Filed under: Management, Raising money, Engagements

We’ve been digging around for the the coming layoffs at private equity firms to get a good handle on just what the economic downturn and credit crunch will mean to all the B-School kids who wanted to be the next multi-millionaires and billionaires. While no hard numbers are out industry-wide yet (at least that you can hang your hat on), there are some things trickling out.

The Deal Journal, of the Wall Street Journal, noted in a post today that American Capital Strategies (NASDAQ: ACAS) plans to let go an unspecified number of staffers in middle markets. As you can see in the chart below, they have had their fair share of pain in the process.

Dan Primack, of Private Equity Hub, also wrote a piece noting that no one is getting hired in finance anymore, so he linked to an M&A article about “how to get fired.“

Our own Zac Bissonnette wrote here on BloggingBuyouts at the end of February about how M&A was down so much that dealmakers were set for huge layoffs.

But here we are at the end of April and no major firings have come the way of dealmakers. Since they cannot all jump into “distressed mortgages and loans” and since they cannot all go to work for a SPAC immediately, it seems only a matter of time and that time is sooner rather than later.

The one thing you can bet on is that there won’t be press releases out of private equity firms. They’re private for a reason, well most are still private. When the news does come out it’s probably safe to assume that the firms will state this is merely a reflection of the current conditions or something of the like. Just keep in mind that companies don’t fire waves or groups of workers if they think they will be needed in a few months time.

Who knows, maybe they will just announce worker furloughs through the end of summer.

Permalink | Email this | Linking Blogs | Comments

Share This

Share This

Filed under: Management, Engagements, Investments

Mark Mobius, one that I consider a seer and leading pioneer among emerging market fund managers, has said he is in talks for private equity investment in Iraq. According to Reuters (and others), he’s getting closer to plunking funds down into Iraq.

He said various small manufacturing and food companies that are worth looking at to provide investments. If Mobius invests in Iraq, his investment group will be one of a few companies to invest in Iraq projects since the U.S. invasion. One brave investor, Godvig-Capital Management, has a hedge fund called the Babylon Fund that focuses on Iraq.

Mr. Mobius manages approximately $40 billion in emerging market assets through Templeton Asset Management, a part of Franklin Resources Inc. (NYSE: BEN). He is in the process of developing a $300 million fund for emerging markets.

Mobius is the one who has been coined with the term “Invest when there’s blood in the streets.” Well, that means he sees many opportunities in Iraq.

Jon Ogg is a producer and editor of the Special Situation newsletter and the “10 Stocks Under $10″ weekly newsletter for 247Wallst.com.

Read | Permalink | Email this | Linking Blogs | Comments

Share This

Share This

Filed under: Management, Engagements, Investments

Mark Mobius, one that I think about a seer and leading pioneer among emerging market fund managers, has stated he is in speaks for private equity investment in Iraq. According to Reuters (and others), he’s getting closer to plunking funds down into Iraq.

He said various small manufacturing and food companies that are worth looking at to provide investments. If Mobius invests in Iraq, his investment group will be one of a few companies to invest in Iraq projects since the U.S. invasion. One brave investor, Godvig-Capital Management, has a hedge fund called the Babylon Fund that focuses on Iraq.

Mr. Mobius manages approximately $40 billion in emerging market assets through Templeton Asset Management, a part of Franklin Resources Inc. (NYSE: BEN). He is in the process of developing a $300 million fund for emerging markets.

Mobius is the one who has been coined with the term “Invest when there’s blood in the streets.” Well, that means he sees many opportunities in Iraq.

Jon Ogg is a producer and editor of the Special Situation newsletter and the “10 Stocks Under $10″ weekly newsletter for 247Wallst.com.

Read | Permalink | Email this | Linking Blogs | Comments

Share This

Share This

Filed under: Deals, Management, Raising money, Apax Partners, Bain Capital, Private equity industry, Investments, Value and lack thereof

An article by South-African based Business Report summarizes private equity trends this year amidst the crunched credit markets and slowing U.S. Economy. While it isn’t exactly 2007 or 2006, the numbers are still impressive.

According a Private Equity Intelligence Study cited in the article, in the first three months of 2008, private equity funds have raised $163.5 billion.

Last year, leveraged buyouts tripled the $73 billion posted in the same period this year. This article is also confirming what we have started seeing in many such private equity trends for the start of 2008, as it notes that leveraged buyouts are being replaced with distressed debt. That is amounting to $40 billion being raised by 31 firms so far. For example, Bain Capital’s hefty $13.5 billion fund targets distressed debt, as well as venture and property.

Read | Permalink | Email this | Linking Blogs | Comments

Share This

Share This

Filed under: Deals, Management, Raising money, Apax Partners, Bain Capital, Private equity industry, Investments, Value and lack thereof

An article by South-African based Business Report summarizes private equity trends this year amidst the crunched credit markets and slowing U.S. Economy. While it isn’t exactly 2007 or 2006, the numbers are still impressive.

According a Private Equity Intelligence Study cited in the article, in the first three months of 2008, private equity funds have raised $163.5 billion.

Last year, leveraged buyouts tripled the $73 billion posted in the same period this year. This article is also confirming what we have started seeing in many such private equity trends for the start of 2008, as it notes that leveraged buyouts are being replaced with distressed debt. That is amounting to $40 billion being raised by 31 firms so far. For example, Bain Capital’s hefty $13.5 billion fund targets distressed debt, as well as venture and property.

Read | Permalink | Email this | Linking Blogs | Comments

Share This

Share This

Filed under: Management, Raising money, Venture capital industry, Private equity industry, Investments

IndexAtlas has announced the launch of the $50 million Art Industry Fund, an substitute private equity fund targeting only businesses that serve the art industry.

This will include such operations as auction houses, advisory services, financial and security firms, software and media companies. Each investment is intended to last four years and will range from $3 to $8 million. The fund is expected to shut by December 31, 2009.

CEO and founder of IndexAtlas, Sergey Skaterschikov, believes the fund will generate an IRR of 35% and bases his investing strategy on his book, “Skate’s Art Investment Handbook.” Skaterschikov established IndexAtlas in 2001 and manages $400 million in fully invested funds and has advised on $2.4 billion in transactions.

There have been many such reports in here showing how there has been a convergence of private equity and venture capital. If this isn’t a prime example of that, then nothing else is.

If I didn’t know superior, it almost sounds a lot like a Sotheby’s (NYSE: BID) incubator fund, although it’s not.

Read | Permalink | Email this | Linking Blogs | Comments

Share This

Share This

Filed under: Management, Raising money, Venture capital industry, Private equity industry, Investments

IndexAtlas has announced the launch of the $50 million Art Industry Fund, an alternative private equity fund targeting only businesses that serve the art industry.

This will include such operations as auction houses, advisory services, financial and security firms, software and media companies. Each investment is intended to last four years and will range from $3 to $8 million. The fund is expected to close by December 31, 2009.

CEO and founder of IndexAtlas, Sergey Skaterschikov, believes the fund will generate an IRR of 35% and bases his investing strategy on his book, “Skate’s Art Investment Handbook.” Skaterschikov established IndexAtlas in 2001 and manages $400 million in fully invested funds and has advised on $2.4 billion in transactions.

There have been many such reports in here showing how there has been a convergence of private equity and venture capital. If this isn’t a prime example of that, then nothing else is.

If I didn’t know better, it nearly sounds a lot like a Sotheby’s (NYSE: BID) incubator fund, although it’s not.

Read | Permalink | Email this | Linking Blogs | Comments

Share This

Share This

Filed under: Management, The Blackstone Group, KKR, The Carlyle Group, Apax Partners, Bain Capital, Permira, Private equity industry, Investments, Value and lack thereof, Public or private?

If you’ve ever wondered why so many low-P/E ratio technology companies haven’t been gobbled up, there is a really good explanation: R&D, leverage, and volatility.

Business Week just ran a great cover story titled “When a Buyout Goes Bad” for this week’s magazine. The case in hand is the old private equity buyout of Freescale, which was the chip business from Motorola Inc. (NYSE: MOT). This speaks about a company that was turned around from the edge of the cliff by a great tech leader who created a great stock again. Then the $17.6 billion buyout came from a group led by The Blackstone Group (NYSE: BX), Carlyle Group, and Permira Advisers. This buyout came after being in a competing bid from a consortium led by KKR, Bain Capital, Apax Partners, and Silver Lake Partners.

Last year the company’s revenues fell 10% while the chip sector revenues grew by 5%, then Motorola announced a spin-off or sale of its handset business, and then there is the issue of the $9.5 billion in debt that was clumped on top of the company to get the private equity buyout done.

Unless you are selling transistors and capacitors or just plain Jane DRAM, technology companies require heavy R&D commitments. This is why historically technology companies used to come public back before the 1990’s “get rich from tech stock option awards” became the norm. The bookkeeping changes required investor backers of a different group to mark down 15% of their $7 Billion stake as well. In fact, it notes that it is having a hard time ponying up the $1.2 billion for R&D and $400 million for capital expenditures needed for Freescale. And now there are inventory problems.

For me personally, I am not all that surprised that Freescale was a temporary success. One night right shortly before Freescale was spun-off by Motorola, I was flying from Austin to Chicago. I spoke to two workers that said they were low level managers for Freescale. When they called the company “Free-Fall” and told me about some of their pension or retirement issues and stock option plans getting blended up (not for the better, at all), it left a bad taste in my mouth. Then when this one went private with that much debt and knowing what comm-chip R&D percentages of revenue were, I thought the billionaires were drinking too much of the cool-aid.

You should read that article as it puts it well into context. This is why niche technology companies generally end up being acquired by other niche technology companies or by larger tech companies that are competitors or that can complement each other. In mid to late-2006 you started seeing the private equity frenzy go into overdrive.

If you want good news or the silver lining, I do actually have some. I think that there will be another wave of public technology companies that get acquired. But the buyers will nearly all be LARGER public technology companies. Private equity and technology can mix, but the deals need to be smaller deals with less leverage and in companies that require less R&D.

Read | Permalink | Email this | Linking Blogs | Comments

Share This

Share This

Filed under: Management, Movers and shakers, Engagements, Private equity industry

Private equity firm Behrman Capital has announced that General Peter Pace, retired USMC and former Joint Chiefs of Staff Chairman, took the role as Operating Partner with the firm. General Pace was also named as Chairman of the Board to Pelican Products, an advanced lighting systems and valuable equipment case manufacturer. He’ll also direct ILC Industries, Inc., a company that provides defense electronics (of course the defense angle).

Grant Behrman of the firm noted that General Pace has forty years tenure in the Marines and then as Chairman of the Joint Chiefs of Staff. Pace graduated from the U.S. Naval Academy and has an MBA from George Washington University.

Behrman Capital is a private equity investment firm with more than $2 billion of capital under management and it invests in management buyouts, leveraged “buildups” and recapitalizations of established growth companies. If you look through the private equity firm’s portfolio companies, you can see why having a former general and Joint Chiefs of Staff Chairman would be a good thing.

Permalink | Email this | Linking Blogs | Comments

Share This

Share This

Filed under: Management, The Blackstone Group, KKR, The Carlyle Group, Apax Partners, Bain Capital, Permira, Private equity industry, Investments, Value and lack thereof, Public or private?

If you’ve ever wondered why so many low-P/E ratio technology companies haven’t been gobbled up, there is a really good explanation: R&D, leverage, and volatility.

Business Week just ran a great cover story titled “When a Buyout Goes Bad” for this week’s magazine. The case in hand is the old private equity buyout of Freescale, which was the chip business from Motorola Inc. (NYSE: MOT). This speaks about a company that was turned around from the edge of the cliff by a great tech leader who created a great stock again. Then the $17.6 billion buyout came from a group led by The Blackstone Group (NYSE: BX), Carlyle Group, and Permira Advisers. This buyout came after being in a competing bid from a consortium led by KKR, Bain Capital, Apax Partners, and Silver Lake Partners.

Last year the company’s revenues fell 10% while the chip sector revenues grew by 5%, then Motorola announced a spin-off or sale of its handset business, and then there’s the issue of the $9.5 billion in debt that was clumped on top of the company to get the private equity buyout done.

Unless you are selling transistors and capacitors or just plain Jane DRAM, technology companies require heavy R&D commitments. This is why historically technology companies used to come public back before the 1990’s “get rich from tech stock option awards” became the norm. The record-keeping changes required investor backers of a different group to mark down 15% of their $7 Billion stake as well. In fact, it notes that it is having a hard time ponying up the $1.2 billion for R&D and $400 million for capital expenditures needed for Freescale. And now there are inventory problems.

For me personally, I’m not all that surprised that Freescale was a temporary success. One night right shortly before Freescale was spun-off by Motorola, I was flying from Austin to Chicago. I spoke to two workers that stated they were low level managers for Freescale. When they called the company “Free-Fall” and told me about some of their pension or retirement issues and stock option plans getting blended up (not for the superior, at all), it left a bad taste in my mouth. Then when this one went private with that much debt and knowing what comm-chip R&D percentages of revenue were, I thought the billionaires were drinking too much of the cool-aid.

You should read that article as it puts it well into context. This is why niche technology companies generally end up being acquired by other niche technology companies or by bigger tech companies that are competitors or that can complement each other. In mid to late-2006 you started seeing the private equity frenzy go into overdrive.

If you want good news or the silver lining, I do actually have some. I think that there will be another wave of public technology companies that get acquired. But the buyers will nearly all be LARGER public technology companies. Private equity and technology can mix, but the deals need to be smaller deals with less leverage and in companies that require less R&D.

Read | Permalink | Email this | Linking Blogs | Comments

Share This

Share This