In Private Markets, Red Is the New Black
[ad_1] The luster of the public markets has waned over the last 20 years to the benefit of private capital. Fewer companies are listed on US stock exchanges today than…
Private Markets: Guardians at the Gate?
[ad_1] Earlier this year, the head of the US Department of Justice’s anti-trust unit vowed to crack down on the buyout sector’s aggressive deal-making practices. What that implied wasn’t entirely…
Modern Private Equity and the End of Creative Destruction
[ad_1] “The more leveraged takeovers and buyouts now, the more bankruptcies tomorrow.” — John Shad, chair of the Securities and Exchange Commission (SEC), 1984 When the Reagan administration pushed for…
Private Equity vs. Venture Capital: Opposite Investment Mindsets
[ad_1] Managers of private equity (PE) and venture capital (VC) firms have the same goal in mind: maximizing returns. Yet PE buyout and VC early-stage funds go about it in…
Myths of Private Equity Performance: Part I
[ad_1] “I therefore claim to show, not how men think in myths, but how myths operate in men’s minds without their being aware of the fact.” — Claude Lévi-Strauss As…
Myths of Private Equity Performance: Part II
[ad_1] The internal rate of return (IRR) is not a scientific method to calculate performance. Far from it. Fund managers can manipulate, misreport, or altogether fabricate their results, making them…
Myths of Private Equity Performance: Part III
[ad_1] Private equity (PE) investment returns are neither reliable nor predictable. Many of my clients are prepared to accept these as facts. But one private equity myth is harder to…
Myths of Private Equity Performance: Part IV
[ad_1] “Perhaps what cannot be wholly understood cannot wholly be destroyed.” — Anthony Burgess, Kingdom of the Wicked Three myths about the reliability, predictability, and resilience of private equity (PE)…
Capitalism Is Dead, Long Live Debtism
[ad_1] Notwithstanding its many failings, capitalism has been a formidable engine of wealth creation and economic development over the last three centuries. Yet, what classical economists and revolutionary theorists like…
SPAC Fever: Clear and Present Danger?
[ad_1] “Nations, like individuals, cannot become desperate gamblers with impunity. Punishment is sure to overtake them sooner or later.” — Charles Mackay Special-purpose acquisition companies (SPACs) have gone viral. They…
Tricks of the Private Equity Trade, Part 2: Leverage
[ad_1] The essence of maximizing the internal rate of return (IRR) lies in the total amount of leverage contracted to finance a transaction. The less equity a buyout firm has…
Permanent Capital: The Holy Grail of Private Markets
[ad_1] In the 1970s, when trailblazers Henry Kravis and Teddy Forstmann helped launch one of the most successful financial products of the past half-century, leveraged buyouts (LBOs) were conducted on…
Tricks of the Private Equity Trade, Part 1: Value Drivers
[ad_1] Investors’ faith in the genius of private equity (PE) fund managers has reached ever greater heights amid new records in fundraising, deal volume, and asset valuations. These trends have…
Perpetual Debt Is Already Here
[ad_1] “Be still indebted to somebody or other, that there may be somebody always to pray for you, [. . .] fearing, if fortune should deal crossly with you, that…
Modern Variants of Capitalism, Part 1: Classical Capitalism and Shareholder Capitalism
[ad_1] Capitalism is the economic system most advanced nations have adopted to foster growth and prosperity. Its Marxian definition, describing the principles of wealth accumulation through the appropriation of profits,…
Modern Variants of Capitalism, Part 2: Financial Capitalism
[ad_1] Advanced economies started cooling off about 50 years ago. Official data state it plainly. For the past two decades, most economies in North America and Europe have slowed to…
Modern Variants of Capitalism, Part 3: Digital Capitalism
[ad_1] While many traditional sectors of the economy have succumbed to secular stagnation, a new form of value creation has expanded since the 1970s as part of the Third Industrial…
Private Equity: Market Saturation Spawns Runaway Dealmaking
[ad_1] Fifty years ago, leveraged buyout (LBO) sponsors had a simple goal in mind: to help divisional managers of large corporations gain their independence and extract more value from previously…
New Breed of Private Capital Firms Will Face Performance Headwinds
[ad_1] Under the private equity fundraising model, every few years fund managers secure capital commitments with a 10-year duration and charge management and advisory fees during the lock-up period. While…
Alternative Investments: Predictable Uncertainty in Private Markets
[ad_1] In finance, as in all walks of life, people tend to see their environment as predictable. With experience, investment professionals acquire a better understanding of markets, become more confident…
The Private Capital Wealth Equation, Part 1: The Controls Variable
[ad_1] Investment performance is assessed on a risk-adjusted basis. But with financial markets growing ever more competitive, private capital fund managers have developed tools to reduce risk while protecting or…
The Private Capital Wealth Equation, Part 2: The Economics Variable
[ad_1] What makes financial capitalism so compelling is the idea that modern fund managers fully participate to the upside of their investment decisions with little exposure to the downside. This…