Last week, a slew of survey and study data came out, and like a diligent reporter I’m wading through them to bring you the highlights of each. Here goes.
Global Scenarios for Private Equity and Venture Capital
Commissioned by: The European Private Equity and Venture Capital Association
Goal: Examine four potential scenarios for the future of private equity and offer long-term perspectives on each.
Scenarios: “Three Towers,” in which investment activities stays regulated to three large regional blocks, thanks to geopolitical tensions. Benefits firms with deep local knowledge and relationships. “Gulfstream,” in which global economics are fully integrated and investments flow within wealthy nations and to emerging markets. Benefits firms with broad international reach. “Trading Up,” in which institutions strongly support global economic integration. Benefits venture capital in Europe. “Going East,” in which European and North American economic and social problems lead its investors to increasingly successful and sophisticated Chinese and Indian markets.
Find more info: http://www.evca.eu/default.aspx
2007 Annual Review of Private Equity and Outlook 2008
Prepared by: SCM Strategic Capital Management
Most surprising conclusions: Asia and the BRIC companies are expected to grow in line with trends of recent years despite economic uncertainty in other parts of the world. The study also projects that vintage 2008 and 2998 funds may end up with excellent performances thanks to the abundance of debt buying opportunities and rock-bottom evaluations in financial services, retail and lodging sectors. I am very skeptical of this conclusion, since there is a small population of private equity firms that are prepared to jump on those types of investments.
Least surprising conclusions: Most of it proves what we already know—the slowdown will continue through 2009, the stock markets haven’t corrected enough to reflect flower earnings growth, and returns on US and European priate equity funds will decrease for 2008. SCM predicts they may even turn negative.
Find more info: http://www.scmag.com/#/en/portrait/scm
Doing Deals in Tough Times
Commissioned by: KPMG
Surveyed: 160 U.S. and European Companies
Goal: Identify organizational and implementation attributes of successful corporate M&A teams.
Most surprising conclusion: The study outlines 5 practices used by successful M&A teams (how they defined which teams were “successful” or “unsuccessful,” I’m not sure). The practices aren’t surprising, but certainly useful. For example, successful M&A teams spend 33% more time doing diligence than their less successful counterparts. They interview an average of 50 external sources per transaction. Likewise, 60% of successful teams pass “Day One” preparation responsibility on to business development teams. Most of the successful teams plan integration budgets during due diligence.
Least surprising conclusion: Leading M&A teams stabilize the new business quickly. Even though we all know time is of the essence, its still fun to see in numbers exactly how directly speed correlates with success.
Find more info: Here
Mergermarket Canadian M&A Round-up
Goal: Report on state of M&A in Canada for the first half of 2008
Most surprising conclusion: Deals are up in the second quarter of 2008, totaling $32.2 billion.
Least surprising conclusion: Canadian deal flow took a sharp dive in the first half. No surprise there, but is it interesting to note that 74.1% of all Canadian deal value is in the energy, mining and industrials sector, but just 33.8% of the volume.
Find more info: http://www.mergermarket.com/pdf/Press-Release-Canada-H1-2008.pdf
M&A Beyond Borders: Opportunities and Risks
Commissioned by: Marsh, Mercer, and Kroll
Surveyed: 670 senior executives
Goal: Report on attitudes of senior executives toward global M&A
Most surprising conclusion: Managers in emerging countries China, Russia and India have undergone an increase in IPOs, but not because they need capital. It’s because they want to do M&A, and the best way to garner interest from international suitors—strategic or financial—is to show transparency and prove their reputations.
Least surprising conclusion: The biggest cross-border M&A hurdles remain: human capital issues and cultural integration. Its not surprising to learn that a number of Western European countries (which came in as the third most attractive place to invest) have significant legal roadblocks in place to stymie major lay-offs. It is surprising to learn that parts of Latin America, Africa and the Middle East employ the same rules.
More: Interesting heat chart documenting low to high risk factors across regions. The biggest risks factors are inadaquete infrastructure in Africa, bribery and corruption in Africa, litigation culture in North America, intellectual property issues and organizational cultural differences in Southeast Asia.
Find more info: http://www.kroll.com/library/pdf/BeyondBorders_excerpt.pdf