Volcker Rule Private Equity

Volcker Rule

The Paul Volcker Rule and Private Equity

The so-called Volcker Rule is a financial reform proposal by President Obama's economic advisor, Paul Volcker.  The Volcker Rule proposes reducing the size of banks and placing limits on banks' proprietary lending.  As the President outlined the plan earlier this month, “Banks will no longer be allowed to own, invest or sponsor hedge funds, private equity funds or proprietary trading operations for their own profit, unrelated to serving their customers.”

Although this would in some ways hurt the industry, private equity firms would also gain from the rule because it would reduce and even eliminate competition from large investment banks.  For more information on the Volcker Rule see the Journal's coverage here.  It does seem that Congress will reject the Volcker's push for financial reform but it is possible that a similar bill with his ideas will surface this year. 

I came across this FT interview with Tony James, president of Blackstone, where he discusses the Volcker Rule and how it would impact private equity:

FT: What do you think about the Volcker rule, is it a good idea?
TJ: I think it’s too vague to know, frankly. I don’t think it’s going to in any way make the system more systemically safe. At least as far as managing the private equity hedge funds go, I don’t think that they are sources of systemic risk. Prop trading, hard to know how that’s defined, I don’t know how you define the role between what’s hedging and what’s really speculative bets. I think tampering back speculative bets is probably a good thing, that part of it I agree with.
FT: And by all players or just by banks?
TJ: I think it’s fair to say by people that get the support of the Federal Government, whether that be access to the Fed, deposits that are guaranteed or other debt guarantees.
FT: So, that sounds like you agree with the spirit of the Volcker rule?
TJ: I think it’s hard to implement, though. I think it’s one of those admirable goals and I think that will be in the details.
FT: As regulations currently stand, are regulators requiring banks to put enough capital against proprietary trading?
TJ: I think you’d have to say no in retrospect. I think you’d also have to say they’re not paying enough for the deposit insurance in retrospect.
FT: And in retrospect, do you think Volcker is right to be focusing on this as a particular source of systemic risk? Some people have said no, that it’s beside the point.
TJ: I think it could play a role in it, I don’t think it’s critical. Again, I don’t think you have to get them out of the business, which is what Volcker’s trying to do. I think you can do it with capital requirements and sources of funding and things like that.  Read More

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Tags: Volcker Rule, Volcker financial reform, Paul Volcker, Obama, Financial regulation, financial reform, reforms, Volcker Rule and Private Equity

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Spain EU Regulations

Spain Pushes EU to Regulate Non-EU Funds Tougher

Spain is working to enact tougher regulations on non-European Union hedge funds causing further problems in negotiating the EU's Alternative Investment Fund Managers legislation. Spain has taken the reins from Sweden as head of the EU and is pushing for a Swedish proposal to force foreign funds marketing their services inside EU countries to make their yearly report available to investors and regulators and be subject to tighter inspection by a regulator.

The foreign-funds clause has been one of the more contentious aspects of the EU's controversial Alternative Investment Fund Managers legistlation and has prompted accusations of protectionism by hedge-fund industry officials and the U.S. and U.K. governments.


The proposed change underscores the bloc's deep ideological divisions about regulating financial markets in the wake of the economic crisis. Germany, France and Italy are staunch critics of hedge funds and other aspects of financial markets that critics say have evolved beyond regulators' understanding and oversight.


The U.K. has taken the opposite stance, saying added scrutiny could push financial firms to find new venues with less stringent regulations. The foreign-funds clause in its current form would create "significant legal uncertainty," the Bank of England's Financial Markets Law Committee said in a report published Tuesday, which in turn could lead to "widespread market disruption." Source

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Europe Private Equity IPO Update

European Privately-Held Companies Preparing for IPO

European companies held by private equity firms are preparing for an initial public offering this year.  Private equity firms are eager to take these portfolio firms public to finally gain the profits from selling the shares.  It has been a quiet two years for private equity firms but it is expected that buyout firms will dominate the IPO market this year, with 20-30 private equity-owned companies considering an IPO in 2010.  Read more about the expected wave of private equity-held companies launching IPOs in 2010 here.

Bankers say 20 to 30 private equity-owned companies in Europe are contemplating IPOs this year. Some buy-out executives say this expected wave of flotations could be a crucial factor in their industry’s recovery from the crisis.

Stephen Schwarzman, Blackstone’s chief executive, has told investors that his group plans to float eight companies this year. In the UK, Permira has promised to return a “wall of cash” to investors by floating or selling a number of its portfolio companies.

Private equity is expected to dominate the IPO market this year, after two quiet years. Private equity-backed IPOs raised $16.4bn globally last year, up from $11bn in 2008, but a fraction of the $55.8bn in 2007, according to Dealogic, the financial data provider.

Most of the flotation action by private equity last year was in the US, where 25 companies raised $8.5bn, and in Asia, where 25 companies raised $7.1bn. Europe, the Middle East and Africa produced only three private equity IPOs raising just $779m.  Source

What is an initial public offering?



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Tags: Private equity ipo, private equity initial public offering, initial public offerings, european private equity offerings, ipo, ipos, initial public offerings 2010, 2010 ipo, europe

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Private Equity Consolidation

Managers Predict Private Equity Industry Consolidation

A new survey found that the majority of buyout managers are expecting a consolidation within the industry as fundraising troubles persist, the economy is still struggling, and looming regulation.  Expectations for mid-market buyouts are much more optimistic on the other hand, as three quarters of surveyed managers said they would do more mid-market deals as financing is more available for smaller deals. One of the biggest concerns for managers is the cost of debt financing for deals which has forced a decline in buyouts and managers fear that banks will not loosen credit for some time. 

More than four fifths of managers working in private equity expect a wave of closures or mergers within the industry because the poor fundraising environment will last longer than previously expected, according to a survey of senior buyout practitioners.

The poll, conducted by Private Equity News, found that difficulty in raising funds, coupled with fears about the health of the economy and increased regulation, would continue to haunt the sector, with larger buyouts in particular likely to face a challenging year.

Only one quarter or those who took part in the survey said they expected the average cost of debt financing to be lower this year, compared with 2009.

Of the 500 people and firms surveyed, three quarters of those who expected consolidation said it would come from firms closing because they would be unable to raise funds, while a quarter expected consolidation through mergers or acquisitions.  Source

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Obama 2011 Budget Hedge Funds

Obama's 2011 Budget Raises Taxes on Private Equity

President Obama released his budget proposal for 2011 which would raise taxes on private equity firms and hedge funds.  As expected, the president is urging Congress to eliminate the carried interest tax loophole and tax performance fee income as ordinary income.  This change would be a significant blow to funds and managers who rely on this performance fee.  Congress still has to approve the budget and it will likely be changed from Obama's original proposal.

The president’s plan would eliminate the so-called carried-interest loophole, which taxes fee income earned by alternative investments professionals as capital gains, rather than ordinary income. The Obama plan would tax performance fee income as ordinary income, nearly tripling the amount some managers will pay. The provision would add $24 billion to the government’s coffers over the next 10 years.

The fiscal year 2011 budget also includes several other tax provisions likely to hit the alternative investments industry hard. Obama has proposed allowing the tax cuts on wealthy Americans pushed through by President George W. Bush to expire, increasing the top income-tax bracket to 39.6%. That would net nearly $1 trillion in new revenues for the government as it struggles to both prop up the U.S.’s ailing economy and cut its ballooning deficit.

Tags: Private equity, taxes, tax treatment, capital gains loophole, carried interest, income taxes, fund managers taxes, obama budget

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Palestinian Private Equity

First Private Equity Fund focusing in Palestine Opens

There are private equity funds opening all over the world and two Arab investment firms have just opened the first private equity fund in Palestine.  Abraaj Capital and the Palestine Investment Fund have collaborated to open the fund which will focus on small and medium-sized companies.  The two firms provided $15 million in seed money and hope to reach $50 million by the end of this year.

Two Arab investment companies have announced the launch of the first private equity fund designed to boost the Palestinian economy.

The semiofficial Palestine Investment Fund and Dubai-based private equity firm Abraaj Capital, said Sunday that they will invest in small and medium-sized businesses. They say they will provide an initial $15 million, and hope to raise a total of $50 million this year.

Western-backed Palestinian Prime Minister Salam Fayyad, an internationally respected economist, has announced plans to build institutions to lay the groundwork for independence in two years, regardless of progress in peace talks with Israel. The fund jibes with this plan.  Source

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Tags: Palestine, Palestinian, Palestine Investment Company, Palestine investments, finance, palestine private equity firms, first private equity fund in Palestine

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Private to Public Company Preparations

Private to Public Company Video

Video on Preparing Private Companies Going Public

Going public is not as easy as private equity owners may lead you to believe, Rosetta Stone is one example of an IPO that started well but then hit some challenges.  Here is a brief talk with Mintz Levin partner Jeffrey Schultz on what a private company should consider in preparing to go public.  E-mail subscribers can watch the video here.



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Tags: private companies,  public companies, private to public, private firms, private equity, going public, private to public offerings, ipo, initial public offering

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European Private Equity Market

European Private Equity Market Showing Signs of Life

The European private equity market has been hurting particularly badly since the onset of the financial crisis but it may be breathing new life over two years later.  A few European buyout deals involving large private equity firms, including KKR and Carlyle, may be a signal that the industry is beginning to recover.  Two buyouts in Europe is certainly not enough to assume the worst is over, but after such a rough stretch, it's a welcome signal.  Here's more from the Journal:

KKR is paying just under £1 billion ($1.61 billion) to buy U.K. retailer Pets at Home. Meanwhile, several buyout groups, including CVC Partners, Carlyle and BC Partners, are considering a €5 billion ($7.04 billion) bid for German pay-TV operator Kabel Deutschland. If successful, that would be the biggest European leveraged buyout since 2007.

True, it would be a mistake to read too much into either deal. The Pets at Home deal is hardly on the scale of the mega-deals that buyout shops like KKR targeted during their heyday. Nor is it a particularly leveraged: the combined mezzanine and senior debt package is worth around €350 million, with the bulk of the deal financed by equity. The debt may amount to five times Ebitda, well above the three to four times limit that banks were prepared to allow last year, but it is still way below the six to eight times available in the boom.

Kabel Deutschland is also a special case because it is already private equity-owned and its high-yield bonds are widely held among European investors. Its five-year credit default swaps currently trade around 380 basis points, tight for the junk bond market, suggesting there's likely to be good appetite for new bond issuance.   Source

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Carried Interest Tax Bill

Senator Says Carried Interest Tax Increase Will Not Pass

There is more news regarding the proposed bill that would increase taxes on private equity managers' carried interest.  Senator Debbie Stabenow of Michigan, a member of the Senate Finance Committee, has said that she thinks it is unlikely that the carried interest tax reform will be included in the final Senate bill.  If it does make it into the bill and passes, private equity managers will see their taxes increase significantly as carried interest would be taxed as ordinary income from a 15% to a 35% top tax rate. 

The carried-interest tax loophole will not be closed, a member of the U.S. Senate Finance Committee said, which means that hedge fund and private equity fund managers won’t see their tax bills double this year. 

Sen. Debbie Stabenow (D-Mich.) said it was unlikely that the Senate would pass a provision that would treat carried-interest, or a manager’s share of a fund’s profits, as ordinary income, rather than capital gains. That means that performance fees would be taxed at a top rate of 35%, rather than 15%.

The U.S. House of Representatives has already approved the closing of the loophole as part of a bill extended $31 billion in tax cuts.

“I don’t think it’s going to be part of the Senate bill,” Stabenow told Crain’s Detroit Business. “While members of the committee have brought it up, it won’t be part of any bill we pass.”  Source

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Private Equity Homebuilders

Private Equity Funds Lending to Homebuilders

Private equity funds are offering some much-needed financing to homebuilders.  The banking industry is still recovering from the financial crisis and lending too little.  In the absence of traditional bank lenders, private equity funds are stepping in as a lifeline for homebuilders and seizing an opportunity for high returns from the interest on the loans.

Investment funds and a handful of lenders held court in a corner of the Las Vegas Convention Center, receiving a throng of homebuilders looking for a financial lifeline.
The event, held over four days during the International Builders' Show, was meant to address a key industry roadblock. Homebuilders have seen land development and home construction loans all but dry up since the financial crisis erupted in the fall of 2008. Many have had to walk away from half-finished projects or even shut down.

Now some private equity funds, seeing the potential to charge up to 20 percent interest, are cautiously bankrolling some projects, despite the danger that the fragile housing recovery could stall.

"It's a very opportune time to make loans," said Craig Manchester, managing partner of Sentinel Capital. Manchester said he charges builders between 12 to 15 percent, plus fees. "A year from now, two years from now — who knows — there may be other lenders who are competing against us, driving our pricing down."  Read full article

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Tags: homebuilders, home building, construction, private equity funds construction, construction firms, private equity homes, private equity houses

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Top 5 Private Equity Career Mistakes

Video of Top 5 Private Equity Career Mistakes

Here is a brief video I created on the top 5 private equity career mistakes.  I will be making more of these free videos for this blog in the future and as usual any feedback is welcome.   For those of you following through RSS or e-mail please click here to watch.  Here is the top 5 career mistakes:


Here is the post which I based the video on with expanded explanations of all five career mistakes:

There is a fine line between between being competitive while pursuing a job and annoying the potential employer. The following is an explanation the top five career mistakes that you should avoid. It is targeted toward professionals in the finance and investing industry which is highly competitive and many people's enthusiasm for getting the job leads them to commit errors that ruin their chances. I receive lots of applications from people looking to enter the private equity industry and almost all of these applicants (although well-meaning) unknowingly makes at least one of these mistakes.

Here are five very common mistakes:

1. Don't be annoying. Annoying may seem a bit harsh but I don't know how else to describe ten e-mails confirming that you received the first e-mail. By pursuing a hirer or recruiter too aggressively he will want to give you a shot even less rather than catching his attention.
2. Don't be overconfident. Confidence is healthy and necessary especially in the business world but being overconfident to the point you claim to know everything begs the obvious question, "then why would I hire you, shouldn't you hire me?" Especially for entry-level positions, this is the wrong attitude. You should be eager to learn more about the industry from those with experience. You send the wrong message by marketing yourself as better than everyone and imply that you are a no-it-all.
   
3. No long resumes or emails. Resumes should be kept short. I understand that you want to highlight all the qualifications and attributes that make you the right candidate for the job but the people who read your resume are busy and want it written concisely and clearly. For a guide to writing a quality resume see Private Equity Resume. The same applies to emails, I know of people (myself sometimes included) who will stop reading emails because they are epic essays that do not have a clear objective. The best emails are brief and to the point.
   
4. Generic is boring. You have to separate yourself from the other hundreds of emails or applications. By trying to appear well-rounded you sometimes underplay your specific abilities and areas of expertise. There are thousands of people with finance experience who want to work in private equity so you have to differentiate yourself from the herd. Employers want to hire people that fill a specific void in that private equity firm.
   
5. Passion is not enough. This is a lesson for those applicants who think that passion alone can get them in the door. I've seen this first hand with internship applicants with e-mails like "Working in private equity is my dream! I love the industry; it's so exciting..." It's great that you're excited about the industry and employers do look for people passionate about the industry but often people will little qualifications or experience use this enthusiasm as a way of compensating. Employers see through this so back up your communications with something stronger than exclamation points.

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Private Equity Obama Plan

Private Equity Could Be Hurt by Obama's Plan

Experts say that Obama's plan to reform commercial banks could have an adverse impact on hedge funds and private equity.  On Thursday, President Obama presented his plan to stop commercial banks and institutions owning banks from "owning, investing in or sponsoring" private equity and hedge funds which would remove a significant source for alternative asset funds.  The President is aiming to curb risk in the banking sector but private equity firms and hedge funds may pay a penalty too.

U.S. banks in particular make a tremendous contribution to the buyout sector and have raised 60 funds since 2006, with a total value of more than $80 billion, according to London research firm Preqin. Currently, U.S. banks have 18 new private equity funds on the road seeking aggregate funds of around $18 billion, and have $50 billion worth of "dry powder" waiting to be invested.

The main players include Goldman Sachs Inc. (GS), which has $27.2 billion (EUR19.2 billion) of capital ready to deploy in private equity deals, the most of any firm globally. Other prolific banks include Credit Suisse Group (CS), Citigroup (C) and Morgan Stanley (MS).

In Europe, Lloyds Banking Group (LYG) owns Lloyds Development Capital, which manages GBP2 billion of investments. Barclays PLC (BCS) has been contributing less of its balance sheet to its private equity arm, Barclays Private Equity, for some time and is already considering a spin out. Its latest fund raised EUR2.4 billion in 2007 and it had plans to raise another fund this year.
Source

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Tags: Hedge Funds Obama Plan, obama hedge funds, hedge fund investment, hedge funds assets, President Obama, Barack Obama, hedge funds and private equity

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Copywriting for Capital Raising

Here is a short video which explains why copywriting is so important and why ignoring this area can kill your progress towards raising more capital for your private equity fund. Below is a definition of copywriting for those of you new to the subject.

Definition of Copywriting:  The strategic use of the right words within sales letters, websites and presentations to influence others to take action.

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SuperReturn International

 SuperReturn International 2010 Private Equity Conference

As I have noted in previous posts, attending conferences is a great way to improve your career prospects by networking with other private equity professionals, enhance you knowledge of the industry and discover valuable new business partners.

SuperReturn International 2010 is one of the largest conferences on private equity with talks from the top names in the industry.  SuperReturn International takes place in Berlin 8 – 11 February 2010.  This is the 13th annual event with a following of over 1200 attendees from across the globe.

Delegates will hear 220 industry leaders such as David Rubenstein, Guy Hands, Hardy McLain and Dwight Poler discuss the most critical issues facing the industry.

The vast agenda include off the record interview sessions with Leon Black and Richard A. Friedman and John P. Grayken. Delegates will listen to guest speakers such as Paul Gompers, Harvard Business School and turnaround guru Greg Brenneman; and LP panels with The Guardian Life Insurance Company of America, New York City Retirement System and Teachers Private Capital. Furthermore, delegates can participate in knowledge sharing workshops on topics such as secondaries, emerging markets and seizing opportunities during the downturn; and hear real-time industry feedback in the audience polling session moderated by Jon Moulton.

The heart of the conference is networking, and to facilitate this, delegates access all attendees and schedule meetings 2 weeks before the start of the conference using an online networking site.

GPs can present during a fundraising showcase in front of an LP-only audience or a delegate Quickfire showcase. There is also speed networking, “Meet the LP” roundtables, Champagne roundtables, interactive information sharing sessions, evening drinks receptions and much more to facilitate meeting new and old contacts.

For more information on this private equity conference click here: http://www.icbi-events.com/superreturn-peblog

New registrations are offered a 15% discount by quoting VIP: KR2261PEBLOG.



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UK Buyouts Low

UK Buyouts Hit 25 Year Low With Little Debt for Deals

Buyouts in the UK have been struggling for the past 25 years, according to a new study, and the financial crisis has made it even harder to execute deals.  The value of buyouts in the UK fell to 72% in 2009 which is a 25-year low.  The most likely cause for this decline is that there is very little debt available to fund deals in the UK and sellers are unwilling to lower prices to meet buyers' offers.  Deal value in 2009 was roughly $3.36 billion, a massive decline from just over $12 billion the previous year.  In terms of volume and value of the private equity buyouts, it is nearly the worst in 25 years at 117 deals and $2.8 billion, respectively. 

Meanwhile the volume and value of private equity-backed buyouts at 117 deals and GBP4.7 billion respectively were also the worst for a quarter of a century.

Large buyouts which require higher multiples of debt were the hardest hit and private equity buyers were forced to stump up significantly higher amounts of cash to fund acquisitions--the average equity contribution rose to 64% in 2009, from 48%, said CMBOR.

However there is evidence that confidence is returning to the buyout market as the value of buyouts backed by private equity firms in the fourth-quarter of 2009 rose 48% to GBP843 million, from GBP636 million the previous quarter, it added.

Further, confidence is also returning to public markets and a slew of initial public offerings by private equity-owned companies are coming to market including Blackstone Group's (BX) Travelport which earlier Tuesday confirmed plans to float its shares on the London Stock Exchange in a transaction valuing it at around $3 billion, London's largest IPO in nearly two years.  Source

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Buyout and Venture Capital Funds

Comparing Buyout and Venture Capital Funds

I've been looking through PitchBook's latest report on private equity this week.  One thing that struck me is just how poorly venture capital is still doing.  The industry has been largely in decline since the dot-com tech bubble burst and it never really seemed to recover.  Although there have been a lot of great venture-backed companies in the last ten years there have been some abysmal failures which I think has kept a bit of nervousness in investors.  Which may explain why venture capital managed to raise just 6% of capital last year in private equity, according to PitchBook.

In another part of the report, which contrasts fund returns for different fund types, private equity funds have performed superior to venture capital funds.  This should not come as a big surprise, when you remove the exceptionally high returns of 1999-2001 venture capital funds have not given the same level of returns as private equity funds have over time.  This is largely because venture capital funds have a problem with exits but perhaps with the IPO market seemingly strengthening, venture capital funds will be able to successfully take their firms public.

The average IRR (Internal Rate of Return) for mature funds (vintage 2005 and older), shows that private equity funds, which are made up of Buyout, Growth and Restructuring funds, among others, have achieved consistently higher returns than venture capital funds. VC funds, which saw outsized returns during the technology bubble of the 1990’s, have found mixed results in the first decade of the 21st century.

To read the PitchBook report please visit this link


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Private Equity IPO

Private Equity Initial Public Offerings to Lead 2010

Here's just a short article I came across today which covers the expected wave of IPOs coming from private equity and venture capital firms.  The market was largely considered too unstable in 2009 to bring any privately-held companies public, but now as the stock market recovers private equity portfolio companies are going to lead the IPOs.  It's going to be an interesting next couple months as the firms test investor interest in young or restructured companies--if they don't end up holding off a bit longer.

Venture capitalists that own companies as diverse as New Look and Hilton hotels are struggling to raise fresh capital from credit-crunched investors; an alternative is to consider flotation as an exit route, allowing them to realise investments after a two-and-a-half year IPO drought.

David Wilkinson, UK head of IPOs at Ernst & Young said: "With recovery some way off and an election in the offing, the IPO window could be relatively short as political and economic uncertainties kick in later in the year. But we hear that the IPO pipeline is relatively full and expect quite a few operations to come to market in the near future, especially where they involve private equity."

City sources say that a number of companies are looking at flotations before Easter in the hope that the stock market will continue to rally in the first half of 2010.   Source

What is an initial public offering?

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Family Office Contact Details in Excel

Family Office Contact Details

The Family Offices Database Version 3.1 has now been released.  The Family Offices Database is an Excel-based database of contact details for single and multi-family offices.  Around 71% of the family offices within this database are US-based and around 27% of them are Europe-based.

Version 3.1 includes updated contact details, new listings, and improved data quality over the last few versions of this resource.  To learn more about this resource please watch our video or click here.

Our website is http://FamilyOfficesDatabase.com

Tags: Contact Details for Single Family Offices, Multi-family office contact details, family office contacts in the United States, family office contacts in Excel, Excel contact details for a family office, family office email address

Link to This Resource: Family Office Contact Details in Excel

http://privateequityblogger.com/2010/01/family-office-contact-details-in-excel.html

Corporate Bankruptcies in 2009

List of 116 Important Corporate Bankruptcies Last Year

Here is a good recap from Robert Salomon of 116 notable corporate bankruptcies which occurred last year.  Salomon is pretty pessimistic of next year, predicting that there will be 300 corporate bankruptcy filings in 2010.  Last year, his forecasting that there would be more than 400 major corporate bankruptcies proved a bit too high (the total for 2009 was 249). 

Professor Salomon puts forth an interesting hypothesis for why bankruptcies increased as the year went on rather than declining as the economy started to stabilize: 

As I mentioned in a previous post, the stylized fact that the pace of corporate bankruptcies decreased through Q2, Q3, and Q4 begs the question of whether the underlying cause was a structurally improved economy or the massive Fed/Treasury liquidity programs keeping weaker firms on artificial life support. My sense is that it had more to do with the latter than the former, but we will find out for certain once the Fed/Treasury start to unwind their extraordinary liquidity programs.

Here is the list of 116 notable corporate bankruptcies from Seeking Alpha:

• 1st Centennial Bancorp (Banking)
• AbitibiBowater Inc. (ABWTQ.PK) (Paper)
• Accuride Corporation (AURD.OB) (Trucking)
• Adamar Inc. dba Tropicana Casino & Resort (Gambling)
• Advanta Corp. (ADVNA) (Banking/Finance)
• Altus Pharmaceuticals (ALTU) (Pharma)
  
• American Community Newspapers Inc. & LLC (Newspapers)
• ARG Enterprises, Inc. (Restaurants)
• Aurora Oil & Gas Corporation (AUEGF.PK) (Energy)
• Aventine Renewable Energy Holdings, Inc. (AVR) (Energy)
• BankUnited Financial Corporation (BKUNA) (Banking)
• Barzel Industries, Inc. (Manufacturing)
• Baseline Oil & Gas Corp. (Energy)
• Bearingpoint, Inc. (BGPT.OB) (Consulting)
• BI-LO, LLC (Supermarkets)
• Bruno’s Supermarkets, LLC (Supermarkets)
• Butler International, Inc. (IT Services)
• California Coastal Communities, Inc. (CALC) (Real Estate)
• Cape Fear Bank Corporation (Banking)
• Capital Corp of the West (Banking)
• Capmark Financial (Banking)
• CCS Medical, Inc. (Medical)
• Champion Enterprises, Inc. (CHB) (Real Estate)
• Charter Communications, Inc. (CHTRQ.PK) (Telecom)
• Chemtura Corporation (CEMJQ.PK) (Chemicals)
• Chrysler LLC (Automobiles)
• CIB Marine Bancshares, Inc. (Banking)
• CIT Group (CIT) (Banking)
• Citadel Broadcasting (CTDB.PK) (Media)
  
• Colonial BancGroup, Inc. (CNB) (Banking)
• Cooperative Bankshares, Inc. (COOP) (Banking)
• Cooper-Standard Holdings (Automobile)
• Crescent Resources, LLC (Real Estate)
• Cynergy Data, LLC (Banking)
• deCODE Genetics, Inc. (DCGN) (Biotech)
• Eddie Bauer Holdings, Inc. (EBHI) (Retail)
• Edge Petroleum Corporation (Oil & Gas)
• Ennis Homes, Inc. (Real Estate)
• Extended Stay Inc. (Hotels)
• Fairpoint Communications (FRP) (Telecom)
• Filene’s Basement, Inc. (Retail)
• Finlay Enterprises, Inc. (FNLY) (Jewerly)
• Fleetwood Enterprises, Inc. (FLE) (Recreational Vehicles)
• Fortunoff Holdings, LLC (Retail)
• Fountainbleu Las Vegas, LLC, (Hotels)
• Freedom Communications Holdings, Inc. (Media)
• Fulton Homes Corporation (Real Estate)
• General Growth Properties, Inc. (GGWPQ.PK) (Real Estate)
• General Motors Corporation (MTLQQ.PK) (Automobiles)
• G.I. Joe’s, Inc. (Retail)
• Goody’s LLC (GDYS) (Retail)
• Gottschalks Inc. (GOT) (Retail)
• GSI Group, Inc. (GSIG) (Semiconductors)
• Guaranty Financial Group Inc. (GFG) (Banking)
• Herbst Gaming, Inc. (Gambling)
• Holley Performance Products, Inc. (Automotive)
• ION Media Networks, Inc. (ION) (Television)
• Idearc (IDARQ.PK) (Publishing)
• Imperial Capital Bancorp (Banking)
• Irwin Financial Corporation (IFC) (Banking)
• JL French Automotive Castings, Inc. (Automotive)
• Journal Register Companies (JRC) (Newspapers)
• Lazy Days RV Center, Inc. (Recreational Vehicles)
• Lear Corporation (LEA) (Automobile)
• Lyondell Chemical Company (LYO) (Chemicals)
• MagnaChip Semiconductor LLC (Semiconductors)
• Magna Entertainment (MECA) (Gambling)
• Majestic Star Casino, LLC (Gambling)
• Masonite Corporation (Real Estate Manufacturing)
• Metromedia International Group, Inc. (MTRM.PK) (Media)
• Midway Games, Inc. (MWY) (Entertainment Software)
• Monaco Coach Corporation (MNC) (Recreational Vehicles)
• Muzak Holdings LLC (Entertainment)
• Nortel Networks, Inc. (NRTLQ.PK) (Telecom)
• NTK Holdings – Nortek, Inc. (Construction)
• NutraCea (NTRZ.OB) (Health/Nutrition)
  
• Oscient Pharmaceuticals Corporation (OSCI) (Pharma)
• Pacific Energy (Oil & Gas)
• Penn Traffic Company (Supermarkets)
• Philadelphia Newspapers, LLC (Newspapers)
• Proliance International, Inc. (Manufacturing)
• RathGibson, Inc. (Manufacturing)
• Reader’s Digest, Inc. (RDA) (Media)
• Recycled Paper Greetings, Inc. (Greeting Cards)
• R.H. Donnelley Corporation (RHDC.PK) (Marketing)
• Ritz Camera Centers, Inc. (Retail)
• Samsonite Company Stores, LLC (SAMC) (Retail)
• Security Bank Corporation (Banking)
• Shane Company (Jewelry)
• Silicon Graphics, Inc. (SGID) (IT/Computing)
• Silver State Bancorp (Banking)
• Simmons Company (Bedding)
• Six Flags, Inc. (SIX) (Entertainment)
• Smurfit-Stone Container Corporation (SSCC) (Paper Manufacturing)
• Source Interlink Companies, Inc. (SORC) (Marketing)
• Southern Community Bancshares, Inc. (Banking)
• Spectrum Brands (SPEB.OB) (Consumer Products)
• Star Tribune Companies (Newspapers)
• Station Casinos, Inc. (STN) (Gambling)
• Sun-Times Media Group, Inc. (SUTM.PK) (Newspapers)
• Tarragon Corporation (TARR) (Real Estate)
• Team Financial, Inc. (Banking)
• Temecula Valley Bancorp (TMCV) (Banking)
• Teton Energy Corporation (Oil & Gas)
  
• Thornburg Mortgage, Inc. (THMR.PK) (Banking)
• TLC Vision Corporation (TLCV) (Vision/Eye Care)
• Trump Entertainment (TRMP) (Gambling)
• UCBH Holdings (UCBH) (Banking)
• U.S. Shipping Partners L.P. (Marine Transportation)
• Velocity Express Corporation (VEXP) (Delivery)
• Vineyard National Bancorp (VNBC) (Banking)
• Visteon Corporation (VC) (Auto Supplies)
• Walking Company Holdings, Inc. (Footwear)
• Wall Homes, Inc. (Real Estate)
• WL Homes, LLC (Real Estate)
• Young Broadcasting, Inc. (YBTVA) (Television)

To read the whole article by Professor Salomon, visit this link.



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Tags: corporate bankruptcies in 2009, corporate bankruptcy filings, major corporate bankruptcies, corporate bankruptcy, 2010, Robert Salomon, corporations

Link to This Resource: Corporate Bankruptcies in 2009

http://privateequityblogger.com/2010/01/corporate-bankruptcies-in-2009.html

Private Equity Fundraising in 2009

Moving Past Dismal Private Equity Fundraising in 2009

It's important to realize just how bad last year was for private equity fundraising before we set about trying to improve on it.  Fundraising in 2009 totaled just $246 billion, a 61% decline from the previous year.  In just the last quarter of 2008, private equity firms hauled in $158 billion, so more than half of all capital raised in 2009.   For tips on improving your fund marketing strategy look through this blog and see this free guide to private equity marketing materials.

Fund-raising actually got worse as the year went on, with the fourth quarter representing a low point for the year with only $35 billion raised by 75 funds –- the lowest quarterly total since the third quarter of 2003. To put that in perspective, the industry raised $158 billion in the fourth quarter of 2008 during the peak of the financial crisis.

The average fund size fell 13 percent, to $513 million this year, from $592 million last year. It also took private equity longer to raise the cash. The 25 largest funds took an average of 18 months to raise money in 2009, compared with 12 months in 2007, according to the study. Meanwhile, many funds have just given up trying raising more cash, as the study found that the aggregate target of funds on the road has now fallen to $698.5 billion, a 21 percent decline from its peak of $888.4 billion in January 2009.  Source

Private equity portfolio companies are swamped with debt and many of these firms have defaulted on their obligations, adding more to the problems facing buyout managers.  (Reportedly, roughly 50% of the 220 firms who defaulted on their debt last year were at least once owned by a private equity firm.) 

Why is fundraising so tough?  There are a number of reasons why it's difficult to attract investors to private equity funds but it's worse than simply concluding that investors have turned to more traditional investments such as mutual funds, stock and bonds.  Here's part of the problem: Hedge funds aren't having much trouble reigning back in fleeing investors after they posted their best year in a decade.

It may be that institutional investors and high net worth individuals want to recoup their 2009 losses as quick as possible.  Managers of institutional investment and wealth management funds could face layoffs if they aren't able to rebound after such a steep fall.  Hedge funds present an alluring opportunity to make back those losses quickly; private equity funds, on the other hand, tend to invest long term and make take longer to realize their profits.  Without a very stable IPO market, it's hard to keep investors' confidence up by promising profitable exits. 


So what can private equity funds do?  It's hard to say, until private equity funds can bring the kind of returns that hedge funds have in the last 12 months it will be an uphill battle convincing current investors not to jump ship and boost allocations to hedge funds (for now, the grass really does seem greener on the other side).

But it isn't all doom and gloom for private equity, buyout and venture capital firms are likely going to dominate the IPO market this year, making up for last year's slow market.  As stock prices rise and market confidence returns, private equity funds will finally be able to debut those companies at a fair price and make the firm and their investors some much anticipated cash.  This is of course assuming that the valuation gap narrows and the stock market strengthens in 2010. 

There are also some appealing prospects abroad for private equity funds and in burgeoning sectors such as clean and bio tech and plenty of cash to invest with.  It's hard to think things could go worse than last year (here's hoping it's uphill from here).  There is always room for improving your marketing practices but until investors see actual returns, it's going to be hard to erase memories of last year. 

Check out our Fund Marketing Powerpoint here
Learn about the Educational marketing strategy
Also see our guide to Private Equity Marketing Materials


Please consult your compliance officer or legal consultant before following tips from this website.


Popular private equity articles:

1. Private Equity Tracker Tool
2. Alternative Investment Jobs
   
3. Career Guide
   
4. Service Provider Directory
5. Private Equity Associate
   

Tags: private equity marketing, private equity fundraising, private equity assets, private equity AUM, buyout funds, buyout fund marketing, private equity funds, private equity 2008, private equity 2009, private equity 2010

Link to This Resource: Private Equity Fundraising in 2009

http://privateequityblogger.com/2010/01/private-equity-fundraising-in-2009.html