SPACs – Exit Opportunities for Private Equity Sponsors?
23/04/2008. Over the past few years, Special Purpose Acquisition Companies (SPACs), also known as “blank check” companies, have raised significant amounts of capital through the public equity markets. Since January 2007 over $14 billion has been raised through SPAC public offerings. Recent high profile offerings have brought new legitimacy to this market, including Thomas O. Hick’s SPAC, Hicks Acquisition Co. I, which raised over $530 million, and Goldman Sachs’ underwriting Liberty Lane Acquisition Corp., a $350 million SPAC organized by former Fisher Scientific CEO Paul Montrone. 
Limited Partner Allocation to Private Equity 2008 - Almeida Capital Report
16/04/2008. This year will see a major shift in the investment focus of experienced LPs. Whilst the past two years have witnessed a traffic jam of mega buy-out funds raising capital, institutional investor attention is now directed towards opportunities in other segments of the private equity spectrum and towards the emerging markets, according to the latest survey by Almeida Capital, a provider of fund placement, advisory and secondary transaction services to the global private equity industry and also the parent company of AltAssets.
Reverse break-up fees: the ultimate option?
02/04/2008. Many recent LBO merger agreements do not require the buyer to specifically perform its obligations, so a buyer’s right to walk and pay a reverse break-up fee is generally clear, writes Jack Boden of law firm Covington & Burling.
Ignorance of the FCPA is no excuse
19/03/2008. Private equity sponsors and hedge funds are increasingly investing in emerging markets, including through dedicated investment funds. The risk of corrupt payments is higher in those markets than in most developed markets and US investors are subject to the U.S. Foreign Corrupt Practices Act (FCPA) in connection with those investments. Recently, the US government has become more aggressive in enforcing the FCPA, writes Weil Gotshal & Manges.
The Global Economic Impact of Private Equity Report 2008
13/02/2008. This collection of working papers is published by the World Economic Forum and is the result of collaboration with faculties at various academic institutions. The research finds that the total value of firms (both equity and debt) acquired in leveraged buy-outs is estimated to be $3.6tn from 1970 to 2007, of which $2.7tn worth of transactions occurred between 2001 and 2007. Many private equity firms have expanded dramatically in size and global reach and the sector has attracted attention from many other players, such as politicians, regulators and organised labour.
The 144A equity offerings – potential new liquidity option for sponsors
09/01/2008. On 12 November 2007, a group of Wall Street firms and The Nasdaq Stock Market announced an intention to form The PORTAL Alliance, a trading platform designed to serve the market for 144A equity securities, write Corey Chivers and Alison Cole of Weil Gotshal & Manges.
Sponsored spin-offs: new spin on divestment strategy provides tax and other advantages
22/08/2007. A Q&A discussion with Mark Mandel about the sponsored spin-off structure. An unconventional and creative adaptation of the "tax-free spin-off" - whereby a parent company divests a business and new, publicly traded shares are distributed to its stockholders - is generating interest because of the tax and other advantages it can provide over the traditional spin-off. It's called the "sponsored spin-off" and involves a sponsor taking a minority albeit significant stake in the spun-off company.
Why over-commitment is required to achieve target exposures to private equity
27/06/2007. With private equity moving from an alternatives asset allocation consideration to an extension of the equity asset class, many institutional investors are either initiating a new allocation to private equity or increasing their smaller allocations to a more meaningful portion of their portfolio. This paper from Fort Washington examines a method for initiating and reaching a target private equity allocation.
Winning management’s vote - alternative approaches to equity compensation
23/05/2007. Auctions have become a fact of life for private equity sponsors, says Weil, Gotshal & Manges, with most privately-held companies, even mid-market and smaller companies, being sold through some form of competitive process. Although management may not be able to direct the outcome of an auction, they usually have some influence and potentially a casting vote between competing bidders who are offering roughly similar prices for the business. In order to gain a competitive edge in an auction, private equity sponsors increasingly are trying to structure equity incentives in a tax-efficient manner for management.
Behavioural Economics and the world of private equity
07/11/2006. Behavioural Economics looks beyond assumptions on what is strictly "rational" decision-making as a field of study that combines psychology and economics in an effort to investigate occurrences in markets in which some of the agents display human limitations and complications. Private Equity is not a strictly rational business, therefore opportunities and risks arise from this reality in the industry.
The accounting standards are changing: measuring fair value of private equity funds
01/11/2006. In this Israel Venture Capital Journal article, Kobi Shamash, CPA and Asher Shklar,CPA of Israeli accounting firm BDO Ziv Haft, look at the shift to fair value measurement of private equity assets that can make financial statements more relevant.
New era for employee stock options
27/09/2006. Valuation issues relating to employee stock options are shaking the high-tech and accounting worlds, says the Israel Venture Capital Journal, and its treatment has attracted a great deal of attention on the part of regulatory bodies.
The impact and perception of buy-outs in Europe
20/09/2006. The private equity industry, which has been growing rapidly in Europe, has recently had to face increasing public awareness and criticism, says Loic Le Foll Focusing on the buy-out industry in Europe, this paper aims to analyse the factors that can contribute to a poor perception of buy-outs as well as the potential consequences if nothing is done.
Profitability of venture capital investment in Europe and the US
28/06/2006. This paper from the European Commission examines the profitability of European venture capital investment and presents some comparative analysis of the returns generated by European and US venture capital funds.
Temporal comparative analysis of the US venture capital industry over 1980 to 2002
29/03/2006. Avi Messica of the Holon Institute of Technology and Tamir Agmon of The College of Management hypothesise that supply and demand shifts occurred in the US venture capital industry during 1980 to 2002. In this paper, they show the results of an empirical study about the temporal characteristics of the VC industry during the period.
Corporate governance in private equity companies: can it add value?
13/07/2005. Yes, says Ulrich Steger, IMD professor, and Christian Frigast, CEO at Axcel - provided both investors and management understand the differences between the private equity and stock market-quoted companies.
Issues and policy framework for the development of self-sustainable venture capital markets in Europe
29/06/2005. This study by Graham Cope of the Luxembourg School of Finance asserts the need to recognise that the goal for national and EC policy makers should now be that of the creation of a fully self-sustainable venture capital market across Europe.
A principle-agent approach to understanding the net asset value in VC
25/04/2005. European Business student Robert Blotevogel on the role of the net asset value in the venture capital industry and how GPs use it as a strategic tool to further their own interests.
Exposed to the J-Curve: Understanding and Managing Private Equity Fund Investments
18/04/2005. Understanding the correlation of private equity to other asset classes and, indeed, within its own sub-segments is a fundamental part of developing a fund investment strategy. In an extract from a newly published book, Ulrich Grabenwarter and Dr Tom Weidig discusses the correlation and how it should be related to portfolio construction.
First-timers in Israel rely on local co-investors
29/03/2005. Increasing numbers of foreign investors are taking their first look at Israeli companies, and several have already made their initial Israeli investments. Jessica Steinberg reports for the IVC on how some of these first-timers approach the Israeli investment scene.
Exploration-exploitation dilemmas of venture capital companies
14/03/2005. The role of organizational slack and time horizon is examined in this article, and finds that VC management must understand the forces driving the entrepreneurs in their exploratory behaviors, while the entrepreneurs must understand the predicaments of the VCs’ exploitative strategy.
International innovation benchmarking and the determinants of business success
02/03/2005. The promotion of innovation and venture capital is high on the policy agenda in Europe as attempts are made to close the perceived gap in productivity performance with the USA, says the CBR. In the UK a wide range of policy initiatives have been undertaken to promote the commercialisation of scientific and technical knowledge.
Protecting Your Investment: Insurance for Portfolio Companies' M&A Transactions
08/11/2004. With the recent uptick in merger and acquisition activity, a number of private equity firms have begun to consider a relatively new form of insurance coverage to help facilitate their portfolio companies' transactions. This coverage - M&A insurance - has become increasingly popular, and in this article, Carl E. Metzger of Testa Hurwitz & Thibeault provides an overview of situations in which M&A insurance should be considered and how such insurance works.
The risk and return of publicly traded private equity
11/06/2004. A major problem in studying the performance of private equity is the lack of reliable market data. It is very difficult to clearly evaluate the performance of individual private equity investments since no benchmark based on market prices has been built so far for this asset class, according to Heinz Zimmermann, Hans Christophers and Michel Degosciu of the University of Basel.
The Legal road to replicating Silicon Valley
14/01/2004. The construction of a legal and fiscal environment conducive to venture capital and private equity activity is paramount for policymakers seeking to replicate the Silicon Valley phenomenon outside the US, according to John Armour of the University of Cambridge and Douglas Cumming of the University of Alberta School of Business.
Development of a rating system for private equity funds
07/01/2004. There has long been a cry for greater transparency and increased performance monitoring to help advance private equity to a mature asset class, according to Clemens Troche of the European Investment Fund. Yet investors and fund managers are often reluctant to increase transparency because it is deemed to create a competitive imbalance.
|
