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Single-Family Offices Warm Up to Private Equity

The secretive world of single-family offices has become a more meaningful source of capital for private equity as traditional LPs get cold feet. Apparently these wealthy family money managers are eager to get more involved with the asset class.

Grant Thornton: British PE Firms Expects Lower Prices For Most Assets in 2011 – Reuters

Private equity firms in Britain expect to pay significantly lower prices for assets in 2011 according to a survey by Grant Thornton, Reuters reported. The survey captured the views of 100 private equity executives in Britain. The group sees lower prices in most sectors as a result of competition to buy businesses receded. The study indicated that health care and high technology are the only industries that will buck the trend, with valuation for health care companies expected to remain flat. The valuation for high-tech companies is expected to increase, according o the survey.

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Market Structure Is Causing The IPO Crisis

As Congress battles over the shape of financial reform, will it address the lack of a properly functioning market structure? The market for underwritten IPOs, given its current structure, is closed to 80% of the companies that need it. In fact, since 2001 the U.S. has averaged only 126 IPOs per year, with only 38 in 2008 and 61 in 2009 — this compared to the headiness of 1991–2000 with averages of 530 IPOs per year.

Companies can no longer rely on the U.S. capital markets for an infusion of capital, nor can they turn to credit-strapped banks. The result? Companies are unable to expand and grow — they are unable to innovate and compete — so they are left to wither and die, contributing to today’s high unemployment rate.

During the time since our first studies were released, Grant Thornton has received a number of intriguing questions. This post (and the report posted after the jump) addresses them and presents updated data through December 2009, while examining the continued lack of a properly functioning IPO and small cap stock market. The systemic failure of the U.S. capital markets to support healthy IPO and robust small cap markets inhibits our economy’s ability to innovate, create jobs and grow. At a time when America is struggling with double-digit unemployment, the failure of the U.S. capital markets structure can no longer be ignored.

Useful Tips for Navigating A Crazy Credit Environment

The nonprofit Financial Executives Research Foundation (FERF) and Grant Thornton, the tax advisory company, issued a report earlier this week on the fundraising environment. I’m discovering it’s chockfull of useful information. Much of the analyses derives from a 14-question online survey distributed late last year and that more than 250 finance pros, i-bankers, merchant bankers, and […]

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Grant Thornton: Long Term Decline In U.S. IPOs

The number of companies listed on U.S. exchanges has dropped by more than 22% since 1991 and nearly 39% since 1997, even though that was around the beginning of the dot-com boom, Grant Thornton reports in a study that was two years in the making and was first reported by peHUB.

U.S. exchanges are losing ground to exchanges in China, London, Italy, Tokyo, Toronto, Australia and Germany, where listings continue to increase. In the U.S., meanwhile, there are not enough new IPOs to replace the number of companies that are being delisted.

Grant Thornton estimates a possible loss of 22 million U.S. jobs because of this situation and points to a “wholesale erosion” of the infrastructure that supports IPOs — sell-side research, brokers, capital commitments by exchanges.

U.S. stock markets now favor “computer-driven trading interests at the expense of long-term investors and the U.S. taxpayer,” the report said.

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Grant Thornton To Release “Blockbuster” Study

Grant Thornton confirmed that the study will be rolled out at a press conference on November 9th. It’s been in the works for two years.

One VC who’s aware of it, Pascal Levensohn, said he was “shocked” when he learned what’s in it. “It has really scary statistics about the secular decline in marketshare, globally, that all listed markets in the U.S. have been experiencing since 1997,” he said. “This proves that (the IPO drought) has nothing to do with Sarbanes Oxley and the tech bubble. The reality is that America peaked in 1997 as a capital markets force in equities, and since then it’s gone straight down and every other market has gone up.”

Sovereign Wealth Funds Feeling Cheated By U.S., Panelists Say

And it’s probably true. After losing an estimated 18% to 25% this year, with much of it in U.S. investments, they’re not exactly rushing to write any more checks for us.

According to panelists at The Deal’s 2009 PE Outlook Conference, the SWFs have retreated, licking their wounds, from further investments in U.S. firms, companies and funds. They’re shifting their focuses back to domestic investing. And it’s not just a temporary bout on the sidelines. There’s a fundamental shift going on in the way they deploy their capital, the panelists said. Fortunately, that’s not necessarily a bad thing.

CFOs: In Defense of Private Equity?

Two thirds of CFOs surveyed by Grant Thornton think CEOs are overpaid. But only 25% think their own CEO is overpaid.

Sounds like a case of “no one wants to call the baby ugly.” The board of directors would likely respond with a similar answer. Execs are spoiled, but ours deserves it. And the survey revealed another interesting point: 83% of those surveyed think the CEO and chairman role should be separate.

Both of these answers support an argument in favor of private equity that says PE firms bring much-needed discipline to companies. The survey doesn’t ask why CFOs want less power and money for CEOs, but The Lehman Brothers Effect isn’t a bad guess. So I ask, if a failing company like Lehman, for example, were backed by a private equity firm, wouldn’t management have been dismissed many quarters ago?

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