How to outbid PE rivals in auction
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The document discusses how private equity firms can differentiate themselves and outbid rivals in auctions. It suggests that firms form a combination of funds across different strategies, and introduce a concept of "fusion" where equity and debt capital are combined in a way to lower the effective return requirement of investment funds. This allows firms to pay more for deals while still achieving target returns. It proposes tapping into corporate and public pension schemes as potential debt investors for these "fusion" funds.
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Venture Capital
Many VC firms are formed from a group of investors that pool capital and then have partners in the firm decide which companies will receive financing
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(Limited Partnerships)
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Management investment: Usually entails some hands-on guidance
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Top VC investments in Maryland
Woodbrook Capital Inc., Towson, Md., 2013 Md. investments: $27.82 million
J. H. Whitney & Co. LLC, New Canaan, Conn., 2013 Md. investments: $$50 million
Third Security LLC, Radford, Va, 2013 Md. investments: $51.4 million
Sandbox Industries LLC, Chicago, Ill., 2013 Md. investments: $55.81 million
Oak Investment Partners, Greenwich, Conn., 2013 Md. investments: $75 million
Kinetic Ventures : An example
http://www.kineticventures.com/about.html
Prior Investment:
4/03/2012: Aztek Networks (Acquired by GENBAND)
Genband : IP infrastructure and application provider
Aztek Networks: a leading supplier of switch consolidation and network migration solutions.
Prior to the acquisition, privately held Aztek Networks was backed by a number of notable VC investors, including Verizon Investments LLC.. The Company was founded in 1982 as Aztek Engineering and is based in Boulder, Colo.
State support Angel / Venture Financing in Maryland
state supported investment programs
http://business.maryland.gov/mvf
http://www.bio.maryland.gov/funding/pages/ang ...
Securities Firms and Investment Banks.docx
Securities Firms and Investment Banks
Securities Firms and Investment Banks (IBs)
Investment banks (IBs) help corporations and governments raise capital through debt and equity security issues in the primary market
Underwriting is assisting in issuing new securities
IBs also advise on mergers and acquisitions (M&As) and corporate restructuring
Securities firms assist in the trading of securities in secondary markets
Broker-dealers assist in the trading of existing securities
2
Investment bankers assist borrowers in raising capital in debt and equity markets and provide advice about mergers and acquisitions, corporate restructuring and general assistance in finance. Bankers also provide many creative over the counter derivative products. Securities firms provide brokerage and market making services. The investment banking and securities industries are complementary and many firms provide a broad range of services. Some specialized entities with advantages in certain market niches remain less diversified. The industry underwent tremendous consolidation in the last decade due to increasing scale and scope economies and the need for greater capital. The face of the industry was changed forever during the financial crisis of 2007-2008 with forced buyouts of Merrill-Lynch and Bear-Stearns, failure of Lehman Brothers and Goldman-Sachs and Morgan Stanley becoming commercial banks. Nevertheless, working for many of these firms is often considered the penultimate finance career, with prestige and remuneration to match. With industry profits down, firms on the Street are having a difficult time maintaining their large salaries and bonuses. A very significant portion of profits are paid out in the form of remuneration to executives. The chapter presents an overview of the size of the industry and the general strategies of the participants, major activities, primary assets and liabilities on the balance sheet, recent in the news events concerning breaches of ethics and the trend toward globalization.
Size, Structure and Composition of Industry
The size of the industry is usually measured by the equity capital of firms rather than total asset size
Equity capital in the industry in 2015 was $235 billion
The number of firms in the industry changed due to economies of scale and scope, losses with the economy, scandals at some firms, and regulations that allowed both inter- and intra-industry mergers
5,248 firms in 1980
9,515 firms in 1987
6,016 firms in 2006
4,115 firms in 2016
As with commercial banks, consolidation has largely occurred through mergers and acquisitions
.
Securities Firms and Investment Banks.docx
Securities Firms and Investment Banks
Securities Firms and Investment Banks (IBs)
Investment banks (IBs) help corporations and governments raise capital through debt and equity security issues in the primary market
Underwriting is assisting in issuing new securities
IBs also advise on mergers and acquisitions (M&As) and corporate restructuring
Securities firms assist in the trading of securities in secondary markets
Broker-dealers assist in the trading of existing securities
2
Investment bankers assist borrowers in raising capital in debt and equity markets and provide advice about mergers and acquisitions, corporate restructuring and general assistance in finance. Bankers also provide many creative over the counter derivative products. Securities firms provide brokerage and market making services. The investment banking and securities industries are complementary and many firms provide a broad range of services. Some specialized entities with advantages in certain market niches remain less diversified. The industry underwent tremendous consolidation in the last decade due to increasing scale and scope economies and the need for greater capital. The face of the industry was changed forever during the financial crisis of 2007-2008 with forced buyouts of Merrill-Lynch and Bear-Stearns, failure of Lehman Brothers and Goldman-Sachs and Morgan Stanley becoming commercial banks. Nevertheless, working for many of these firms is often considered the penultimate finance career, with prestige and remuneration to match. With industry profits down, firms on the Street are having a difficult time maintaining their large salaries and bonuses. A very significant portion of profits are paid out in the form of remuneration to executives. The chapter presents an overview of the size of the industry and the general strategies of the participants, major activities, primary assets and liabilities on the balance sheet, recent in the news events concerning breaches of ethics and the trend toward globalization.
Size, Structure and Composition of Industry
The size of the industry is usually measured by the equity capital of firms rather than total asset size
Equity capital in the industry in 2015 was $235 billion
The number of firms in the industry changed due to economies of scale and scope, losses with the economy, scandals at some firms, and regulations that allowed both inter- and intra-industry mergers
5,248 firms in 1980
9,515 firms in 1987
6,016 firms in 2006
4,115 firms in 2016
As with commercial banks, consolidation has largely occurred through mergers and acquisitions
.
Mkm Presentation October 2011
The document describes the MKM Opportunity Fund, which invests in small cap companies using a private equity strategy while maintaining liquidity as a public fund. It has achieved strong returns since inception in 2008 and invests in underserved small and micro-cap companies through direct deals. The fund is managed by experienced investment professionals and takes steps to both maximize upside through warrants while mitigating downside risk. It provides an example investment in Valley Forge Composite Technologies, a homeland security technology company.
Opportunities in Asset Management
This presentation evaluates the current state of the asset management industry and takes a look at where it might be expected to go from here. Topics covered include capital flows, the emergence of alternatives and the M&A environment
BoyarMiller Breakfast Forum: The Current State of the Capital Markets 2009
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Venture capital accounts for a small portion of overall alternative assets but has a disproportionate impact on the economy. While VC funding amounts are small at around $28 billion annually in the US, VC-backed companies represent over half of the current public company market cap and were responsible for over a third of US jobs. Returns in venture capital are also highly variable, with the top quartile funds achieving average annual returns over 20% compared to under 10% for bottom quartile funds. Success in venture capital relies on identifying companies that can achieve "home runs" or outsized exits in the billions, as these will account for the vast majority of fund returns due to the power law distribution of outcomes.
Chapter 1KEY TERMS Define each of the following termsa. Sar.docx
Chapter 1
KEY TERMS Define each of the following terms:
a. Sarbanes-Oxley Act
b. Proprietorship; partnership; corporation
c. S corporations; limited liability companies (LLCs); limited liability partnerships (LLPs)
d. Stockholder wealth maximization
e. Intrinsic value; market price
f. Equilibrium; marginal investor
Questıons
1- If you bought a share of stock, what would you expect to receive, when would you expect
to receive it, and would you be certain that your expectations would be met?
2- If most investors expect the same cash flows from Companies A and B but are more confident
that A’s cash flows will be closer to their expected value, which company should
have the higher stock price? Explain.
3- What is a firm’s intrinsic value? its current stock price? Is the stock’s “true long-run value”
more closely related to its intrinsic value or to its current price?
4- When is a stock said to be in equilibrium? At any given time, would you guess that most
stocks are in equilibrium as you defined it? Explain.
Suppose three honest individuals gave you their estimates of Stock X’s intrinsic value.
5- One person is your current roommate, the second person is a professional security analyst
with an excellent reputation on Wall Street, and the third person is Company X’s CFO. If
the three estimates differed, in which one would you have the most confidence? Why?
Chapter 2
KEY TERMS Define each of the following terms:
a. Spot markets; futures markets
b. Money markets; capital markets
c. Primary markets; secondary markets
d. Private markets; public markets
e. Derivatives
Questıons
1- How does a cost-efficient capital market help reduce the prices of goods and services?
2- Describe the different ways in which capital can be transferred from suppliers of capital to
those who are demanding capital.
3- Is an initial public offering an example of a primary or a secondary market transaction?
Explain.
4- Indicate whether the following instruments are examples of money market or capital market
securities.
a. U.S. Treasury bills
b. Long-term corporate bonds
c. Common stocks
5- What would happen to the U.S. standard of living if people lost faith in the safety of the
financial institutions? Explain
Chapter 3
KEY TERMS Define each of the following terms:
a. Annual report; balance sheet; income statement; statement of cash flows; statement of
stockholders’ equity
b. Stockholders’ equity; retained earnings; working capital; net working capital
c. Depreciation; amortization; operating income; EBITDA; free cash flow
d. Progressive tax; marginal tax rate; average tax rate
e. Tax loss carry-back; carry-forward; AMT
f. Capital gain (loss)
g. S corporation
Questıons
1- What four financial statements are contained in most annual reports?
2- Who are some of the basic users of financial statements, and how do they use them?
3- If a “typical” firm reports $20 million of retained earnings on its balance sheet, could its
directors declare a $20 million cash dividend wi ...
Atomico Need-to-Know 17 September 2018
The latest collection of things we (Atomico) found interesting and important in tech and VC land, but that didn’t necessarily get the attention they deserve. We think of them as our hidden little gems. We’ll add to the collection over time, so bookmark the page and keep coming back for updates or to dig into the archive.
Dr. Αvi Sharon, ocin22
This document discusses retirement planning and decumulation strategies. It provides historical context on retirement in Greek culture and the transition to individual saving. It also discusses the challenges facing retirees in the US, including managing withdrawals, market risks, and longevity risks. The document advocates for combining safety and growth in retirement portfolios, and outlines strategies like target date funds, income replacement, and combining various account types to help solve decumulation challenges.
Venture Capital Fundraising Q2 '06
Private equity fundraising reached new highs in the second quarter of 2006, with venture capital funds raising $11.2 billion and buyout/mezzanine funds raising $30.8 billion. Several large funds contributed significantly to these totals, including Oak Investment Partners XII raising $2.56 billion and TPG Partners V raising $14 billion. While largely driven by a few mega funds, the fundraising amounts represent substantial capital available to support companies through various stages of growth and exit.
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Chapter 1KEY TERMS Define each of the following termsa. Sar.docx
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How to outbid PE rivals in auction
- 1. Addressing the competition September 2006 Presentation to The Blackstone Group
- 4. The success of buyout business
- 6. See more spectacular returns Source: CalPERS AIM Program Fund Performance Review (as of March 31, 2006) 38.0 200 2003 TPG Partners IV 32.1 100 1996 Thomas H Lee Equity Fund III 74.5 100 1997 Permira Europe I 46.8 150 2002 KKR Millennium Fund 36.6 150 2000 Hellman & Friedman Capital Partners IV 46.6 125 2001 First Reserve Fund IX 46.0 50 1995 Doughty Hanson Fund III 34.2 200 2001 CVC European Equity Partners III 46.3 56 2003 Carlyle Europe Partners II 63.1 200 2003 Blackstone Capital Partners IV 38.2 250 2001 Apollo Investment Fund V Net IRR (%) Capital committed (US$ m) Vintage year Fund description
- 7. Evolving trend of competition
- 9. A few observations Existing rivals Ex partners or units Investment banks Strategy consultants Competitors differentiate from others in terms of fund size, geographical focus, sector expertise etc. Recent example is Lee Equity Partners, formed by founder of Thomas H Lee Partners. Also in Jan 2005, Lion Capital was spun off from Hicks Muse Tate & Furst. Bain Capital was founded in 1984 by three partners of Bain & Co. Should we expect McKinsey Capital soon given its corporate networks & industry knowledge? Apart from aggressive players like Goldman Sachs and Macquarie, Bank of America is targeting to raise US$1 billion private equity fund.
- 10. A few observations (continued) Hedge funds Corporate buyers Family groups Potential LPs Eton Park Capital, a hedge fund formed by ex Goldman Sachs star trader Eric Mindich in 2004, is competing with buyout firms for private equity deals. Universal Music Group of Vivendi beat seven bidders in Sept (incl. Goldman Sachs Capital Partners) to clinch BMG, making it the world’s biggest music publisher. China Life, the largest insurance company in China, did a PIPE transaction of US$400m in CITIC Securities in June. Terry Gou, the richest man in Taiwan and owner of the world’s largest EMS provider, will likely establish a private equity firm in 2008 to target technology sector.
- 12. A number of alternatives … Listed Fund Mega Fund Distressed Fund Hedge Fund Sector Fund Mezzanine Fund
- 14. How to outbid rivals?
- 15. Look at LBO history first 1950s 1960s 1970s 1980s 2000s 1990s 1956: The first LBO might be the US$49m purchase by McLean Industries, Inc. of Waterman Steamship Corporation. 1969: A “bootstrap" transaction was characterized by Victor Posner's hostile takeover of Sharon Steel Corp. 1981: A legendary LBO was Wesray’s acquisition of Gibson Greetings Cards for US$80m, with equity portion of only US$1m. The IPO in 1983 valued the company at US$330m. 1989: The second largest LBO was RJR Nabisco, acquired by KKR for US$31.4 billion. 2006: HCA agreed to sell itself to three private equity firms (Bain, KKR and ML) & the family of Senator Bill Frist for US$33 billion.
- 22. Well, how to do it then Fund I Equity LPs Rating Agency Target A Debt LPs $ Investment returns net mgmt fee and carried interest $ Guaranteed return backed by recaps, bonds issued by Fund I, etc. Target B Target C Credit rating
- 24. Thank You & Prepared By Leo Wong email: wong_leo@yahoo.com