Private Equity
Forget everything you’ve read about secondary prices, as it is “at worst stale, at best a fantasy,” according to a study released today by secondary intermediary Cogent Partners. (Download after the jump) The findings are disheartening for any hopeful investor with stakes in the market and very exciting for buyers of distressed LP stakes. The average high bid for buyout and VC secondary assets declined to 61% of NAV in the second half of 2008, compared with the first half, the study says. Notably, the drop marks the lowest level for secondary prices since 2003, since it’s on the heels of an 84.7% decline in the first half of 2008.
2 min read · 05 January 2009
Hired: Missouri's Governor, by Solamere Capital. He'll work with Mitt Romney's son. (Springfield Business Journal) One VC's Wish List for '09: Including Facebook getting profitable and Google cutting products and services. (A VC) Looking for LPs?: Try the Church of England, which recently committed 150 GPB in Al Gore's investment firm, Generation Investment Management. (Religious Intelligence) Z2K: Do you own a Zune? Did you notice that it mysteriously failed to work at 12am, December 31? Engadget has the scoop on why.
1 min read · 31 December 2008
The business world is full of silly sounding or near-meaningless corporatespeak clichés. Even worse, everyone repeats ‘em until they become official. Like most industries, private equity has its own ridiculous language. In the spirit of holiday light-heartedness, my Buyouts colleagues and I compiled some layman’s explanations of our favorite PE clichés, with everything from “Proprietary deal flow” to “Value add.” So remember, this is what journalists really think when we hear boiler plate clichés. Feel free to add your own. Feel very free. Happy New Year!
2 min read · 31 December 2008
In the last month or so, coverage of private equity has gone from cautious to murky to bearish to downright apocalyptic. The descent has been so rapid, in fact, that it's almost rendered Michael Wolff's recent Vanity Fair article on private equity MOA (moot on arrival). His piece, titled "The Ultimate Bubble," asks the question on everyone's mind: Is private equity doomed, to what extent and which specific people or firms? Wolfe nails it when he says: "Chances are that what you're doing with your idle hours as a PE man is trying to figure out who deserves to crash and burn before you." (We at peHUB have our money on Apollo going down first, among the big boys) He makes the point that PE hasn't crashed yet, because we've yet to see much blood in the water, and that's partly because you all are so damn private. But in the time between his writing the article and it going to press, some of his arguments against a PE crash have now come to fruition! For example, he says, at least PE firms haven't given money back yet. TPG did so last week. He says PE firms haven't announced any layoffs. Enter Blackstone, Carlyle, American Capital, AIG, and probably others we don't know about. Add that to last week's dubious BCG study predicting almost half of all PE firms could cease to exist in the coming years. The study was met with a sneer (slightly from me, largely from commenters), yet the idea isn't that far-fetched. Both Wolff and BCG touch on a topic that may have started months ago as nervous whispers but has amplified to a worried roar and will only snowball in the new year: Private equity firms are in trouble. So in 2009, expect to defend your industry and reason to exist. There are a laundry list of things working against you right now. For his part, Wolff blasts PE for pretending to know how to
4 min read · 31 December 2008
Well, it’s over. The year two thousand eight was wrought with bummers, busts, breakdowns and bad news for private equity, yet most of you managed to survive. For our part, peHUB emerged relatively unscathed, thanks to our loyal readers. (really, thanks!) To close out the year with a self-indulgent bang, we’ve unlocked our top ten most popular stories from the archives. Enjoy reminiscing after the jump, and have a Happy New Year!
3 min read · 31 December 2008
Yikes: Jim Cramer's advice was slightly worse than a coin toss this year. Lump Of Coal: The Naughtiest and nicest CEOs of 2008 (Bits) How The Other Side Lives (And Dies): Hedge fund return data is ugly. (Deal Journal) Ouch: If you though Credit Suisse's toxic debt alterna-bonus was bad, check out Google, which is giving its employees "dogfood." (Valleywag)
1 min read · 30 December 2008
The fact that it's 15 years old makes it that much funnier. The only difference? Suzie didn't take out a low interest loan to buy the lemonade. Click here to view it large.
1 min read · 30 December 2008
Few word combinations could arouse more bearish skepticism than SPAC, auto industry, public markets, pre-revenue and Apollo Management (given peHUB's recent Apollo coverage). Yet we have Hughes Telematics, an automotive supply company facing a shareholder vote to merge with a SPAC. The SPAC's $700 million deal for Hughes Telematics was the largest of this year when it was announced in June. That was back when news headlines read "SPACs are Back," trumpeting the attractiveness of the special purpose acquisition vehicle. The deal worked in Apollo Management's favor: Three years ago Apollo had backed Hughes, a venture-stage maker of in-vehicle telematics technology, and would have laid the groundwork for an exit before the company was even profitable. Meanwhile Hughes would have the financing it needed to get over the revenue hurdle, allowing Apollo to continue to take part in the upside. Increased volatility in the public markets and massive hedge fund redemptions make it safe to say those days are over. Layer that with the increasingly global woes of the automotive industry, and it's safe to say Hughes Telematics faces an uphill battle to get its deal approved. Talking to the deal's leader, Polaris Acquisition Corp. head Marc Byron, and you can sense the nerves. "We are definitely facing headwinds," he said. Last month Byron, Apollo Management and Hughes restructured the deal for a lower value ($385 million). Yet Byron assured me, repeatedly, that he and Apollo Management are bullish on Hughes Telematics and really, really, really want the vote to go through. Apollo and Hughes Telematics' management and shareholders even agreed to hold their shares for a two-year lock-up period. The first earnout shares are unable to vest till the stock price hits $20 (its around $8.86 now). Byron needs to convince $105 million worth of Hughes' shareholders to believe in the story, which he is painting as "the one bright shining star out there in this economic mess." Here's why.
3 min read · 30 December 2008
Well: "Just about everyone in Kimberly, Wisconsin, hates billionaire Stephen Feinberg." Are we surprised? (Bloomberg) First Bono: Now Bjork. Another first-name 90s music star joins the world of venture investments. What Is Going On Here: Plenty of people, Jim Cramer included, are angry that TARP-funded banks can't or won't say what they're doing with the money. (Dealscape) Gotta Love Deal Professor: Some wonderfully acerbic lessons learned from 2008, including "Banks trump private equity." We Beat China: In IPOs, by value. How is that possible, you ask? Visa. (FT)
1 min read · 29 December 2008
2 min read · 29 December 2008
