com/2008/06/top-venture-capital-firms.html
Venture Capital
Venture capital typically refers money provided by investors to finance new businesses. An investor predicts that an emerging company
has a high-growth potential and provides initial funding for the company. Generally, investors offer cash in exchange for shares in the
company. Like other traditional stock investments, the performance of the company effects the gains or losses for the investor. If the
company does poorly, the investor's shares lose value. If the company does well on the other hand, the investor is rewarded with a
valuable share that he can retain or cash out for more money than the initial investment. This is the goal of venture capitalists: to
predict a company's success and provide necessary capital for the company's expansion, and then net a high return when the
company succeeds. There is a shared interest between venture capitalists and the small businesses. Businesses hoping to grow but
lacking the necessary money look to venture capital as a way of funding growth. Venture capital is classified as a private equity
investment.
Link to This Resource: Venture Capital
http://privateequityblogger.com/2008/06/venture-capital.html
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Private Equity Service Provider Directory

Private Equity Service Provider Directory

Auditors & Accounting Services

Fund Administration Services

Marketing and Sales Consultants & Resources

IT Consultants & Technology Services

Attorneys & Lawyers

Link to This Resource: Private Equity Service Provider Directory

Mechanical Trading Systems by Richard Weissman

Mechanical Trading Systems

Dispelling Myths and Defining terms

Mathematical Technical Analysis

Trend Following Systems

Mean Aversion Systems

System Development and Analysis

Price Risk Management

Improving Rate of Return

Psychology of Mechanical Trading

Related to Mechanical Trading Systems by Richard Weissman

Link to This Resource: Mechanical Trading Systems by Richard Weissman

Due Diligence Experience

Due Diligence Experience

Value of Experience in Private Equity Due Diligence

Financial and tax review by an accounting firm

Environmental risk assessment

Management team background checks and capability review by an HR consultant.

Link to This Resource: Due Diligence Experience

Private Equity Attorneys & Law Firms | Lawyers

Private Equity Attorneys & Law Firms

To add your firm to this directory please email us at Theo@peblogger.com.

IT Consultants and Technology Services

To add your firm to this directory please email us at Theo@peblogger.com.

Link to This Resource: IT Consultants and Technology Services

Private Equity Marketing and Sales Resources

Private Equity Marketing and Sales Resources

To add your firm to this directory please email us at Theo@peblogger.com.

Link to This Resource: Private Equity Marketing and Sales Resources

Private Equity Fund Administration Services

Private Equity Fund Administration Services

To add your firm to this directory please email us at Theo@peblogger.com.

Link to This Resource: Private Equity Fund Administration Services

Private Equity Auditors & Accounting Services

Private Equity Auditors & Accounting Services

To add your firm to this directory please email us at Theo@peblogger.com.

Link to This Resource: Private Equity Auditors & Accounting Services

NBA Star David Robinson's Admiral Capital Group

For other private equity tracker profiles follow this link.

Link to This Resource: Admiral Capital

Private Equity Business School

Private Equity Business School

Private Equity is Popular Choice for B-School Grads

Related Articles to Private Equity Business School

Private Equity MBA

Private Equity Positions

Survey Results from EfinancialNews

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Private Equity Directory

Private Equity Directory

Directory of Private Equity Firms

Who Should Purchase the Private Equity Directory?