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The Case for an Essential Industry
Private Equity | Public Good
Giordano’s
Peapod
Ulta Sapphire Energy
DeVry University
Bi...
The Case for an Essential Industry
Private Equity | Public Good
Giordano’s
Peapod
Ulta Sapphire Energy
DeVry University
Bi...
Adams Street Partners
Blackman Kallick LLP
CHS Capital
Duchossois Technology Partners
GTCR LLC
IllinoisVENTURES
KPMG
Madis...
1
When individual investors buy stock or
shares in a mutual fund, they invest
their own money in a company or many
compani...
2
As for Illinois, the state ranked eighth in 2011 by investment value, with
$5.2 billion invested in 87 transactions. Ill...
I V C A 2 0 11 A N N U A L R E P O R T 3
Unfortunately, many Americans don’t
understand what private equity is or its
impo...
About 690 private equity-backed companies
call Illinois home and, collectively, they
employ more than 308,300 workers. Fro...
I V C A 2 0 11 A N N U A L R E P O R T
Last year, 93 companies in the state received
venture capital funding compared to 7...
6
accountants who gained experience in
turnarounds, debt transactions or
venture capital.
Many of Chicago’s initial PE lea...
I V C A 2 0 11 A N N U A L R E P O R T 7
8
This GPA won’t qualify you for Phil Beta Kappa or even determine if you graduate.
This GPA – GPA Holding Company, Inc. –...
I V C A 2 0 11 A N N U A L R E P O R T 9
In December 2004, Svoboda, Collins LLC, now Svoboda Capital Partners, invested
mo...
1 0
A SNAPSHOT OF
THE SAVO GROUP
• A successful, award-winning,
on-demand software company
whose revenues have
continuousl...
I V C A 2 0 11 A N N U A L R E P O R T 1 1
Private Equity, Public Good, our theme
for this 2011 annual report, captures
wh...
1 2
A Letter from Darren Snyder
Darren Snyder, IVCA Chairman
“What’s encouraging is that a healthy ecosystem for Illinois ...
I V C A 2 0 11 A N N U A L R E P O R T 1 3
Jan. 18, 2012: IVCA members contributed $90,700 to the IVCA-PAC in 2011, making...
14
May 20, 2011: The IVCA joined Gov. Pat Quinn in launching the Illinois Innovation
Network that aims to give entrepreneu...
I V C A 2 0 11 A N N U A L R E P O R T 1 5
2011 OFFICERS COMMITTEE
Governance
2011 EXECUTIVE COMMITTEE
2011 STAFF
MAURA O’...
1 6
Adams Street
Partners, LLC
Andersen Pacific
Corporation
Apex Venture Partners
ARCH Venture Partners
Baird Private Equit...
Adams Street Partners
Blackman Kallick LLP
CHS Capital
Duchossois Technology Partners
GTCR LLC
IllinoisVENTURES
KPMG
Madis...
The Case for an Essential Industry
Private Equity | Public Good
Giordano’s
Peapod
Ulta Sapphire Energy
DeVry University
Bi...
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2011 IVCA - Private Equity, Private Good

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Each year IVCA produces its annual report "IVCA Viewpoint" to reflect on where we are as an industry, where we've been and where we are going.

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2011 IVCA - Private Equity, Private Good

  1. 1. The Case for an Essential Industry Private Equity | Public Good Giordano’s Peapod Ulta Sapphire Energy DeVry University Bioniche PharmaOrbitzSchool of Rock ATI Physical Therapy 2011 ANNUAL REPORT These nine companies, the majority in Illinois, reflect the breadth of American industries. They are or have been backed by private equity firms; the majority by Illinois firms. They represent the significant contribution that private equity makes to the American economy. More than 14,200 U.S. companies, employing 8.1 million people, are owned by 2,300 private equity firms. ATI PHYSICAL THERAPY PEAPOD Sapphire Energy Orbitz Worldwide GIORDANO’S BIONICHE PHARMA DEVRY UNIVERSITY SCHOOL OF ROCK ULTA Sponsoring Members
  2. 2. The Case for an Essential Industry Private Equity | Public Good Giordano’s Peapod Ulta Sapphire Energy DeVry University Bioniche PharmaOrbitzSchool of Rock ATI Physical Therapy 2011 ANNUAL REPORT These nine companies, the majority in Illinois, reflect the breadth of American industries. They are or have been backed by private equity firms; the majority by Illinois firms. They represent the significant contribution that private equity makes to the American economy. More than 14,200 U.S. companies, employing 8.1 million people, are owned by 2,300 private equity firms. ATI PHYSICAL THERAPY PEAPOD Sapphire Energy Orbitz Worldwide GIORDANO’S BIONICHE PHARMA DEVRY UNIVERSITY SCHOOL OF ROCK ULTA Sponsoring Members
  3. 3. Adams Street Partners Blackman Kallick LLP CHS Capital Duchossois Technology Partners GTCR LLC IllinoisVENTURES KPMG Madison Dearborn Partners Mayer Brown LLP McDermott, Will & Emery Mesirow Financial Private Equity Neal, Gerber & Eisenberg LLP New World Ventures Reed Smith Ropes & Gray Sidley Austin SNR Denton Spencer Stuart Square 1 Bank Sterling Partners The Pritzker Group Thoma Bravo LLC Willis Stein & Partners Wind Point Partners Adams Street Partners LLC Apex Venture Partners ARCH Venture Partners Baird Venture Partners Beecken Petty O’Keefe & Company Duchossois Technology Partners LLC Dunrath Capital Ernst & Young LLP First Analysis Frontenac Company KB Partners Mesirow Financial Private Equity Mid Oaks Investments LLC MK Capital Motorola Solutions Venture Capital New World Ventures Northern Trust Global Advisors OCA Venture Partners Paradigm Capital, Ltd. Prairie Capital Prism Capital Silicon Valley Bank Sterling Partners Svoboda Capital Partners The Edgewater Funds Thoma Bravo, LLC Willis Stein & Partners Wind Point Partners IVCA FOUNDING MEMBERS Provide outstanding support for IVCA in the form of services and/or the highest levels of event sponsorship Baker Tilly Virchow Krause, LLP Edelman Edwards Wildman Kirkland & Ellis LLP Kutchins, Robbins & Diamond, Ltd. McGladrey Silicon Valley Bank SPONSORING MEMBERS Have sponsored at least one event during the year SUPPORTING MEMBERS Design: Avila Creative, Inc. Editorial: Edelman Primary Photography: Steve Ewert Photography Infographic Illustration: Dale Glasgow & Associates Printing: The Fox Company How a Private Equity or Venture Capital Fund Works The firm creates an investment “fund” to invest in private companies from “Limited Partners,” typically: – Pension funds – Endowments – Foundations The fund considers thousands of companies. The fund typically acquires a company that can grow significantly with skills and investment: – Updated business strategy – Additional talent – New equipment & facilities – R&D The company’s value grows significantly. After 3-5 years of focused effort, the company is worth significantly more than at time of investment. The fund invests in 7-10 portfolio companies over the fund’s life. The fund closes. Each portfolio company is sold when a good price is offered. When all of its companies are sold, the fund closes. The initial investment plus profits are distributed: – 80% of profits go to Limited Partners – 20% of profits stay with the fund as “carried interest” 1 2 3 4 6 5 5 1 2 4 3 6
  4. 4. 1 When individual investors buy stock or shares in a mutual fund, they invest their own money in a company or many companies. Private equity investors do, too, with some important exceptions. They buy a significant share of the stock in a company, they take a meaningful strategic role at it and the money they invest primarily is capital raised from sophisticated institutional investors. They invest their own dollars as well, but it’s often a small portion of the fund that they manage. Private equity firms invest and add their expertise to promising private com- panies poised for growth and mature companies in need of assistance. The capital they raise and invest helps them make operational improvements and execute growth strategies that build stronger companies for the long-term. Venture capital – equity investments for the launch, early development or expansion of a business – also is an important part of the private equity industry. Both private equity and venture capital furnish the funds to develop a company and the business acumen to help management drive growth. Private equity serves as a vital engine that helps power the American economy. In 2011, private equity firms invested nearly $144 billion in 1,702 U.S. compa- nies. That funding creates an economic ripple that flows through the economy, preserving and creating jobs and forging growth. Who gains from the investment returns that private equity generates? Millions of Americans who benefit from charitable foundations, university endowments and pension funds.Workers gain from an employer that is put on a successful path. Companies profit from the improvements that private equity owners deliver to make them bigger and stronger. And America gains from an expanding and dynamic economy. While private equity isn’t usually in plain sight, its benefits are felt across the country. More than 14,200 U.S. companies that employ 8.1 million people are backed by about 2,300 private equity firms. One-third of the 212 top privately held companies on Forbes’ 2011 list were backed by private equity. Familiar names include Biomet, Burger King, Dollar General, Harrah’s Entertainment, Hyatt Hotels, Michaels Stores, Petco, Service- Master, Sports Authority and Toys“R”Us. Chicago’s private equity community encompasses 80-plus firms that represent 1,400-plus portfolio companies. Their holdings range from A to Z, including ATI Physical Therapy, Boise Cascade, Cole Taylor Bank, Giordano’s, GrubHub, Red Foundry, Sapphire Energy, School of Rock, Sittercity, U.S. Renal Care and Zorch International. Increasingly, private equity is Chicago. Simply listen to Mayor Rahm Emanuel, who told IVCA members in 2011: “When you look at what makes up the basic building components of a very successful economic culture in a startup community, it is the entrepreneur, the research institutions, the financial backing, as well as the coaching that comes from successful entrepreneurs to help young entrepreneurs who have new ideas to nurture them, sponsor them and encourage them to succeed….I am very confident about Chicago’s future.” The Impact of Private Equity PRIVATE EQUITY SERVES AS A VITAL ENGINE THAT HELPS POWER THE AMERICAN ECONOMY. IN 2011, PRIVATE EQUITY FIRMS INVESTED NEARLY $144 BILLION IN 1,702 U.S. COMPANIES. That funding creates an economic ripple that flows through the economy, preserving and creating jobs and forging growth.
  5. 5. 2 As for Illinois, the state ranked eighth in 2011 by investment value, with $5.2 billion invested in 87 transactions. Illinois represented 3.6 percent of all U.S. private equity investments in 2011, and its number of transactions ranked fifth among the states. $5.2 BILLION
  6. 6. I V C A 2 0 11 A N N U A L R E P O R T 3 Unfortunately, many Americans don’t understand what private equity is or its importance to the economy. That’s been vividly apparent as our industry has gotten caught up in the frenzy of presidential election politics this year. “In short, that’s been a real wake-up call for us,” says Jim TenBroek, 2011-2012 IVCA Chairman. By nature, private equity firms are wary of explaining what they do or the difference they make. TenBroek relates that he used to simply reply, when asked what he did, that he was “an investor.” More recently, he adds, he came to “the realization that many people outside our world don’t really understand capitalism all that well; they certainly don’t under- stand how the financial world works.” And the failure to communicate the arguments that support private equity’s role in the economy has hurt our industry. “The private equity industry has done a terrible job of explaining what it does,” asserts Colin C. Blaydon, Director of Dartmouth’s Center for Private Equity and Entrepreneurship. But that reticence to explain private equity’s worth is evaporating. The industry is striking back with strong messages about its contributions delivered by the Small Business Invest- ment Alliance (SBIA), National Venture Capital Association (NVCA) and the Private Equity Growth Capital Council (PEGCC), and other related associations, such as IVCA. Still, many Americans consider private equity to be that business where indi- viduals and investment firms buy companies and then reap rich returns when they sell them. They’re not com- pletely wrong, but they don’t recognize the value added to private companies from experienced investors – they don’t understand all of the hard work that occurs between buying the company and selling it that creates the value. CONSIDER THE FOLLOWING CASE FOR PRIVATE EQUITY. What Private Equity, or PE, firms do: They buy companies. Often, they’re underperforming for some reason or other – some times the owner is not even aware of the underperformance. An investor can imagine a better future for them. The PE firm and its professionals can use their expertise and resources to strengthen the company and then, after a few years, they can sell the company again for a profit. If it all works, the company grows, creates new jobs and helps the economy. If it doesn’t work, the investor does not earn a big return on investment, or ROI. And if there is no return on investment, the PE investor is out of business because Limited Partners will not reinvest unless the returns are great. PE firms want to earn an ROI. It’s no different than any American investor who buys public stocks and bonds, expecting that those investments will grow in value over time and they will make money from dividends or when they sell it. Private equity investors, who use their skills and experience to grow the companies in which they invest, must hold their fund holdings for at least 10 years. They don’t always make money on every company because, as individual investors in stocks and bonds know, it’s a risky business. Occasionally, losses are in- evitable, especially in a rotten economy. Across the portfolio of companies, however, a VC/PE firm must show a good return. Millions of Americans owe their continued employment to the abilities of these firms. Consider that of the 212 companies on Forbes’ 2011 roster of top private companies, 30 percent were funded by private equity. And in 2010, 11 percent of the private sector repre- sented companies once venture backed. The Case for Private Equity PRIVATE EQUITY FIRMS RAISE FUNDS FROM LIMITED PARTNERS AND COUPLE THEM WITH DEBT TO BUY COMPANIES AND SELL THEM — EITHER TO OTHER COMPANIES OR TO PUBLIC INVESTORS. They and venture capital firms, part of the larger private equity universe, strive to make a company excel or to reinvigorate it. Every day, that process plays out across America in more than 14,200 private equity-backed companies, helping employ millions of people and improve our economy.
  7. 7. About 690 private equity-backed companies call Illinois home and, collectively, they employ more than 308,300 workers. From 2002 to 2011, private equity firms invested an estimated $114 billion in Illinois-based companies. $114 BILLION 4 That defines the broad swath of private equity on our economic landscape. In Chicago, 80-plus private equity firms represent 1,400-plus portfolio companies, many of which are headquartered in Illinois but most are elsewhere. That’s important, too, as the prowess of the state’s private equity industry spreads far beyond Illinois’ borders. Familiar Chicago-based companies backed by private equity include CDW, Giordano’s, Nuveen Investments, Levy Restaurants, Private BanCorp, SAVO Group and ServiceMaster, among others. What Illinois PE Firms Do: Talk to PE investors and academics who know the industry in Illinois and they’ll say private equity is heavily weighted to the middle market and to focusing on operational improvements, and not just financial engineering. Chicago, they say, is considered a middle market-savvy city. Increasingly, PE firms here also prefer to concentrate on sector-specific expertise. Linden LLC, for instance, specifically focuses on health care. Brian Miller, a managing partner there, recalls that in 2002, when he helped found Linden, specialists using “a focused team working with operating knowledge, this was the new model.” So does Beecken Petty O’Keefe & Company and Water Street Healthcare Partners, among others. Anderson Pacific Corporation invests in the media and telecommunica- tions industry, and ARCH Venture Partners concentrates on converting technologies from universities into companies. Other firms that invest in various industries also use focused teams that specialize in one particular area. Sterling Partners, for instance, engages professionals who concentrate on finding promising business services, education and health-care sector candidates for the PE firm’s portfolio. Wind Point Partners, with a focus on top grading management and driving change through a clear value-creation plan, leverages the industry expertise of its CEO partners for the particular target investment. PE Firms’ Investments in Illinois and the U.S: In 2011, U.S. private equity firms invested $144 billion – representing 55 percent of $274 billion in global investments – in 1,702 transactions.1 American firms’ investments dwarfed those of any other country. As for Illinois, the state ranked eighth in 2011 by investment value, with $5.2 billion invested in 87 transactions. Illinois represented 3.6 percent of all U.S. private equity investments in 2011, and its number of transactions ranked fifth among the states.2 About 690 private equity-backed companies call Illinois home and, collec- tively, they employ more than 308,300 workers. From 2002 to 2011, private equity firms invested an estimated $114 billion in Illinois-based companies.3 In 2011, venture capital activity in Illinois increased 30 percent over 2010, with both the number of companies receiving an investment and the dollars invested climbing. Last year, 93 com- panies in the state received venture capital funding compared to 74 the year earlier.The investments totaled $1 billion, exceeding the $930 million invested in 2010.4 The top four companies for venture dollars invested in 2011 were Groupon, Inc., with $136.2 million; Mu Sigma, Inc., 1 Sources: PitchBook, Thomson Reuters, Private Equity Growth Capital Council analysis 2, 3 Sources: PitchBook, PEGCC analysis 4 Sources: PitchBook, Thomson Venture One and IVCA research.
  8. 8. I V C A 2 0 11 A N N U A L R E P O R T Last year, 93 companies in the state received venture capital funding compared to 74 the year earlier. The investments totaled $1 billion, exceeding the $930 million invested in 2010. $1B 5 $133 million; GrubHub, Inc., $70 million; and Braintree, Inc., $69 million. The State of Illinois recognized the potential returns from private equity funding as well. Since 2003, investments by the Illinois Treasurer’s office in venture capital and private equity funds – through its Technology Development Account – has led to 3,500 jobs in 60 pri- vate Illinois companies. This represents a 117 percent jump in jobs since the time of investment in these companies, reflecting a 90 percent growth in revenues since funds were invested in them. How did this happen? In 2003, the state treasurer was authorized to com- mit 1 percent of the state’s investment portfolio into Illinois venture capital and private equity firms with a goal of investing in growth companies in the state. Managed by Northern Trust Global Advisors, the state’s investment in 14 venture capital and private equity firms triggered tremendous job creation for the state, thanks to a 17.5 times match of private investor dollars. The state treasury’s investment totaled $44.8 million since 2003 and private partnerships added another $742 million – making total investments in these 60 companies of $787 million through 2011. And $11.3 million has been returned to the State Treasury from the sale of portfolio companies. In 2011, the state treasurer was autho- rized to commit 2 percent of the state’s investment portfolio into venture capital and private equity funds dedicated to investing at least two times the state’s money into private Illinois companies. This fund, Technology Development Account II, also authorizes the treasurer to seek additional investors for a “side- car fund” that will allow corporations, endowments, foundations and pension funds to invest cost-effectively in Illinois companies. PE Firms as Employers: Contrary to conventional wisdom by many, private equity firms don’t suddenly jettison their employees during finan- cially difficult times. A recent report by Moody’s Investors Service shows that such companies are less likely to be liquidated in tough times. It suggests that private equity does more to save the jobs of workers at struggling companies than do other types of owners. The Moody’s study reviewed more than 1,000 situations where companies defaulted on their debt. Two hundred involved companies had undergone leveraged buyouts backed by private equity; the others had not.The data indi- cates default rates among companies with similar credit ratings were virtually the same for all companies, whether or not they were owned by private equity. Why may PE firms stick with troubled companies longer than other types of owners? It might reflect their experience in repairing troubled companies, the strong negotiating position they usually have with their lenders and their capa- city to invest swiftly in firms needing repair. Importantly, they have fiduciary responsibility for their investors’ dollars as well as their own, and typically will pursue all courses to save an investment. Who the PE Leaders are: They are specialists at what they do, and many are former executives or pro- fessionals at companies in the fields they specialize in. Many professionals in the healthcare or energy areas, for instance, worked in the medical and energy fields before joining a PE firm. Other PE leaders are entrepreneurs, investment bankers, lawyers or
  9. 9. 6 accountants who gained experience in turnarounds, debt transactions or venture capital. Many of Chicago’s initial PE leaders worked at the city’s largest banks and gained investing expertise over many years. Stanley Golder, considered Chicago’s PE patriarch, built the private equity program at First Chicago Corp., where he backed Federal Express, before founding Golder Thoma & Co. Carl D. Thoma, also at First Chicago and cofoun- der of Golder Thoma & Co., co-founded and served as managing partner at Thoma Cressey Equity Partners. John A. Canning, Jr. replaced Golder at First Chicago and he later founded Madison Dearborn Partners. Mark Glennon, Managing Director at Ninth Street Advisors, learned much about PE as law partner at Holleb & Coff. Laura Pearl, Managing Director of Ceres Venture Fund, is a certified public accoun- tant who served four years at Ernst & Young before joining Frontenac Company in early 1985 and became partner in 1987. And Bryan Daniels, Christopher Killackey, Stephen King and Darren Snyder at Prairie Capital are alums of American National Bank and Trust Co. of Chicago. Chicago PE Partners Give Back: Peruse cultural, philanthropic, commu- nity and other nonprofit organizations’ boards in the Chicago area and you likely will find PE firm partners and other PE professionals well represented among their directors. But, like their firms, they rarely seek public notice. Many favor lesser-known nonprofits, viewing them as “entrepreneurial undertakings,” says Carl Thoma, Co-Founder and Managing Partner at Thoma Bravo LLC. (He is a long- time supporter of Chicago Shakespeare Rep and Writer’s Theatre in Glencoe.) At the Old Town School of Music, it’s guitar-playing Rob Ospalik, a partner in Baird Private Equity. At Misericordia, it’s Paul Carbone of The Pritzker Group. John A. Canning, Jr., Chairman of Madison Dearborn Partners, is a director of Children’s Inner City Educational Fund and a trustee of the Big Shoulders Fund and the Field Museum, among others. Ellen Carnahan of Machrie Enter- prises is active in Communities in Schools Chicago and the Chicago Network, and Alex Washington of Wind Point Partners and Mark Anderson of GTCR are directors of Chicago Foundation for Education. Darren Snyder, a partner in Prairie Capi- tal, also is active in education, serving as a founding board member of Polaris Charter Academy in Chicago’s West Humboldt Park neighborhood. Bret Maxwell, Managing General Part- ner at MK Capital, serves on the board of Mt. Sinai Hospital and Stephen Beitler, Founder and Managing Director of Dunrath Capital and a former Green Beret, is a board member of the Special Operations Warrior Foundation that pro- vides college scholarships and counseling to children of Special Operations personnel killed in action or training. And the list goes on…. Summing Up Private Equity: It’s clear, despite a fog of recent criticism, that private equity plays a central role in the nation’s economy. Please recognize that when you order takeout food from GrubHub, stay at a Hyatt Hotel, gamble at a Harrah’s casino, exercise at an LA Fitness Club or buy a child a gift at Toys “R” Us…they’ve all been backed by private equity. A recent report by Moody’s Investors Service shows that such companies are less likely to be liquidated in tough times. It suggests that private equity does more to save the jobs of workers at struggling companies than do other types of owners. Please recognize that when you order takeout food from GrubHub, stay at a Hyatt Hotel, gamble at a Harrah’s casino, exercise at an LA Fitness Club or buy a child a gift at Toys“R”Us…they’ve all been backed by private equity.
  10. 10. I V C A 2 0 11 A N N U A L R E P O R T 7
  11. 11. 8 This GPA won’t qualify you for Phil Beta Kappa or even determine if you graduate. This GPA – GPA Holding Company, Inc. – is recognized as an industry leader in substrates and expertise for the graphic arts industry.With its headquarters located just west of Chicago in McCook, GPA is the leading provider of pressure sensitive papers, specialty papers and printable films for offset, digital, and other printing processes. Founded in 1940 as a small printing paper business, the company over the years became more of a niche business known as Gummed Papers of America with a focus on adhesive-backed papers. As industry technology advanced, it focused exclusively on selling label papers, and changed its name to GPA, America’s Label Experts. Throughout the years, it saw a need for value-added products that would help print- ers grow their business and expanded its offering to what it has become today. Much of GPA’s growth is a result of a commitment to innovation, as well as a broad product line and consultative approach to selling. The company also stays true to the ideals it was founded on; its mission is “to offer a service as dependable as the product we deliver.” The company has grown rapidly. In the past eight years, it has recorded double-digit revenue growth in six of them. Only in the recession did its revenue growth slow and, in 2009, it did decline. But in 2010, that trend was reversed as revenues climbed 15.5 percent and in 2011, they rose another 13.6 percent. CASE STUDY: GPA ® Management Tom Brooker, CEO Private Equity Partners Svoboda Capital Partners Northstar Mezzanine Members of Management Prairie Capital A SNAPSHOT OF GPA • Providers of specialty substrate solutions to the graphic arts industry. • Revenues have grown by double digits in six of the last eight years, including in 2010 and 2011. • Employment has risen 43 percent since 2004 to 93, including nearly half (47) from Illinois. • Named among Best Workplaces in America by the printing industries for five years in a row.
  12. 12. I V C A 2 0 11 A N N U A L R E P O R T 9 In December 2004, Svoboda, Collins LLC, now Svoboda Capital Partners, invested more than $7 million from its Svoboda Fund I to buy out two largely absentee investors in GPA to acquire the company. The Chicago-based private equity firm partnered with management and Prairie Capital III, a secondary investor. Svoboda invests in and helps build leading value-added distribution, consumer and business services companies in the lower middle-market. The firm particularly likes to invest in Illinois and Midwest companies. “The most appealing part is that these investments are close to us and allow us to work more closely with their management teams,” explains Rick Harpster, a Svoboda Principal and GPA director. In June 2010, GPA named Tom Brooker, former president and CEO of Nashua Corp., as its President and CEO. That same month, the company acquired Atlanta-based TEC Papers USA, which became GPA’s fourth distribution center, joining the others in Connecticut, Chicago and Los Angeles. Reflecting Svoboda Capital’s nonfinancial assistance to GPA, that acquisition was structured and negotiated by the Svoboda team, which had a relationship with TEC Papers’ prior owner. In addition to its four main sales and service hubs, GPA also has 11 other third-party logistic warehouses throughout the United States, as well as one in Canada. In October 2011, with its Fund I nearing the end of its life, Svoboda Capital Partners recapitalized GPA and, in effect, renewed its partnership with GPA management. Svoboda partnered with management, Ellipse Capital and Northstar Capital, which provided subordinated debt to complete the transaction. PNC Bank provided a senior debt facility. Today, GPA employs more than 30 sales representatives and product managers, as well as others who work closely in partnership with its customers. It has a total of 93 employees, with 47 in Illinois. The company has grown notably since 2004 when it had 65 employees, with 38 in Illinois. GPA has been recognized as a leader for its practices and products within its indus- try with various awards, including the 2012 Jack Glacken award for their outstanding contributions to the Digital Solutions Cooperative (Dscoop) community. In recent years, GPA also has won a variety of awards within the printing industry, including a Gold Ink Award, multiple awards in the International Association of Printing House Craftsmen (IAPHC) International Gallery Competition, and a Premier Print Award. The SAVO Group is a Chicago-based market leader in sales enablement. SAVO powers direct and channel sales teams at the nation’s largest companies, helping to execute their sales initiatives by providing real-time access to relevant sales materials, subject matter experts and coaching - anytime, anywhere. By tracking and analyzing successful behavior, SAVO provides executive insight for better decision making and performance management. SAVO’s cloud-based architecture provides mobile applications for the iOS, Android and Blackberry platforms, giving sellers the most critical content, competitive intelligence and subject matter expertise at the moment of need. Founded in 1999, SAVO started out providing custom sales solutions to clients that included Diners Club, LaSalle Bank and Northern Trust. Over time, it became clear that the challenges at these companies reflected a much broader disconnect between executive initiatives and sales team execution. An inability to manage and leverage marketing collateral and other sales assets effectively prevented revenue growth. In response, SAVO developed its own on-demand solution, which continues to Management Mark F. O’Connell President and CEO Private Equity Partners Sterling Partners SAP Ventures CASE STUDY: The SAVO Group ® For the fifth year in a row in 2011, GPA also was named among the Best Workplaces in the Americas by the Printing Industries of America/Graphic Arts Technical Foundation for its exemplary human resource practices and dedication to employee success.
  13. 13. 1 0 A SNAPSHOT OF THE SAVO GROUP • A successful, award-winning, on-demand software company whose revenues have continuously grown (by 20 percent for each of the past seven years). • More than 200 employees. • More than $25 million in recurring client bookings from top-tier U.S. companies improve sales and marketing productivity at major companies. SAVO enhances its sales-enablement tools constantly. This includes the development of a new social collaboration application and deep business insight via a new reporting and analytics engine. SAVO also uses a wide array of eminent partners, from Oracle and Microsoft to SAP and salesforce.com, to help with its mission. This journey took time – and financing.When the company first began, three employ- ees (including its co-founders) were at the helm. In six years, the company expanded to 30 employees. While SAVO’s organic growth continued each year, executives looked for an extra push to propel them forward. In September 2005, Sterling Partners invested $10 million in SAVO.The funds were used for expansion, including hiring, technology development, marketing and sales initiatives. This provided SAVO with the needed fuel to expand their growth rate. Sterling’s contributions also exceeded funding. The firm helped SAVO refine its organizational structure as it grew and assisted in developing a business model for middle-market companies. In June 2011, SAVO secured $14 million in financing from SAP Ventures and Sterling Partners. The funds support its rapid expansion and continued innovation of SAVO’s sales enablement platform. SAVO’s workforce has grown to nearly 200 nationwide, and its annual revenue continues to grow year over year (20 percent for each of the past seven years). And, SAVO receives more than $25 million in recurring client books from top-tier U.S. companies. The future continues to look bright. Mr. O’Connell, for one, has credited Illinois and its “incredible” talent pool for contributing to its success. That talent reservoir, he says, includes new graduates from Illinois-based universities, as well as executive talent who traditionally have “commuted” from tech companies based on the East and West coasts.
  14. 14. I V C A 2 0 11 A N N U A L R E P O R T 1 1 Private Equity, Public Good, our theme for this 2011 annual report, captures what we as an industry and the IVCA as our representative strive to achieve. It’s also a timely focus for today, given the outright assault on our profession this past election year. Those attacks have proven a real wake- up call.They made me think more about, and better articulate, the value that private equity and venture capital deliver. I’ve never had any doubts about that value, and I’ve always considered what we do to be an essential contribution to our broad economy. At the same time, we’ve all assumed too freely that others saw us the same way.The reality is, many people outside our world don’t under- stand private equity, finance or even capitalism all that well. This ongoing public conversation we’re having is a vital one. Long term, a stronger public understanding will surface about how capitalism works and about the worth of private equity and venture capital. More people will grasp that we seed promising entrepreneurial ventures and provide growth capital for existing businesses. That we shoulder the risk for entrepreneurs unwilling to gamble their entire fortunes on their dream. That we spark economic growth and jobs. And, yes, that we buy shares in a company – just like any investor – and hope to sell those shares and derive capital gains, again just like any investor. In the process, we all support the critical ecosystem of capitalism. Private equity and venture capital have proven to have a vast impact on improving the Illinois economy. Among the con- tributions of the IVCA is the knowledge research it generates about the role our industry plays in Illinois’ economic development. It’s an impressive one. I’m pleased to report that the IVCA in 2011 continued to advance its three- pronged mission statement – to promote investment in Illinois; to advocate for the Illinois venture capital and private equity community; and to serve our membership. It helps us focus on what activities to promote and to gauge their value to our members by aligning efforts along those three categories. Here’s a quick scorecard: •Economically, our firms are moving forward. They’re actively trying to raise money and are largely having success. In the face of near-record-low interest rates, private equity is generating double digit returns5 versus very low-single digit returns for risk-free investments. Pension funds that invest in private equities aren’t fleeing the category, as we feared they would after the liquidity crunch of 2009. And if they are adjusting, it’s a less dramatic mix shift than might have happened. •Our political action committee, thanks to the leadership of Ellen Carnahan, raised $90,000 in a watershed political year, up dramatically, and that’s very important for our initiatives and supporters. •The annual December awards gala continues to be our community’s event of the year, and the addition of individual IVCA awards for venture-backed and private equity-backed Portfolio Company of the Year, as well as inductees into the IVCA Portfolio Company Hall of Fame have generated even more interest in the event. Not to mention the opportunity to chat with the individual award winners and with the true pioneers of our Illinois private equity community. •While our legislative agenda was lighter this past year, our legislative lunches continue to help spread the mes- sage that we are extremely interested in issues that impact our industry and the Illinois economy. A recent example was our successful seminar on federal health- care reform and what’s likely to happen as a result of the narrow Supreme Court decision upholding it. •Our membership is stable and the IVCA, with Executive Director Maura O’Hara taking the lead, is playing a more active role in connecting with the broad- er venture-related community, including the Illinois Technology Association and 1871, the new home for digital startups in Illinois. We thank Maura, along with Kathy Pyne and Penny Cate, for making possible most of what happens at IVCA. I also wish to thank all the members who served on our boards and on our committees, and also all the member firms and sponsors who backed and underwrote our activities this year. All of you reinforce my view that Chicago and Illinois are great places to call home for private equity and venture capital firms and for entrepreneurs. A Letter from Jim TenBroek Jim TenBroek, IVCA Chairman “More people will grasp that we seed promising entrepreneurial ventures and provide growth capital for existing businesses. That we shoulder the risk for entrepreneurs unwilling to gamble their entire fortunes on their dream. That we spark economic growth and jobs.” 5 Preqin Ltd.
  15. 15. 1 2 A Letter from Darren Snyder Darren Snyder, IVCA Chairman “What’s encouraging is that a healthy ecosystem for Illinois startups has developed, and a new generation of private equity and venture capital investors has appeared and they’re opening up new shops. In addition, the national spotlight is shining on successful Illinois-based technology, advertising and media businesses.” I am pleased to take the reins of the IVCA as your chairman from Jim TenBroek and his sterling stewardship.While the macro- economic environment continues to be murky (has there ever been a “normal” market?), plenty of issues exist for which we can help make a real difference. New regulations impacting our industry continue to arise from recently enacted legislation. Critical budget and pension issues that must be addressed to facilitate long-term economic growth in Illinois grow ever more pressing. And, of course, a general misunderstanding of private equity persists, stoked by political-year machinations, which requires us to con- tinue to make the case for how private equity contributes to the public good in Illinois and nationally. What’s encouraging is that a healthy ecosystem for Illinois startups has de- veloped, and a new generation of private equity and venture capital investors has appeared and they’re opening up new shops. In addition, the national spot- light is shining on successful Illinois- based technology, advertising and media businesses. Our IVCA mission for the next 18 months remains consistent with that of the recent past. On the advocacy front, we need to: •Expand upon a history of educating Illinois lawmakers on the economic role and benefits of our industry. We must be willing to spread that message to a broader public audience, especially since this fall’s election will elevate the dia- logue. It’s critical that we articulate the public good that our industry provides. •Make certain we continue to represent the entire industry, continu- ing to recruit the new crop of investors growing their presence in Illinois as well as industry stalwarts.We’re thrilled to have attracted such new members as Lightbank, Generation Growth Capital and BlueCross BlueShield Venture Partners. New and existing private equity funds are focusing heavily on operating partners and expanding governance and strategic resources. As a result, they’re adding more value to their businesses than ever before. To serve our members, we must: •Continue our educational and net- working agendas, particularly as new regulations go into effect for our industry and the industries in which we invest. •Support the growing ecosystem for startups and young companies, including the new technology hub for startups called 1871 at the Merchandise Mart as well as the Booth School of Business New Venture Challenge. The Challenge has launched more than 75 companies that have gone on to raise more than $242 million in funding and to create more than 1,000 jobs. •Continue improvements in our branding, our website and our corner- stone event, the IVCA Annual Awards Dinner in December. We will continue to promote the Invest in Illinois campaign by partnering with and supporting the initiatives of Mayor Emanuel’s office and the state treasurer’s Technology Development Account. More opportunities exist today than ever before to make successful invest- ments and build terrific companies. The spotlight on private equity gives us a unique chance to elevate our standing as a distinct driver of growth and jobs in our economy. For IVCA, this furnishes a stage to discuss how Illinois private equity and venture capital businesses possess a Midwest style. It’s an honest approach, a realistic yet entrepreneurial vision, a collaborative style that cares about the people and the profits. It’s doing what you say. It’s about values. It’s the willing- ness to make long-term investments. We need all our members and those who appreciate what private equity does to help us achieve this ambitious but important mission.
  16. 16. I V C A 2 0 11 A N N U A L R E P O R T 1 3 Jan. 18, 2012: IVCA members contributed $90,700 to the IVCA-PAC in 2011, making it the most successful campaign ever. Eleven member firms donated $10,000 or more on a three-year rolling average. The IVCA-PAC board pledges to continue to contribute strategically to Illinois General Assembly candidates in a manner that helps foster a positive investment climate in the state. It also will continue to provide information on the candidates it supports. Dec. 5, 2011: More than 420 people attended the 10th Annual IVCA Awards Dinner at the Four Seasons Chicago ballroom, with Kirkland & Ellis LLP again serving as Presenting Sponsor. Portfolio Company awards went to Accretive Health and Great Kitchens. SPSS, Inc., joined the IVCA Portfolio Company Hall of Fame. Individuals honored: Brian P. Simmons, CHS Capital, received the Stanley C. Golder Medal and Scott F. Meadow, professor at the University of Chicago’s Booth School of Business, received the Richard J. Daley Medal. The 2012 dinner will be held on Dec. 3. Nov. 15, 2011: The IVCA Toolkit presentation focused on buyer behavior after the sale of a portfolio company, delivering insight on how these complex negotiations ultimately are resolved through the escrow process. Panelists were Paul Koenig, Managing Director of SRS; Rob Verigan, Partner at Sidley Austin LLP; and Chris Girgenti, Managing Partner of New World Ventures. Sponsors were SRS/Shareholder Representative Services and Sidley Austin LLP. Sept. 28, 2011: Investing in health care in an uncertain environment served as the topic of an IVCA luncheon, sponsored by GE Capital’s Healthcare Financial Services. Panelists were Matt Downs, Sandbox Industries; David Koo, RoundTable Healthcare Partners; David Katz, GTCR LLC; and Jim Pavlik, Baird Venture Partners. Brian Pottinger, Managing Director of GE Capital’s Healthcare Financial Services, was moderator. June 30, 2011: The IVCA board added three new members to serve three-year terms ending June 30, 2014. They are Thomas Danis Jr., Managing Principal, RCP Advisors; Constantine S. Mihas, Principal, GTCR; and R. Craig Collister, Senior Partner, Round- Table Healthcare Partners.The board also welcomed Jeffrey Diehl, Partner, to the Adams Street Partners’ board seat, replacing Thomas Berman, who has served since the IVCA was founded; and Robert Finkel, Managing Partner of Prism Capital, who rejoins the board. Diehl’s term expires in June 2015 and Finkel’s term expires in June 2013. June 14, 2011: “Homegrown Successes: Serial Entrepreneurs” was the topic of an IVCA luncheon that featured four such entrepreneurs.The event was sponsored by the Neal, Gerber & Eisenberg law firm and one of its partners, Michael Gray, served as moderator. Lon Chow of Apex Venture Partners helped coordinate the event, which featured entrepreneurs Brian Hand of Timelines, Eric Lunt of BrightTag, Al Warms of Appolicious and Alex Zoghlin of VHT. IVCA News & Events The importance of creating new sources of venture capital in Illinois cannot be overstated. Although venture capital-backed companies accounted for 11 percent of private-sector employment in 2008, they generated nearly $3 trillion that year – 21 percent of U.S. GDP. Additionally, these companies have helped to create, not only new jobs, but entire new sectors, such as biotechnology, semiconductors, software and the Internet. −Report of the (Illinois) Economic Recovery Commission, 6/24/10
  17. 17. 14 May 20, 2011: The IVCA joined Gov. Pat Quinn in launching the Illinois Innovation Network that aims to give entrepreneurs the resources to build and grow their businesses and create more jobs. It’s the first initiative created by the Governor’s Illinois Innovation Council, a public-private partnership launched in February 2011 to accelerate innovative economic development and job-creation efforts in the state’s startup sector. May 11, 2011: At the Annual IVCA/NVCA luncheon, Chicago Mayor Rahm Emanuel told attendees that his job “is to create the conditions for you to create jobs” because “city government does not create jobs. Creating jobs is your job.” He added that he must make Chicago “an exciting place to live, so you have the talent pool that will not make it a struggle to start up a company.” The event was sponsored by Baker Tilly accounting/advisory firm, and Ropes & Gray LLP law firm. Also featured were Mark Heesen, president of the NVCA, and Doug Lowenstein, then president of the Private Equity Growth Capital Council. IVCA Vice Chairman Darren Snyder moderated the luncheon program. April 27, 2011: A get-acquainted meeting with 16 IVCA members and Rep. Bob Dold (R., Ill.) kicked off the 2011 IVCA Legislator Meeting Series. Among the topics discussed were the cost and compliance burden of Dodd-Frank regulations on small and mid-sized firms and the negative impact on new product introduction from slower FDA review of these products. March 30, 2011: The IVCA-PAC board adopted new “pay to play” policies and proce- dures that ensure compliance consistent with SEC rule changes, Municipal Securities Rulemaking Board rules and Illinois law. One change will guarantee that continuing annual contributions to the political action committee won’t limit a firm’s ability to access state and pension funding within its base of Limited Partners. March 9, 2011: An IVCA luncheon examined new opportunities for liquidity for share- holders of private companies via private shares marketplaces. Danielle Hughes of Divine Capital Markets explained the four marketplaces, which include SecondMarket, GATE Technologies, Xpert Financial and SharesPost. Also participating were Jeremy Smith of SecondMarket, the largest marketplace and Michael Gray of Neal Gerber & Eisenberg LLP, who also moderated the audience Q&A. Feb. 15, 2011: IVCA hosted a lunchtime webinar with Reed Smith that examined portfolio company executive compensation. It was part of IVCA’s Toolkit series and featured Brad Schmarak and Seth Hemming, global co-heads of Reed Smith’s Private Equity Group, as moderators; John Martini, chair of the firm’s Tax, Benefit & Wealth Planning Group; and James Tandler, head of the firm’s Tax Group. “When you look at what makes up the basic building components of a very successful economic culture in a startup community, it is the entrepreneur, the research institutions, the financial backing, as well as the coaching that comes from successful entrepreneurs to help young entrepreneurs who have new ideas to nurture them, sponsor them and encourage them to succeed.” −Chicago Mayor Rahm Emanuel, at IVCA/NVCA luncheon, 5/11/11
  18. 18. I V C A 2 0 11 A N N U A L R E P O R T 1 5 2011 OFFICERS COMMITTEE Governance 2011 EXECUTIVE COMMITTEE 2011 STAFF MAURA O’HARA Maura has been Executive Director of IVCA since 2003. She oversees all aspects of the Association and represents IVCA in the community. MARK GLENNON Treasurer: 2009-2011 Ninth Street Advisors JAMES TENBROEK Chairman: 2010-2011 Vice Chairman: 2009-2010 Secretary: 2008-2009 Wind Point Partners PENNY CATE Penny is IVCA’s Government Affairs representative. Since 2004, Penny has led IVCA’s legislative efforts and develops strategies for IVCA’s Legislative Committee and IVCA-PAC. LEE M. MITCHELL Secretary: 2010-2011 Thoma Bravo, LLC ELLEN CARNAHAN IVCA-PAC Chairman: 2010-2011 Chairman: 2009-2010 Vice Chairman: 2008-2009 Machrie Enterprises KATHY PYNE Kathy is the IVCA’s Association Coordinator and is responsible for events, member communications and database management. Kathy joined IVCA in 2005. DARREN SNYDER Vice Chairman: 2010-2011 Secretary: 2009-2010 Treasurer: 2008-2009 Prairie Capital ELLEN CARNAHAN IVCA-PAC Chairperson ROBERT FEALY Treasurer – IVCA-PAC MARK GLENNON IVCA Treasurer, Co-Chairman – Research JOHN HOESLEY Co-Chairman – Research JIM MACDONALD Chairman – Events LEE M. MITCHELL IVCA Secretary LAURA PEARL Chairperson – Membership DARREN SNYDER IVCA Vice Chairman, Chairman – Legislative JIM TENBROEK IVCA Chairman, Co-Chairman – Institutional Investors Chairman – Executive Committee STEVE VIVIAN Co-Chairman – Institutional Investors JEFF ZILKA Chairman – Marketing & PR MAURA O’HARA IVCA Executive Director
  19. 19. 1 6 Adams Street Partners, LLC Andersen Pacific Corporation Apex Venture Partners ARCH Venture Partners Baird Private Equity Baker Tilly Virchow Krause, LLP Barnes & Thornburg LLP BDO Seidman, LLP Beecken Petty O’Keefe & Co. Bessemer Trust Co. Blackman Kallick LLP *BlueCross BlueSheild Venture Partners Burke Warren CapX Partners CBRE Group Cendrowski Corporate Advisors Ceres Venture Fund Chicago Growth Partners *Chicago Teachers Pension Fund Chicagoland Entreprneurial Center Chrysalis Ventures CHS Capital Coinstar, Inc. Cressey & Company, L.P. Deloitte & Touche DFJ Mercury DLA Piper, LLP (US) Duchossois Technology Partners Dunrath Capital Edelman Edwards Wildman The Edgewater Funds EmPower HR Member list *Lightbank Linden LLC *Lockton Companies Machrie Enterprises Madison Dearborn Partners Martin Partners Matthew Pritzker Company Mayer Brown LLP McDermott, Will & Emery McGladrey McGuireWoods LLP Mesirow Financial Private Equity Mid Oaks Investment LLC MK Capital *Monroe Capital Motorola Solutions Venture Capital MVC Capital Neal, Gerber & Eisenberg, LLP New World Ventures Ninth Street Advisors Northern Trust Global Advisors Northwestern University - The Larry and Carol Levy Institute for Entrepreneurial Practice OCA Venture Partners Origin Ventures *Otherwise, Inc. Paradigm Capital, Ltd. Patriot Capital PPM America Capital Partners Prairie Capital PricewaterhouseCoopers Prism Capital *The Pritzker Group Quarles & Brady LLP Ernst & Young LLP Financial Investments Corporation First Analysis Freeborn & Peters Frontenac Company *Generation Growth Capital, Inc. Golder Investment Management, LLC *Greenberg Traurig GTCR LLC *Harrison Street Capital Heizer Center, Northwestern University, Kellogg School of Management Horwood, Marcus & Berk Chtd. Houlihan Lokey *Hyde Park Venture Partners *IZA Fund Illinois Municipal Retirement Fund *Illinois State Board of Investment Illinois State Treasurer IllinoisVENTURES, LLC JK&B Capital *Jones Day JP Morgan K&L Gates Katten Muchin Rosenman LLP Kaye Scholer LLC KB Partners Kelley, Drye & Warren LLP Kirkland & Ellis LLP KPMG LLP Kutchins, Robbins & Diamond, Ltd. LaSalle Capital Group Lazard Middle Markets RBS Citzens RCP Advisors Reed Smith LLP River Cities Capital Funds Ropes & Gray LLP RoundTable Healthcare Partners Sandbox Industries Seneca Partners, Inc. *Sidley Austin Silicon Valley Bank SNR Denton Spencer Stuart Square 1 Bank State Universities Retirement System Sterling Partners, LLC Stern Cassello & Associates Svoboda Capital Partners LLC Teachers’ Retirement System of Illinois Thoma Bravo, LLC Thompson Flanagan & Co. Tribune Company Ungaretti & Harris University of Chicago Booth School of Business University of Illinois University Technology Park at IIT Vedder Price P.C. Water Street Healthcare Partners Willis Stein & Partners Wind Point Partners Winona Capital Management Winston & Strawn LLP WP Global Partners WTAS LLC Wynnchurch Capital, Ltd. Zebra Technologies Inc. Investor firms in bold *New Members
  20. 20. Adams Street Partners Blackman Kallick LLP CHS Capital Duchossois Technology Partners GTCR LLC IllinoisVENTURES KPMG Madison Dearborn Partners Mayer Brown LLP McDermott, Will & Emery Mesirow Financial Private Equity Neal, Gerber & Eisenberg LLP New World Ventures Reed Smith Ropes & Gray Sidley Austin SNR Denton Spencer Stuart Square 1 Bank Sterling Partners The Pritzker Group Thoma Bravo LLC Willis Stein & Partners Wind Point Partners Adams Street Partners LLC Apex Venture Partners ARCH Venture Partners Baird Venture Partners Beecken Petty O’Keefe & Company Duchossois Technology Partners LLC Dunrath Capital Ernst & Young LLP First Analysis Frontenac Company KB Partners Mesirow Financial Private Equity Mid Oaks Investments LLC MK Capital Motorola Solutions Venture Capital New World Ventures Northern Trust Global Advisors OCA Venture Partners Paradigm Capital, Ltd. Prairie Capital Prism Capital Silicon Valley Bank Sterling Partners Svoboda Capital Partners The Edgewater Funds Thoma Bravo, LLC Willis Stein & Partners Wind Point Partners IVCA FOUNDING MEMBERS Provide outstanding support for IVCA in the form of services and/or the highest levels of event sponsorship Baker Tilly Virchow Krause, LLP Edelman Edwards Wildman Kirkland & Ellis LLP Kutchins, Robbins & Diamond, Ltd. McGladrey Silicon Valley Bank SPONSORING MEMBERS Have sponsored at least one event during the year SUPPORTING MEMBERS Design: Avila Creative, Inc. Editorial: Edelman Primary Photography: Steve Ewert Photography Infographic Illustration: Dale Glasgow & Associates Printing: The Fox Company How a Private Equity or Venture Capital Fund Works The firm creates an investment “fund” to invest in private companies from “Limited Partners,” typically: – Pension funds – Endowments – Foundations The fund considers thousands of companies. The fund typically acquires a company that can grow significantly with skills and investment: – Updated business strategy – Additional talent – New equipment & facilities – R&D The company’s value grows significantly. After 3-5 years of focused effort, the company is worth significantly more than at time of investment. The fund invests in 7-10 portfolio companies over the fund’s life. The fund closes. Each portfolio company is sold when a good price is offered. When all of its companies are sold, the fund closes. The initial investment plus profits are distributed: – 80% of profits go to Limited Partners – 20% of profits stay with the fund as “carried interest” 1 2 3 4 6 5 5 1 2 4 3 6
  21. 21. The Case for an Essential Industry Private Equity | Public Good Giordano’s Peapod Ulta Sapphire Energy DeVry University Bioniche PharmaOrbitzSchool of Rock ATI Physical Therapy 2011 ANNUAL REPORT These nine companies, the majority in Illinois, reflect the breadth of American industries. They are or have been backed by private equity firms; the majority by Illinois firms. They represent the significant contribution that private equity makes to the American economy. More than 14,200 U.S. companies, employing 8.1 million people, are owned by 2,300 private equity firms. ATI PHYSICAL THERAPY PEAPOD Sapphire Energy Orbitz Worldwide GIORDANO’S BIONICHE PHARMA DEVRY UNIVERSITY SCHOOL OF ROCK ULTA Sponsoring Members

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