Learning Curve Archive > 2007 Evaluating Mass Torts in a Private Equity Acquisition 02/01/2008. An important aspect of evaluating the possible acquisition of the stock or assets of a target portfolio company is the potential litigation liability that may be acquired simultaneously. If a target company is involved or could potentially become involved in complex litigation matters, particularly mass tort litigation, it presents both risk and opportunity to a private equity acquiror, Sean P. Wajert and R. Jeffrey Legath, partners at law firm Dechert say. The asset class private equity – market opportunities in Europe 19/12/2007. Institutional investors around the globe are continuously on the lookout for high yield and new alternative investment opportunities to boost and diversify their capital income, writes Uwe Fleischhauer of Fleischhauer, Hoyer & Partner. As the stock market turned bearish in the spring of 2000 and continued its slump well into 2003, accompanied by a prolonged phase of low interest rates up to date, asset managers in banks, pension funds, insurance companies, foundations and family offices have intensified their search for alternative asset classes. Fair value reporting for illiquid investments: ready or not (here it comes) 12/12/2007. For many years, private equity funds (both venture and buy-out) carried illiquid portfolio companies at cost for at least a year or more unless a subsequent financial transaction supported a different valuation, says Roger Mulvihill, a partner at law firm Dechert. Conflicts in private equity: respecting the rights of limited partners of private equity funds and shareholders of portfolio companies 05/12/2007. Private equity fund governing documents generally permit a manager to commence investing a new fund ('Fund B') at the time an existing fund ('Fund A') has invested or used to pay expenses an agreed upon percentage of its committed capital (on average, approximately 75 per cent). After providing for future management fees, Fund A should have capital available for follow-on investments and possibly for additional new portfolio investments as well, advises Robert M Friedman, a partner at law firm Dechert. The hybrid capacity: The convergence between hedge funds and private equity firms 28/11/2007. James Kelly, a partner at business law firm Nixon Peabody, says hedge funds investing in illiquid assets means its differences from private equity are beginning to lessen. The Walker Review 28/11/2007.  Even the sceptics cannot deny that publication of Sir David Walker's review this week is a seminal moment for the private equity industry, notes SJ Berwin. Unique in the world, Walker's guidelines urge private equity houses that own or acquire 'large' UK companies - or aspire to do so - to reveal much more about themselves than they have in the past, and to require their portfolio companies to be more open than other private companies have ever been. Many of the affected houses have already pledged to comply, and most are expected to do so. In practice, the pressure to fall into line - at least for UK-based houses - is likely to prove irresistible. Chaotic times in leveraged finance 21/11/2007. William D Egler, counsel for business law firm Nixon Peabody, explains why private equity leverage is in a state of flux. Sir David Walker' Guidelines for Disclosure and Transparency in Private Equity 21/11/2007. Sir David Walker has published his Guidelines for Disclosure and Transparency in Private Equity, recommending that both private equity firms and their portfolio companies disclose more information. However, the private equity business will remain a private business and Sir David does not see the need to make it wholly transparent. The key to the locked box 14/11/2007. Over the past 12 months there has been a marked increase in sellers requiring a 'locked box' deal in European M&A transactions, particularly on auctions by or to private equity houses. Richard Ufland, a partner in business law firm Lovells’ private equity group, explains how the mechanism works and considers the issues. Jon Moulton's Alternative Guide to Venture Capital 14/11/2007. This article was written by Jon Moulton, the managing partner of venture capital firm Alchemy Partners to help Venturedome.com readers to gain a better understanding of the VC industry and how it operates. It is a selected dictionary of oft-used phrases to cut through the bull. A Rock and a Hard Place 07/11/2007. Deal certainty is important to both buyers and sellers of corporate businesses. A buyer wants certainty as to both the circumstances in which it can terminate the acquisition agreement if the assumptions on which it agreed to buy the business have materially changed and the maximum amount of potential recourse that a seller has against it if it terminates. A seller wants certainty that a buyer cannot terminate the acquisition agreement in the absence of a material adverse change in the business and wants meaningful remedies against a buyer for wrongful termination, say Doug Warner and Christopher Machera of Weil, Gotshal & Manges. Interim funding – what is the hurry? 07/11/2007. It has become commonplace for bidders to require their mandated lead arrangers to sign an interim financing package on or prior to exchange of a proposed acquisition. Susan Whitehead, a senior consultant in international business law firm Lovells’ leveraged and acquisition finance practice, explains why this can be necessary, what is involved and some issues the parties should consider. Extraterritorial reach of US patent laws 24/10/2007. F Jason Far-hadian Esq., principal of Century IP Group, maintains that patent rights covering a system are enforceable, even if parts of the system are located abroad, as long as the control of the patented system remains within the US. Public value: a primer on private equity 19/09/2007. You can hardly open a newspaper today without learning of a major new corporate transaction involving private equity, says the Private Equity Council. As private equity has become more prominent, as private equity funds and the size of the transactions they finance have grown larger and as the names of the companies they acquire have become more familiar, reasonable questions are being asked: What is private equity all about? How does it work? What does it mean for the American economy, for American workers and for American competitiveness? The morning after: driving for post deal success 29/08/2007. Many CEOs and CFOs may be familiar with that 'morning after' feeling when the intensity of the deal negotiations are finally behind them, says KPMG. Rather than relief and celebration, there is a realisation of the enormity of the task ahead, and pressing questions can include: what have I bought and how do I deliver the value paid for? Resolving disputes in China through arbitration (2007) 29/08/2007. Arbitration is usually the preferred method of dispute resolution for investors in China and this guide from Freshfields Bruckhaus Deringer aims to describe the most significant features of the arbitral process and the requirements for an arbitration clause. Determining company value based on capital raising is a tricky business 22/08/2007. Don’t be misled by common simple calculations of company value cautions BDO Ziv Haft Consulting & Management executives Udi Savithsky and Efrat Shust. In this IVCJ article, they explain how valuations are generally far more complex. Operating partners promise performance and higher returns, but do they always deliver? 08/08/2007. According to a 2007 Association for Corporate Growth/Thomson Financial survey, private equity professionals see lower returns as the greatest threat looming over them - more so than competition from other firms and hedge funds. For many, a way to avoid that problem is to install so-called operating partners - senior-level executives with industry expertise - at portfolio companies. Panelists at the 2007 Wharton Private Equity and Venture Capital Conference and others in the industry say that operating partners with experience running plants and facilities, and rolodexes full of industry contacts, can boost profits and feed higher returns. What's in your portfolio? 01/08/2007. A technology company's strength and viability cannot be fully assessed without a close look at its intellectual property assets. F Jason Far-hadian of Century IP Group explains why a well-balanced IP portfolio is so important in today's competitive environment. View from the House: private equity in the UK 25/07/2007. Change is afoot in the world of private equity, says British MP Mark Field. Few would disagree that there should now be some tightening of the generous tax regime for private equity investment. But it is crucial that we do not undermine the future prosperity generated by private equity, not least in invisible exports, in an area where the UK has become a world leader. The political and fiscal decision-makers must recognise the appeal for many players in this industry of working in a truly cosmopolitan environment. Disclosure and transparency in private equity 17/07/2007. Sir David Walker was asked by the British Venture Capital Association and a group of private equity firms to undertake a review of the adequacy of disclosure and transparency in private equity with a view to recommending a set of guidelines for conformity by the industry on a voluntary basis. This is his consultation document on the subject. Dealing with pension fund trustees 20/06/2007. In May, says SJ Berwin, the UK's Pensions Regulator clarified its guidance on clearance applications. Probably because that clarification came in the same week as the trustees of the Boots' pension scheme flexed their muscles in anticipation of a buy-out, it attracted significant press attention - and was seen by most as a further impediment to buy-out deals. But that may be a misleading interpretation of the announcement. Gray hair giving way to black hair 06/06/2007. Venture capital management firms are or soon will be facing the issue of succession in their top management. In this IVCJ article, Zeev Holtzman, founder and chairman of Giza Venture Capital, provides his prescription for a successful succession process. Lessons from the front 30/05/2007. The takeover battles between The Blackstone Group and a consortium lead by Vornado Realty Trust for Equity Office Properties, and between The Carlyle Group and Building Materials Corporation of America for ElkCorp, are two examples of the potentially tougher acquisition environment that private equity sponsors may face in 2007, says Weil, Gotshal & Manges, including increased challenges from strategic buyers. Identifying and managing special situations at VC-backed companies 23/05/2007. In this IVCJ article, Yoav Kfir, CEO at special situations firm VAR Management, answers frequently asked questions about distressed situations – one of the most common special situation investments – and proffers ideas on how they could best be managed. Big deal(s): what's driving the M&A frenzy? 09/05/2007. 2006 set a record for mergers and acquisitions worldwide, says Knowledge Wharton. Deals totaled $3.79tn, 38 per cent higher than in 2005, and 55 of the transactions were valued at more than $10bn each, according to data from Thomson Financial. Europe was one of the big players, registering 39 per cent more deals than in 2005 for a total of $1.43tn. VC funding: must have three to tango 02/05/2007. In this IVCJ article, management consultant Harry Yuklea examines the substantial dependency among general partners, limited partners and entrepreneurs in the venture capital field and describes inefficiencies that result when interests of all three players are not in sync. Venture lending – It's now or later 04/04/2007. Venture lending is relatively new to Israel. In this IVCJ article, Dr Lee-Bath Nelson, senior principal at Plenus Venture Lending answers the most frequently asked questions about this rapidly growing method of financing. Oh, no! Not fund raising again? 14/03/2007. In this IVCJ article, Jonathan Saacks of Genesis Partners offers some alternative best practices that could increase the rate of fund raising success, while making the process more enjoyable or, at least, less painful. Scaling up innovation: the GoForward plan to prosperity 14/03/2007. Innovation, small and medium enterprises, entrepreneurship and venture capital are ingredients in the creation of knowledge based economies; witness the success of Silicon Valley in large economies like the US and replicated in France, Germany, Japan, the UK, and elsewhere, says Thomas A Nastas. Small country economies like Israel, Ireland and Singapore, with little domestic demand for technology, developed unique approaches of exporting knowledge creation with excellent outcomes. The growing benefits of private ownership 28/02/2007. Regulators and impatient investors are driving US public companies to go private. Major investors, along with some executives, will gain; other investors can only watch. Technology-focused private equity investing in Israel 07/02/2007. There are sharp differences between private equity investing and venture capital investing. In this Israel Venture Capital Journal article, Yuval Cohen, Managing Partner at Fortissimo Capital Fund, explains the distinctions in several key areas. The Israeli venture capital industry has achieved international recognition and great success. The art of communication part II 23/01/2007. In this IVCJ article, high-tech entrepreneur Isabel Maxwell continues to discuss the principles of good communications. Part I can be summed up in the acronym LLCC, which stands for Language, Listening, Consideration and Clarity. The combination of strong [English] Language speaking, writing and reading skills; the ability to listen; the capacity to be considerate - of another person and his/her country/culture whether communicating by phone, email or in person; and conducting oneself with clarity of thought and purpose, whether for a company or personal project. Revisiting material adverse change clauses 17/01/2007. Burgers and material adverse change clauses have more in common than the fact that they sometimes share the name Mac, says Weil Gotshal and Manges. Private equity buyers should (but mostly cannot/do not) special order their MACs.