Private Equity Shaken not Broken By: Douglas Warner and Michael Weisser
February 2010  This past year the private equity industry was shaken but not broken. The year began badly with the full gloom of the credit crunch with new loans virtually unavailable for acquisition financing. During the year private equity sponsors navigated, among other obstacles, difficult fundraising markets, liquidity constrained limited partners and portfolio company loan amendments, restructurings and bankruptcies. The mood brightened somewhat in the second half of the year as the primary loan market began to reopen and the rebounding equity markets facilitated portfolio company IPOs.
Certain pundits predicted that the private equity model was "broken" and that the credit crunch would irrevocably change the relationship between sponsors and their LPs and that many sponsors would be driven from the business. However, despite the credit crunch and the resultant turbulence for the private equity industry, the private equity industry survived 2009 and appears poised to continue to thrive for the foreseeable future. This article looks back on some trends we saw in the industry in 2009. It also contains some predictions as to what awaits the industry in 2010 and beyond...Read more. | | A Conversation with Harris Smith By Danielle Fugazy
November 2009  Harris Smith, a managing partner in the private equity group of Grant Thornton, recently penned a whitepaper that discusses exit opportunities and fundraising possibilities in the post-boom era. Private Equity Professional Digest recently had the opportunity to sit down with Mr. Smith and talk about some of the major issues facing private equity today including a possible change in how carried interest is taxed and whether private equity has a public relations problem.
1. A recent report cited that nearly 1 in 3 private equity firms have a portfolio company in bankruptcy. Does this surprise you?
Unfortunately, it doesn’t. While I was researching my latest whitepaper I came across too many private equity-back portfolio companies that have filed bankruptcy. Excess leverage is responsible for many of the bankruptcies. Most private equity firms thought adding debt to their companies’ balance sheet would be fine because there was enough revenue coming in to cover the additional expense. Then the economy collapsed...Read more. | 2009 Carried Interest and Compensation Survey By John P. McNulty
June 2009  The Private Equity Professional Digest 2009 Carried Interest and Compensation Survey was conducted from March through April 2009 and gathered data from 140 private equity funds. Approximately 70% of the funds in the survey are presently investing a fund that is less than $500 million in capital with the balance of the funds evenly split between $500 to $1 billion and greater than $1 billion.
In gathering data on carried interest we asked all respondents to answer the survey questions assuming the following five tiers among the professional staff of a private equity firm: (1) Partners; (2) Top Professionals: These are the most senior non-partners in your firm. Titles would include senior vice president or principal; (3) Middle Professionals: Typical titles would include vice president or associate; (4) Entry Professionals: Typical titles include assistant vice president or analyst; and (5) Administrative Staff: The administrative staff would include the accounting staff, HR professionals and secretarial staff.
The survey results speak for themselves but one clear trend has emerged.
Read more... | | Non Partners Increase Share of Carried Interest By Danielle Fugazy
June 2009 Every incoming class of private equity professionals want to know what their carry is going to be. Doling out carried interest stakes to new employees is commonplace now and it has been for quite some time. According to the most recent carried interest survey conducted by Private Equity Professional Digest, carry has become so widespread that most private equity firms give entry-level professionals a small percentage of carried interest and some even allow administrative staff to participate in the carry. “If you go back ten years ago, only partners received carried interest. But when the market started taking off in 2000 there was tremendous pressure to hire the best people and all of a sudden carried interest was being given to people below the partner level. It soon became the competitive norm,” says Michael Holt, managing director of Holt Private Equity Consultants.
Read more... | Good News for Limited Partners on FAS 157 By Katita Palamar and Brenlen Jinkens
June 2009  Limited Partners have been struggling with how to apply Financial Accounting Standards Board (“FASB”) Standard 157 requirements for quite some time now. As a secondary market advisor to private equity limited partners and a provider of private equity monitoring and diligence services, Cogent Partners has had numerous conversations on this subject with limited partners and other market participants. It now seems that relief may be on the way, as the FASB acknowledges the difficulties in applying the complex FAS 157 requirements to private equity assets.
The dilemma goes back to 2006 when FAS 157 was first issued. While the standard did not create the need to report at fair value (this was already a requirement), it made clear that limited partners could not simply accept the net asset value (“NAV”) figures provided by general partners.
Read more...
| | The Recessionary Fraud Double Whammy By Richard Powell
May 2009  The prospect of being on the wrong end of a fraud is an unnerving one for businesses at any time. In turbulent times like these though, the impact that a fraud may have can be far more marked than under happier economic conditions. Unfortunately, the probability of a new fraud being perpetrated — or of a longer running fraud finally coming to light — is far higher in a recessionary climate.
To make matters worse, the well-intentioned cost cutting programs which many corporates are putting into place might reduce the efficiency of anti-fraud measures — just when they’re needed the most. It’s a sad fact of life in recessionary times that instances of fraud will be on the rise. Pick up any newspaper and you’re far more likely to find yourself reading about a fraud coming to light than you were a couple of years ago. There also seems to be no limit to their scale — with some frauds being sizable enough to bring down whole companies. Read more...
|  The Good, the Bad and The Ugly: Options for Private Equity in the Current Business Downturn
By Mark Rittmanic
CEO and Founder
ForteCEO
March 2009
Private Equity owned businesses are tripping loan covenants, being asked to inject fresh equity, and filing for bankruptcy protection in record numbers. The carnage is likely to increase as the steep falloff in business accelerates in 2009. Even now lenders are staffing up their workout groups to prepare for the onslaught, and being more aggressive with troubled businesses.
In today’s adverse business environment, is there anything that can be done to prevent getting to this stage? Despite not having a magic wand to fix the economy (growth makes up for a lot of evils) and get credit flowing again, there is something proactive private equity firms can do to improve the survival odds of their portfolio companies. Address the classic leadership dilemma in a new way.
Read more...
| |  Asset Disaggregation: A Strategy to Faciliate Acquisitions and Exits
By Richard L. Kaye
Executive Vice President
The Hilco Organization
February 2009
Acquisitions, whether the target is a platform company or an add-on, almost always involve expendable assets regarded as surplus, duplicative, underperforming, or not synergistic with the strategic direction of the go-forward business. Closing these transactions can challenge even the most astute negotiators. Many a deal has fallen through simply because buyer and seller can’t to come to terms on how to handle the unwanted assets.
Now comes “Asset Disaggregation,” a concept from The Hilco Organization that is being employed by private equity groups and investment bankers to systematically remove troublesome assets that otherwise might be a major obstacle to getting deals done.
Read more...
|  Introduction to the 2008 Marketing Best Practices Survey By Danielle Fugazy
December 2008 Editors Note: At some point or another every private equity professional has said, “I wish I knew what the banker thinking?” Well, wish no further. Private Equity Professional Digest surveyed more than 400 investment bankers to find out what’s on their minds when it comes to private equity firms, deal making and best practices. Private Equity Professional Digest would like to thank Private Equity Info for helping us with contacting the participants for the survey. In the early days of designing the survey and laying out the requirements we contacted Andy Jones, the head of Private Equity Info, to get his help in contacting investment banks to invite them to participate in the survey. The Private Equity Info database delivers quality data that is consistently accurate and up-to-date. We recommend you give it a try (www.privateequityinfo.com). The 2008 Marketing Best Practices survey was conducted from October 15th through November 15th with 414 investment banks participating. The survey was 42 questions long and covered 5 areas.
Read more...
| | Results of the 2008 Marketing Best Practices Survey By John P. McNulty
December 2008 In this article we provide the results of the 2008 Marketing Best Practices - Investment Banks survey in a graphical format.
Private Equity Professional Digest would like to thank Private Equity Info for helping us with contacting the participants for the survey. In the early days of designing the survey and laying out the requirements we contacted Andy Jones, the head of Private Equity Info, to get his help in contacting investment banks to invite them to participate in the survey. The Private Equity Info database delivers quality data that is consistently accurate and up-to-date. We recommend you give it a try (www.privateequityinfo.com). Be sure to also read the accompanying article which provides a narrative of the survey results. Below are the survey results in a graphical format.
Read more...
|  Private Equity on the Hunt for CEO's: Private Equity Salaries Rising
By Mitchell Feldman
December 2008
As the economic crisis continues to unfold and layoffs and cost cutting plague the financial sector, private equity is bucking the trend. The Private Equity Analyst-Holt Compensation Study shows that private equity firms of all types - buyout, venture, mezzanine - continued to hand out generous increases in compensation in 2007 and into early 2008. Moreover, the report finds that hiring was also strong. Right now, CEO jobs are opening up as private equity firms, preparing to take control of distressed companies, look to hire chief executives to bolster teams that manage troubled businesses. A recent Financial Times report underscores this view adding that banks are also looking to hire private equity executives. “The hiring spree comes in spite of the push by many banks to shed tens of thousands of jobs in other areas of their business, particularly investment banking,” states the Financial Times. The report quotes Philip Davidson, Head of Restructuring at KPMG, as saying, “The idea is to hire people who can actively manage these companies and sit on their boards to nurture them along and put the right managers in.”
Read more...
| |  Private Equity in a Post Metldown Monday World
By Jack Perkowski
October 2008
As a guest speaker at a prestigious Middle East Conference held in Dubai recently, I had a great opportunity to hear the latest thinking on the future of private equity (PE) in a post Meltdown Monday world from the best in the business. The conference brought together approximately 500 private equity professionals from firms and investors with a presence or interest in MENA. (The term MENA is an acronym for "Middle East and North Africa" and refers to the region that extends from Morocco in northwest Africa to Iran in southwest Asia, including all the Arab Middle East and North African countries except Turkey). The roster of speakers included the founding partners of at least three global private equity firms, as well as the founders and principals from dozens of other leading international and regional investors.
Though the views of the professionals varied in the degree and intensity in which they were held, there was a general consensus around a number of points.
Read more...
|  Two & Twenty: Taxing Partnership Profits at Private Equity Funds
Introduction by John McNulty
September 2008 According to private equity legend, this article by Victor Fleischer started the carried interest is ordinary income not capital gains debate that raged in Washington late last year and early this year and may again become an issue in 2009. In late 2007 a draft of Victor’s paper was discovered on the web by a congressional staffer who was looking for a source of tax revenue to offset the rollback of the alternative minimum tax. Congress’ Joint Committee on Taxation estimates that changing the tax treatment would result in additional tax revenue of about $3.0 billion a year.
The prospect of closing a loophole for private equity practitioners and lowering the taxes on middle class Americans was just too juicy to pass up. The carried interest issue became front-page news and was the subject of hearings on Capitol Hill. Politicians that got involved with it included Congressman Sander Levin ( D-MI), Congressman Charles Rangel (D-NY), Senator Charles Schumer (D-NY), Senator Charles Grassley (R-IA) and Senator Max Baucus (D-MT). In November 2007, the House of Representatives passed legislation that raised the tax on carried interest. The legislation was fought by the US Chamber of Commerce, the Private Equity Council and Americans for Tax Reform and was supported by MoveOn.org and the Service Employees International Union’s Private Equity Project.
Before we continue, here is the paper’s abstract:
Read more...
| |  Private Equity Says Hola to Latino Firms By Edward Iwata
August 2008
As a boy on the rough streets of Washington Heights, NY, 46-year-old Marcos Rodriguez saw his father toil as a hotel waiter to raise his kids. His dad, once a successful Havana businessman, had lost his land to the Cuban regime.
Vowing to honor his parents' hard work, Rodriguez earned an MBA from the University of Pennsylvania's Wharton School, worked for GE in Mexico, then became a successful financier.
"One great lesson I learned from my parents," Rodriguez says, "is that no one can take away what's in your heart and in your head."
Read more...
|  Create Rapid and Measurable Change in Your Portfolio Companies
By John Kopeck
August 2008
Value is created through change. It is as simple as that.
Adding rapid and sustainable value to a business is not for the faint of heart. Many investors only want to buy companies that already have the growth and profitability levers in place to create value quickly. But these firms will often command price premiums, as someone has already done the “heavy lifting” required to put the firm on the path towards value creation. So what happens when a company is not doing well? Or when the value of the business is not where you want it to be?
We have spent a significant part of our careers working with business owners to help them implement significant and lasting change in their companies. Our experience proves that by identifying and fixing impediments to value creation, you can add significant value to the business and turn around negative trends within 3-12 months. This is done by identifying and pulling key value generating levers – hard. And you had better have the right people pulling them.
Read more... | |  Private Equity Investments in the Life Sciences
By Mark Reiboldt
July 2008
I haven’t written on healthcare topics in a while, primarily because the sector is so bad as far as the public markets are concerned; however, I’ve been thinking a lot lately and discussing with a number of people about private equity activity within the healthcare space.
First of all, let me say that ‘healthcare’ is probably too defined of a term when referring to investment opportunities in that industry. Most people use the term ‘life sciences’ so as to include all of aspects of healthcare, not necessarily the activity between the doctor and patient (either way, I will typically use the terms interchangeably). Indeed, today’s market has drastically expanded the healthcare or life sciences space, and today, there is perhaps more opportunity for very significant investment in the indirect providers of healthcare, as opposed to the traditional providers (i.e., healthcare services firms).
Read more... |  Holding Up a Mirror to the SEIU
By Diana Furchtgott-Roth
July 2008
On July 17, in New York and 50 other cities, one of America's biggest unions, the Service Employees International Union, will try to demonize prominent New York financier Henry Kravis, a founding partner of the private equity firm Kohlberg Kravis Roberts.
The SEIU already has attempted to besmirch Mr. Kravis on its Web site for paying too few taxes, even though it does not accuse him of illegal activity. It asserts that because of tax loopholes, Mr. Kravis's taxes are too low. It wants higher taxes for private equity partners, with the proceeds used for middle-class tax cuts and health care.
The pep rallies are another in a series of SEIU efforts to attack private equity firms. Apart from the silliness of making Mr. Kravis its target when its complaint really lies with Congress, the SEIU would do better to look in the mirror. In its own treatment of workers, especially worker pension plans, it falls short.
Read more... | |  Deception and Greed at the SEIU
By Jeff Long
July 2008
For more than two years the Service Employees International Union has made private equity its target. Strikes and marches that may come to mind when one thinks of a union movement are long gone. In its place the SEIU has staged more outlandish types of protests, mostly aimed at the venerable Carlyle Group.
For example, the SEIU bombarded Henry Kravis’ house asking passerbys to sign a petition giving Kravis a tax break, they sneaked into a private equity conference to harass David Rubenstein, a founder of the Carlyle Group, while he was giving a speech, and wore Rubenstein masks in front of the offices of Carlyle while handing out Sugar Daddy suckers.
Read more... |  Beware the Forgotten Founders: An IP Due Diligence Primer
By Brent C.J. Britton
June, 2008
Intellectual property due diligence is a component of nearly every M&A and private equity transaction. When acquiring or investing, a buyer's primary interest in a target company is often the perceived value of its IP portfolio. Even when the buyer isn't initially targeting IP per se, the IP portfolio nearly always forms a material part of the transaction, especially given that most authorities peg the value of intangible assets at anywhere from 25% to 80% of the average company's total valuation.
Because of the expense of patent litigation and the increasing activity of the IP market makers, the deal can hinge on high-quality IP due diligence. The goal is to accurately map out the territory that the target company has procured for itself in a volatile IP landscape, and identify the soundness of the assets being purchased and potential risks.
Read more... | |  The Deal Sleuth: American Capital Strategies Pulls Out of Merisel Buyout
By Thomas Kirchner
June 2008 Another addition to the graveyard of busted mergers: business development company American Capital Strategies (ACAS) has terminated its agreement to buy Merisel (MSEL) under the “material adverse change” clause that has become a standard excuse for buyer's remorse. After the exchange of multiple letters between the two firms, Merisel stock reacted predictably with a steep drop and now has a market capitalization below its net cash, despite generating positive earnings and cash flow in 2007.
Read more...
|  Executive Compensation: Public vs. Private Equity Controlled Companies
By Joseph E. Bachelder III
June, 2008
How do executive pay programs in publicly traded companies compare with those in private equity controlled companies? Can valid comparisons be made or do differences between the two environments prevent meaningful comparisons of pay packages? To the extent comparisons can be made, do they support, or not support, suggestions in the media that private-equity-controlled companies are attracting key executives away from public companies by offering them larger pay packages?
CURRENT COMPENSATION
Salaries in public companies tend to be higher than salaries in private-equity-controlled companies of comparable size and type. This reflects, in part, the emphasis in private-equity-controlled companies on preserving cash. It also reflects the primary "lure" of private-equity-controlled companies in offering (or being perceived as offering) greater long-term equity opportunities than are offered by comparable public companies (See further discussion on this point under heading of Long-Term Incentives below).
Read more... | |  Private Equity and the Public Good
By Stephen F. Diamond
May 2008
The collapse of the credit markets over the last year has hit more than just the homebuilding and mortgage sectors of the economy. As interest rates increased, private equity, or “PE,” an important new form of financial capital, was also rocked on its heels.
PE funds have grown substantially in size as well as political and financial significance in the last decade. The Blackstone Group, for example, one of a handful of top-tier PE funds, recently announced a takeover of the Hilton Hotels Corporation for $26 billion. Cerberus Capital, another major PE player, surprised many when it announced plans to buy the troubled Chrysler Group from DaimlerChrysler—a pioneering venture into the top ranks of industrial America. Kohlberg Kravis Roberts & Co. (KKR), one of the oldest PE funds, currently owns such a large number of independent businesses that it is, indirectly, the second largest employer in America, with 560,000 employees, twice as many as General Motors, ahead of McDonald’s and just behind Wal-Mart. Today’s PE fund managers have been hailed widely in the business press as the new “masters of the universe,” pushing aside bond traders and investment bankers, not to mention lowly chief executive officers. The managers of the largest funds are billionaires. Henry Kravis, the second “K” in KKR, has a wing named after him at New York’s Metropolitan Museum of Art.
Read more... |  Gridiron Capital Begins Consolidation of Landscaping Industry
By Marisa Palmieri & Nicole Wisniewski
May 2008
Ten years after the LandCare USA rollup, private equity firm Gridiron Capital announced its formation of Yellowstone Landscape Group, a new full-service landscape company with an aggressive growth plan.
Yellowstone, with headquarters in Dallas, entered the market yesterday with the acquisitions of Houston-based BIO Landscape & Maintenance and Atlanta-based Piedmont Landscape Contractors. Amvest Financial Group advised Gridiron on the transaction, of which financial terms were not disclosed.
According to figures provided for Lawn & Landscape’s Top 100 list (to be published in June), BIO and Piedmont grossed $19 million and $30 million, respectively, in 2007, making Yellowstone an instant $50-million industry presence with a footprint that covers Georgia, Texas, Virginia, Tennessee, South Carolina and Florida.
Read more.... | |  Carry Gets Spread Among the Ranks By Danielle Fugazy
April 2008
Who’s getting it and who isn’t? That’s the big question on everyone’s mind when it comes to the elusive carried interest. While the industry used to be made up of a couple of big dogs at each firm who kept most of the carried interest, times are changing. Over the past several years the industry has become more institutionalized and as a result the carry is being spread more evenly throughout the ranks.
One major reason for this is that firms are becoming more cognizant about locking in their next generation of leaders in hopes of building a strong, long standing businesses.
“Giving professionals ownership in the franchises they are helping to build only makes sense,” says Brian Korb, head of the private equity practice with Glocap, an executive recruiting firm. “If you want to have staying power you have to share the wealth.”
Read more... |  The Private Equity Professional 2008 Carried Interest Survey
By John P. McNulty
April 2008
The PEPD 2008 Carried Interest Survey of 136 private equity funds showed that on a weighted average basis Partners at private equity firms are allocated 75% of the carried interest and that Top Professionals, the most senior non-partners in the firm, maintain a 16% share of the carried interest.
In analyzing the results of the survey, the allocation of carried interest was generally equal among the various classes of professionals despite variations in the fund size.
For funds with capital of less than $3 billion, Partners were allocated about 75% of the carried interest and Top Professionals were allocated 16%. The remaining 9% is divided amongst the Middle Professionals with a 7% allocation and each of the Entry Professionals and Administrative Staff taking 1% apiece.
Read more... | |  The Alternative to an Initial Public Offerring By John P. McNulty
March 2008
For over a year, the market for initial public offerings (IPO) for promising private companies has been slow. In 2007, there were just 234 IPOs, down from a decade high of 486 in 1999. As a result, private companies and their investors (including venture capital and private equity backed companies) have been left without a crucial exit strategy. More importantly, these private companies that might have completed an IPO have been deprived access to the critical growth capital that the public markets can provide them. An alternative to an initial public offering is needed.
The challenging IPO market has given rise to an increasingly popular alternative to an IPO to raising capital—alternative public offerings, which combine a reverse merger into a public shell and a private investment in public entity (PIPE). According to DealFlow Media, in 2007, 222 reverse mergers were completed and 45% of them included a concurrent PIPE, raising almost $1 billion.
Read more... |  Why Cooperation Wins: Reputations, Expectations and the Fine Art of Negotiation
By Irene Kim
February 2008
When it comes to negotiation, nice guys (and gals) finish first. So concludes Kathleen O’Connor, Cornell University’s Johnson School associate professor of management and organizations, who, with Georgetown Management Professor Catherine Tinsley, coauthored “Want the best deal possible? Cultivate a cooperative reputation.” Negotiators known for being collaborative tend to do much better than those known as tough competitors.
It’s going to come as a surprise, particularly to novice negotiators who believe that it’s the tough behaviors – yelling No! and walking out – that carry the day, says O’Connor.
In a series of studies, O’Connor and Tinsley had pairs of MBA students at Georgetown and the Johnson School (Cornell University) conduct week long mock negotiations via e-mail (to mask any visual cues of toughness). For each pair, the researchers manufactured a reputation for one side as being tough, cooperative, or unknown, and informed the other side of his or her partner’s reputation.
Read more... | |  Buyer's Market Coming for Baby Boomer Businesses
By Michael Sipe
President, CrossPointe Capital
February 2008
If you are considering buying or selling a $1 million to $20 million business within the next ten years, you will face unprecedented challenges. The United States is on the leading edge of a massive buyer’s market for manufacturing, distribution and business services companies.
A Bit of Background
In 1998 my firm began counseling companies about the impact the 78 million baby boomer demographic bulge would have on small to medium sized business sales and valuations as Boomer business owners began to retire in about 10-12 years. In other words, right about now. Read more... |  True Stories - The Rose Company
By James A. McCarthy
February 2008
In the summer of 2005 I was working on a tuck-in acquisition for an existing portfolio company. I can’t use the name of the real company, so for purposes of this article let’s call it the Rose Company. The Rose Company was a privately held service company located in Maryland. It was 100% owned by its founder, Chris Moore. Chris had founded the company 8 years earlier (1997) and had grown the company to about $20 million in revenue with $4 million of EBITDA. The company had low to no capital expenditures, as is typical for a service company, and was debt free. In 2001, Chris hired a CEO and began to transition himself out of the day-to-day operations of the company. Chris remained as chairman. Read more... | | 
Material Adverse Change: A Primer By John P. McNulty
January 2008 An often troubling aspect of merger or acquisition agreements is that the buyer will usually not actually buy the company in question until several weeks, if not months, after the purchase price has been negotiated and agreed upon. Events and circumstances may arise causing the value of the enterprise to diminish so significantly that the buyer risks acquiring something for which it did not bargain. As a result, most merger or acquisition agreements include provisions known as material adverse change or material adverse effect (together, MAC) clauses. MAC clauses are intended to allocate the risk of loss in value of the company to the seller. The idea is that the seller should bear the risk if an event or circumstance occurs or becomes known that materially changes the "bargained-for" agreement.
Read more...
|  The 2008 Fearless Forecast By John P. McNulty
January 2008 Ok, we admit that our crystal ball shattered years ago. But, one advantage of staying abreast of the daily news that affects private equity is that you become immersed in the trends and prognostications of others. So, you really don’t need a crystal ball. You just need to watch the market closely and we do that in spades. So below, is our best guess as to what you might expect to see in 2008. • Large deals are out of vogue in 2008
• Middle market deals rule
• The effect of the retiring baby boomers boosts transaction flow
• Legislation taxing carried interest as ordinary income returns again
• Transactions in organic foods and luxury goods surge
Read more... | |  The Eight Pillars of Private Equity
By John P. McNulty
November 2007 "The Eight Pillars of Private Equity" describes the eight core activities of a private equity firm. As private equity professionals, we address on any given day many of the pillars. The most successful private equity professionals are experts in more than one of the pillars. As private equity professionals, we address on any given day many of the pillars. The most successful private equity professionals are experts in more than one of the pillars. The table below presents the “Eight Pillars of Private Equity”.
Read more... |  Bird Doggin' the Deal: An Interview with James Shiloh
By John P. McNulty
November 2007
I was first introduced to James “Jimmy” Shiloh at the 2003 ACG Capital Connection in Minneapolis. Jimmy, a partner in a private equity firm which invests in the middle market, was manning the table next to mine. Jimmy is what you call a “finder”. Many private equity firms have structured themselves as “finders”, “grinders” and “minders”. Finders, as the title implies, are the individuals who find deals. Grinders take the deal to closing. Minders run the investment during its term as a portfolio company. When the investment matures and the decision is made to sell, the minders turn the company back to the grinders and the sale is conducted.
I’ve never met a finder as good as Jimmy. He’s the best “bird dog” I know. Jimmy agreed to speak to Private Equity Professional Digest about being a finder.
Read more... | |  The Touchstone
By John P. McNulty
November 2007
One of the eight pillars of private equity (see the other article in this issue) is the generation of new investment opportunities. A benchmark for our industry is that for every thousand deals that cross your desk - the good, the bad and the ugly - only one hundred or so will have enough merit to warrant taking a closer look. So, the generation of investment opportunities is truly a numbers game. The more deals you see the better your chances of adding one to your portfolio.
When I began in private equity all I did was screen deals. As a result, I looked at thousands of deals and rejected most of them. One day I came upon the story "The Touchstone". This story teaches a valuable lesson. That day, I placed a copy of the story under the glass of my desk. It is still there today.
Read more... |
|
|
