Institutional investors are increasingly looking for direct deal opportunities. For private equity firms, what does it mean when your investor client becomes your competitor? According to Osler, Hoskin & Harcourt Partners Mary Abbott and John Groenewegen, it means allowing co-investment rights (and accompanying lower fees) in the hope that large limited partners will decide not to invest directly but rather be alongside the fund as a co-investor.
The IRR clock starts ticking from day one, and the first months of a deal are critical to establishing its pace and trajectory and the relationship between the PE firm and portfolio company. Our firm has advised more than 200 PE funds since 1995, and even in the era of the 100-day plan, we time […]
It can be painful for buyout pros to watch a great company that they sold produce a splashy return for the next owner. Great companies are hard to find. Riverside Co, a lower-mid-market shop with offices worldwide, in 2009 produced a 5.1x gross return on the sale of railroad-equipment-repair company Nordco to OMERS Private Equity; it had invested in […]
By Solomon Owayda, founding partner, Mozaic Capital Advisors It is said that hindsight is 20/20. Wouldn’t it be great if one could look back at a private equity portfolio and have the chance to double down on the good investments and undo the bad ones? I have been investing in PE for the past 29 years, with […]
One issue that has haunted emerging managers trying to persuade LPs to open their wallets is: How well do these early funds perform and are they worth the risk? Preqin has an answer: It reviewed a sample set spanning 13 vintage years from 2000 to 2012, and it found that 2004 was the only year […]
Steve Schwarzman, chief executive of Blackstone Group, got cocky on the firm’s Oct. 27 third-quarter-earnings call. He was explaining that institutions hungry for yield in the low-return environment are turning to alternatives to get the kind of returns they need to meet their obligations. What Schwarzman is describing relates to an increasingly desperate situation especially […]
For the fourth year running an analysis of return data sourced from public-pension funds shows that past performance in private equity has something to say about future performance. All other things being equal, investors are better off backing firms whose most recent funds were top quartile for their vintage years and avoiding those whose most recent […]
Tech appears to be single-handedly dragging along private equity M&A activity this year, keeping it at least on par with last year’s volume levels. In our quarterly issue, Steve Gelsi reports that of the 10 largest third-quarter PE deals, seven were in technology, media and telecom. Tech businesses are drawing lofty valuations, 5x to 10x […]
All the debating and lobbying and sweating about whether one day buyout professionals will have to pay regular income taxes, not capital gains, on their profit share sometimes obscures two human-resources-related truths. One, firms have been hiring at a fast clip. And two, already-generous compensation packages have been racing skyward across the industry. Ample evidence for these developments […]
I don’t often find myself in agreement with Donald Trump. However, Trump said something during his first debate with Hillary Clinton (who I also don’t generally agree with), that hit home. Trump blamed the Federal Reserve for creating a bubble by keeping interest rates low. He claimed the Fed was doing the bidding of the […]