North America

Private equity and venture capital research, reports and surveys with a focus on North America

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• PricewaterhouseCoopers US IPO quarterly report 05 Nov 2008. Source: PricewaterhouseCoopers. The number of IPOs in the US has declined for three straight quarters as volatility in the US economy continues unabated. For the first nine months of 2008, there were 54 IPOs that raised $31.2bn, a significant drop from the 195 offerings that generated $44.7bn for the same period in 2007, according to this PricewaterhouseCoopers report. When the $17.8bn VISA IPO is excluded from the 2008 results, IPO value for the first nine months was just $13.3bn.

• Venture capital investment holds in $7bn range in Q3 2008 despite turmoil in the financial markets, MoneyTree Report. 27 Oct 2008. Source: National Venture Capital Association (NVCA), PricewaterhouseCoopers. Venture capitalists invested $7.1bn in 907 deals in the third quarter of 2008, according to the MoneyTree Report from PricewaterhouseCoopers and the US National Venture Capital Association (NVCA), based on data provided by Thomson Reuters. Quarterly investment activity was down seven per cent compared to the second quarter of 2008 when $7.7bn was invested in 1,033 deals. Despite the turmoil in the global financial markets in the US, venture capital investing remained within historical norms in the third quarter of 2008.

• The Federal Reserve loosens restrictions on minority investments in banks 14 Oct 2008. Source: Nixon Peabody. Steven M Plevin. Law firm Nixon Peabody discusses new Federal Reserve Board policy guidelines which relax previous limitations on minority investments in banks and should provide a window of opportunity for private equity funds to take advantage of new investment opportunities.

• US private equity firms raise $222.6bn in first nine months of 2008 08 Oct 2008. Source: Dow Jones Private Equity Analyst. While the public financial markets are in crisis, US private equity firms not only continue to stockpile capital but have picked up the pace of their fundraising. Dow Jones Private Equity Analyst reports that US private equity firms raised $222.6bn in 264 funds during the first three quarters of 2008, 11 per cent more than the $200.4bn raised by 298 funds during the same time last year. This is in contrast to the halfway point of this year, when fundraising slightly lagged against last year's pace, and is despite a slow-down in buy-out fundraising. The full year fundraising record of $313bn was set in 2007.

• Trouble in Sand Hill Road: venture capital-backed liquidity drops 66 per cent to $4.6bn in 3Q 2008, lowest since 2003 01 Oct 2008. Source: Dow Jones VentureSource. The troubles on Wall Street are not just being felt on Main Street, they are also taking a toll on the residents of Sand Hill Road and other venture capitalist enclaves. In the third quarter of 2008, venture-backed companies generated just $4.57bn in liquidity through IPOs and M&As, down 66 per cent from the $13.4bn generated in the third quarter of 2007, according to Dow Jones VentureSource.

• Distressed debt transactions: soup to nuts 27 Aug 2008. Source: Pepper Hamilton LLP. Michael H Friedman, J Bradley Boericke, Shirley R Kuhlmann This article first appeared in the July-August 2008 issue of Deal Lawyers. DealLawyers.com. It is reprinted here with permission. A central feature of the ongoing credit crisis has been the decline in prices across all types of debt as the market has undertaken a radical repricing of risk. In response, a significant amount of capital is being raised by funds with a view to investing in debt. At the end of the first quarter of 2008, and in the midst of gloomy forecasts about how long the current market malaise will last, funds formed to purchase and manage distressed debt had raised over $24.6 billion. (1)Only a fraction of the funds raised have been invested to date, suggesting an imminent boom in distressed debt transactions.

• Investment in financial institutions 20 Aug 2008. Source: Pepper Hamilton LLP. J Bradley Boericke and Timothy R McTaggart. This article first appeared in the August 1, 2008 issue of The North American Brief, mergermarket.com. It is reprinted here with permission.. Financial institutions of virtually all stripes have been hit hard by the subprime crisis and its related fallout. To some this will seem like a potential investment opportunity, but the regulatory framework applicable to various types of financial institutions can seem daunting. This is particularly true for investments in financial groups that include a bank, which are heavily regulated through complex federal and state statutes and regulatory authority.

• Managing conflicting interests: a guide for private equity directors on portfolio company boards 06 Aug 2008. Source: Pepper Hamilton LLP. Amy S Carder. Private equity funds typically invest in young companies (each a portfolio company) with the hope that these companies will increase in value with the assistance of the private equity funds’ management and resources. During the investment period, managers of the private equity fund usually sit on the board of directors of the portfolio company. These 'private equity directors' may, however, find themselves in a position of conflict because, as directors, they owe fiduciary duties to the portfolio company and all of its shareholders, but as fund managers they remain loyal to the private equity fund (in certain US states, the law regarding fiduciary duties focuses solely on the best interest of the company, and the interest of the shareholders is just one of many factors to consider in determining the best interest of the company, which may alleviate some of the conflicts faced by directors in these jurisdictions).

• Canadian budget implications for US/foreign VCs 29 Jul 2008. Source: Fraser Milner Casgrain. On 19 March 2007 Canada's minority Conservative government announced the 2007 Budget, which includes a number of tax measures intended to give technology companies that are incorporated in Canada greater access to international sources of capital. Law firm Fraser Milner Casgrain examines these measures and their implications for the venture capital industry.

• 2008 Venture Capital Report 09 Jul 2008. Source: WilmerHale. The gradual but steady increase in venture investing activity that has characterised the venture capital market over the past several years continued in 2007. Of greater significance was the more pronounced improvement in the IPO and M&A markets for venture-backed companies over the past year, according to this venture capital report from law firm WilmerHale.

• Canadian Private Equity 18 Jun 2008. Source: Blakes, mergermarket. The last two years have been remarkable years for private equity in Canada. Paralleling the US and Europe, Canadian private equity has seen record buy-out activity; however, the recent tightening of financial markets has dampened private equity’s party, according to this perceptions study by law firm Blakes in association with mergermarket.

• Why buy-out investments are good for Canada 04 Jun 2008. Source: The CVCA – Canada’s Venture Capital and Private Equity Association. Canada has a relatively nascent but fast-growing domestic private equity industry, with $66bn raised since inception up to 2006. Buy-out investors add substantial value to companies through strong governance, a results-oriented mindset that challenges conventional thinking, and a long-term perspective that builds sustainable value. Stronger Canadian companies translate into a stronger and more productive Canadian economy, says Canada’s Venture Capital and Private Equity Association (CVCA).

• Private equity buy-outs remain solid in first quarter 28 May 2008. Source: Thomson Reuters, Canada’s Venture Capital & Private Equity Association (CVCA). CVCA - Canada’s Venture Capital and Private Equity Association, together with research partner Thomson Reuters, has released the first quarter of 2008 investment statistics for the private equity buy-out sector in Canada. A total of 29 transactions were completed during the quarter, with nine of these disclosing their transaction values. The nine disclosed investments totaled $2.4bn.

• American jobs and the impact of private equity transactions 21 May 2008. Source: The Private Equity Council. Robert J Shapiro and Nam D Pham. Strong job creation has been a hallmark of the American economy for a half century. Many factors contribute to America’s strong job-creating performance, most notably robust economic growth. The most important element contributing to that growth is the way America’s markets work, especially the relative ease and speed with which they move labor as well as capital and expertise from enterprises using those resources ineffectively to others that put them to better use. Private equity funds can facilitate those shifts by taking over underperforming firms and reforming their operations, and acquiring healthy businesses and then injecting capital and management expertise to enable them to expand further, write Dr Robert J Shapiro of Sonecon and Dr Nam D Pham of NDP Group in this research paper from the Private Equity Council.

• Driving growth: how private equity investments strengthen American companies 14 May 2008. Source: The Private Equity Council. The private equity industry is as diverse as the hundreds of firms that manage private equity investment funds. But each of these investment firms has a common goal: seek out companies with the potential for growth and put in place the capital, talent and strategy needed to permanently strengthen the company and raise its value. How private equity firms accomplish that objective is the subject of this paper from the Private Equity Council.

• Venture capitalists: US recession and unstable markets will slow investing and fundraising activities, M&As and IPOs 14 May 2008. Source: KPMG. Venture capitalists expect the US recession and unstable markets to slow investment and fundraising opportunities, however China, India, greentech, internet services and biotech will continue to gain momentum and investment in the coming year, according to a recent survey by KPMG.

• Capital gains: taxing times 30 Apr 2008. Source: Livingstone Partners. Jim Smulkowski. In the US, obtaining long-term (over one year) capital gains treatment is a key objective for investors from a tax perspective. The maximum rate applicable to such gains is 15 per cent, compared to 35 per cent for ordinary income, plus any applicable state income taxes, writes Jim Smulkowski, a partner at law firm Katten Muchin Rosenman.

• M&A Executive Insights 2008 23 Apr 2008. Source: mergermarket, Nixon Peabody. 2007 proved to be a year of two distinct halves for the US M&A market, especially in terms of overall deal value, according to this survey from Nixon Peabody and mergermarket. In the first six months of the year, transactions worth $846.8bn were undertaken in the US while the onset of the credit crunch in August weighed heavily against H2 figures – only $479.2bn of deals were completed during the period, just 57 per cent of total H1 value.

• District Court dismisses antitrust suit against private equity bidders 09 Apr 2008. Source: Weil, Gotshal & Manges. Carrie Anderson, Jeff White, Katherine Ambrogi. In late February, the U.S. District Court for the Western District of Washington at Seattle dismissed an antitrust lawsuit against two private equity firms that jointly acquired a publicly traded corporation. In rejecting the claim that the agreement to jointly acquire the target was an unlawful restraint of trade in violation of US federal antitrust laws, the decision provides some clarification for private equity firms who desire to form bidding consortia to pursue acquisitions, writes law firm Weil, Gotshal & Manges.

• Mid-Atlantic VCs Close Out 2007 on a High Note 20 Feb 2008. Source: The Mid-Atlantic Venture Association (MAVA). Investments were up and timeframes to close deals shortened in the fourth quarter, according to The Mid-Atlantic Venture Association (MAVA).

• American Jobs and the Impact of Private Equity Transactions 13 Feb 2008. Source: The Private Equity Council. Robert J. Shapiro and Nam D. Pham. Strong job creation has been a hallmark of the American economy for a half century. From 1960 to 2006, American businesses expanded the U.S. private-sector workforce from some 46 million positions to more than 115 million, adding 12.7 million net new jobs in the 1960s, 15.9 million more jobs in the 1970s, another 15 million in 1980s, and an additional 20.6 million in the 1990s.

• 2008 CFO Outlook 13 Feb 2008. Source: Bank of America Business Capital. In this year's CFO Outlook survey from Bank of America Business Capital, manufacturing CFOs see a strong economy today, but are cautious as they look ahead to 2008. Less than half of the CFOs surveyed predict the US economy will expand next year and less than a quarter believe it will outperform the world economy. However, a majority of CFOs believe the actions taken by the Federal Reserve Board over the past year have helped the economy and that there will be further rate cuts in 2008.

• US venture capital investment climbs to $29.9bn in 2007 13 Feb 2008. Source: Dow Jones VentureSource. Last year saw record investments in biopharmaceutical, medical device and energy companies, according to the Quarterly Venture Capital Report released by Dow Jones VentureSource. Web-related investments were also up.