Philadelphia Newspapers Private Equity

Philadelphia Newspapers Purchase

Buyout Firm, Hedge Fund Buy Philly's Two Daily Papers

A hedge fund and a private equity firm have collaborated to purchase Philadelphia's two daily newspapers.  Angelo Gordon & Co. and Credit Suisse Group won a thirty hour long auction with a bid of $139 million to win control of the Philadelphia Inquirer and Philadelphia Daily News.  The deal was financed by Alden Global Capital, a hedge fund.   Acquisitions of print newspapers are likely to become more common as sinking readership brings down revenue and papers fall into bankruptcy.

The lenders, which include private equity firm Angelo Gordon & Co. and Credit Suisse Group, won the 30 hour auction with a $139 million bid. The offer was financed by hedge fund Alden Global Capital.

The winning bid topped offers from a group led by billionaire Ronald Perelman and another from Canadian investment firm Stern Partners. It must still be approved by a federal bankruptcy judge, with a  hearing scheduled for May 25.

The Angelo Gordon-Alden Global group have pledged not to make wholesale job cuts at Philadelphia Newspapers, which owns the Philadelphia Inquirer, Philadelphia Daily News and Philly.com Web site. But what exactly that means is unclear: PNI’s new bosses say the company will continue to employ 2,500, but the company’s former CEO says it currently employs 4,500.  Source

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Australian Private Equity Firms

Australian Private Equity Firms Turning to Trade Buyers

Australian private equity firms are looking to trade buyers for their portfolio companies rather than holding IPOs.  Buyout firms in the country have found enough interest from corporate and trade bidders that they may be able to bypass the initial public offering process.  This is good news as the prospects for getting a good valuation on the stock market is relatively low.  For more information on private equity in Australia see this article.

Following a two-year slump during the global financial crisis, when divestments were near impossible, private equity sales are back on the agenda as stock market valuations improve, enabling listed rivals to make bids, and as bank financing re-opens.

Among the companies with dual-track sale processes underway, in which both sale and listing options are considered, university program provider Study Group, owned by CHAMP and pallet maker Loscam, owned by Affinity Equity Partners, may be headed toward sales rather than floats.

"You are seeing more examples now of firms considering dual-track processes. If you go back a few months, it felt like an IPO was the only potential option available," said UBS co-head of equity capital markets Andrew Stevens.

Now, trade and private equity firms are returning as buyers of assets.
"The IPO market is a bit soft, but the options available have increased as well," Stevens said.  Source

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Tags:  private equity, Australia private equity firms, Australian private equity firms, Australian buyout firms, Australian buyouts, trade buyers, Australia private equity, private equity in Australia

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Private Equity Trade Buyers

Private Equity Expects Competition from Trade Buyers 

Private equity firms are expecting stiff competition from trade buyers in business support services sector firms.  Private equity buying in the area has picked up in the first three months of the year, especially in the UK where PE investment in the sector reached about $1.7 billion during that period.  But a recent survey found that private equity firms do not think they are the only ones interested in this area; 80% of the PE firms surveyed said they expect competition from trade bidders and 72% said that they expect PE investment in the sector to rise.

"Although private equity houses have been investing in support service providers for more than a decade, we expect to see much fiercer competition in future sales processes," said David Ascott, Private Equity Partner at Grant Thornton.

"Both financial sponsors and bankers feel very comfortable investing in support services firms that demonstrate robust contracts and repeat business," Ascott added.
The current tussle for WorldPay, the global merchant services division being auctioned by Royal Bank of Scotland PLC (RBS) typifies the trend, with a barrage of buyout firms coming up against trade bidders such as Moneris Solutions, Canada's largest payment-processing firm, and JPMorgan Chase's (JPM) Chase Paymentech.

While the RBS sale is valued at around GBP2.5 billion, many of the sector deals are much smaller such as Advent International's recent purchase of Xafinity for GBP274 million and Bridgepint's takeover of LGC from LGV Capital in a GBP257 million secondary buyout. Source

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Blackstone Q1 2010 Earnings

Blackstone Q1 2010

Blackstone Reports $360 Million Profit in Q1 2010

As usual, I am reporting the earnings of the biggest private equity firms.  Blackstone released its first quarter earnings for 2010, posting an adjusted profit of $360 million. The buyout firm reported a loss of $121 million (a smaller loss than $231 million in Q1 2009) and revenue jumped to $711 million.  Blackstone beat analysts expectations by about 10 cents per unit. 

Adjusted profit hit $360 million, or 32 cents per unit.
Analysts surveyed by Thomson Reuters expected Blackstone to post income of 21 cents per unit.

The improvement was driven by improvements in Blackstone's investments in the private equity, real estate and credit and marketable alternatives segments.

Stock and credit markets rose in the most parts of the world during the quarter, although not as much as in the fourth quarter. Blackstone buys distressed companies then sells them for a profit.

"We are witnessing a positive trend in most asset classes as the economic recovery takes firmer root and the outlook for growth improves," Stephen Schwarzman, Blackstone's chairman and CEO, said in a statement. "We are seeing concrete signs of economic improvement in our portfolio, and as a result, the carrying value of investments in Blackstone funds rose meaningfully in the first quarter."  Source

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Private Equity Environmental

Private Equity Firms Team Up with EDF to Go Green

Private equity firms are a big part of corporate environmentalism movement, pushing its portfolio companies to adopt cost-saving green changes.  Among those leading the movement are KKR and Carlyle Group who partnered with the Environmental Defense Fund to help cut costs for portfolio firms in an environmentally friendly way.  Here is a great video on this important partnership, if you are reading this via e-mail click on this link.  Also, read about Environmental Sustainability in Acquisition Valuation and watch another video on the private equity green movement here.



Read about Environmental Sustainability in Acquisition Valuation
Watch another video on the private equity green movement here.


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Singapore Private Equity Rules

Singapore Begins First Review of Its Private Equity Rules

Singapore is reviewing its rules for hedge fund and private equity investment since it began attracting alternative asset fund managers eight years ago with various incentives.  The Monetary Authority of Singapore has decided to review its policies toward hedge funds and private equity firms in order to be "responsive to the changing needs of the various stakeholders in the fund management industry," according to a recent statement.  This comes at a time when private equity and hedge funds are under intense scrutiny worldwide, although more so for the latter industry.

Hedge funds and private-equity firms are under scrutiny from regulators and lawmakers worldwide, who say they are partly to blame for the worst financial crisis in a generation. Singapore’s hedge-fund industry has grown into Asia’s second biggest behind Hong Kong as the government lured investment management professionals with tax incentives and grants.

“They’re aware of the need to find the right balance,” said Melvyn Teo, a director at the BNP Paribas Hedge Fund Centre at Singapore Management University. “It will make Singapore less appealing to really small, young hedge funds, but the industry is maturing at the moment. We might still be quite attractive to more established larger ones.”

Hedge funds worldwide posted net outflows of $285 billion last year, leaving assets at $1.6 trillion, according to Hedge Fund Research Inc., a Chicago-based research firm.  Source

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China Private Equity Structure

China Buyout Structure Diversifying Despite Regulation

Private equity is gaining ground in China with funds developing at an unprecedented rate.  Private equity structure is are diversifying despite increased efforts by the Chinese government to regulate private equity funds and subject them to foreign-capital restraints. 

In September 2009, CCB International Holdings Ltd. turned its attention to the domestic market by raising 2.6 billion yuan ($381 million) through a health-care industry investment fund. At the end of 2009, Tianjin Shipping Industry Fund similarly raised 2.85 billion yuan. In January 2010, CITIC Mianyang Private Equity Fund announced it had become the largest yuan-denominated fund in China by raising 9 billion yuan.

Data from the Zero2IPO Research Center shows that yuan-denominated funds have grown quickly and have come to dominate the market in terms of the total amount of new funds raised. Moreover, several global PE fund companies hope to establish yuan funds.

Large-scale yuan financing by PE has formed into a diversified structure. State-controlled institutions such as the National Social Security Fund have been authorized by regulators to engage in PE investment. The overseas subsidiaries of China's commercial banks, as well as China's insurance and securities companies, already have access to PE investment channels. Source

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Private Equity Investing in India

The Challenges for Private Equity Firms Investing in India

I have long been looking into the potential for private equity expansion in India.  The economy is booming, and has been for years, with lots of start ups and growing companies.  So it would seem to be ripe grounds for private equity funds investing in emerging markets but, according to a recent article, India is still far from an ideal environment for private equity firms.

Still, private equity activity in the country is increasing dramatically.  Already this year private equity investment in the area has hit $1.2 billion compared with just $714 million in all of 2009.  Although these numbers paint a rosy picture of private equity in India, managers have several complaints about working there.  Primarily, the managers criticize the slow legal process that makes deals difficult and that the business culture disregards their knowledge and opinions. 

From what I can glean from this article, it seems that private equity managers are being ignored by management in the firms.  These managers then feel that they can't exercise enough influence on the companies they are providing capital to, which is a difficult working relationship.  The PE management team wants to use their knowledge and expertise to make the company more profitable and efficient but there are some holdouts in the company resistant to outside influence.

This is not uncommon in private equity, especially in venture capital when the small business owner is particularly attached to his or her company.  Really, this is just the challenges in investing in a developing market and from the uptick in investments it seems like these are just minor difficulties that will eventually pass as private equity investing in India becomes more regular.  But it is important to know that although investments are high, operating in a foreign country--especially in an emerging market such as India--is bound to have its challenges for private equity firms. 

More recently, vibrant stock and bond markets mean companies have plenty of access to capital without any of the entanglements that private equity brings with it.A more likely reason for the recent surge in activity is pent-up pressure to do deals. India focused funds raised $19.2 billion over the last 3 years, according to the Centre for Asia Private Equity. Pan-Asian funds raised another $37.5 billion in the same period.

It means a substantial sum of capital is left to chase after deals that, on average, are far smaller than in the rest of Asia. The risk here is plain to see: returns will shrink as managers compete for business. More specifically, funds eager to strike deals risk paying too high a price.

Certainly some investment avenues are opening. With India seeking some $41 billion in private-sector investment for road projects over the next three-to-four years, infrastructure-focused funds, experienced in partnering with governments and patient enough to wait out the long process, may find opportunities.

Source

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The New Paradigm for Private Equity Report

The New Paradigm for Private Equity

Free Report from the Alvarez & Marsal PE Conference

NYU's Stern School of Business recently held the Alvarez & Marsal Private Equity Conference covering "The New Paradigm for Private Equity."  Unfortunately, I did not get a chance to attend this conference but I took a look at the report from the conference and it has some great insights.  Among the professionals talking at the conference was well-known investor Wilbur Ross and representatives from some of the biggest buyout firms.

As I have always advocated, conferences are a great opportunity to network and learn about the current private equity environment.  So, I think it is worth it to look through this report on the conference and consider the advice and commentary from PE experts.  If you'd like to check out this free report, click on this link.



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Real Estate Private Equity Funds 2010

Real Estate Private Equity Funds Struggle After the Crisis

I get a lot of phone calls and e-mails regarding private equity investments in commercial real estate so I try to keep an eye out for helpful articles.  The WSJ has a good one on the problems facing real estate-focused private equity funds in the wake of the recession.  Private equity investors had high hopes for large commercial real estate funds but the turbulence in the real estate market over the last few years and the recession have caused many property buyout funds to suffer big losses. 

Basically, the article identifies two concerns for private equity, a lack of rental growth and a lack of leverage.  As I have written previously, leverage is still largely unavailable to funds and without it there is going to be a drought of deals.  According to the Journal, "Banks are currently willing to lend up to 75% against the value of prime commercial property, compared with up to 95% in the boom years."  And finding financing for underdeveloped real estate areas is even more difficult.  But there is still hope that banks will sell off secondary assets and property loans in 2010-2010 giving PE funds new opportunities.  To read more about private equity real estate, see this article.

Based on estimates of prime rents and yields, capital values started rising in the third quarter of 2009, according to CB Richard Ellis. Yield spreads are narrowing, a trend which should continue unless government bond yields spike sharply. Prime offices in major European markets now yield on average 6.1%, down from 6.2% at the start of the year, and still above long-term averages.

But yield compression isn't going to drive rapid increases in capital values, as happened during the boom, when yields in some hot spots fell below those of government bonds. Private equity will instead need to look to rental growth and leverage to drive returns. But while prime office rents are stabilizing in Europe, after having fallen in 2009 and the first quarter of 2010, growth isn't expected to return for another two years. Average annual increases in rents across European prime real-estate markets could reach 2.5% to 2020, well below the 10% gains achieved in 2007, although certain parts of the market, such as the City of London, may do better.  Read the whole article here.

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Carried Interest Tax Senate

Senate Again Considers Changing Carried Interest Tax

It may feel like a tired warning to observers of the hedge fund and private equity industries but for those who would be effected by a change to carried interest taxation--all those working in either sphere--it is a big concern.  The U.S. Congress appears ready to tackle the tax treatment of carried interest, according to congressional sources.

Private equity firms and hedge funds have been fighting off the legislation for years but it appears that the idea may be gaining momentum as a way to reduce the federal debt. As some of you may recall, a proposal to change the tax treatment was again passed by the House of Representatives but lacked enough Senate support to go further.  Now, the Senate seems more interested in increasing the tax on carried interest because of the revenue it would bring in.  


I think the timing is right for reforming carried interest for three reasons: popular support and international regulation.  Prior to the financial crisis, there was little public support for reform but the unpopular bailouts of investment banks and revelations of some controversial actions taken by investment firms has galvanized populist angst against the financial community.  With midterm elections fast approaching, many legislatures are under pressure to control Wall Street and lower the deficit.  

The only wildcard is Christopher Dodd, the retiring Democrat from Connecticut who chairs the Senate Banking Committee.  Because he does not seek reelection, he is held somewhat less responsible to his constituents and may ignore pressure to enforce tough regulations and a carried interest reform.  It's hard to tell whether he will try to close his career as a Senator with a legacy of tough financial regulation or fight to soften proposed legislation.  


At the international level, European Union members are considering tough regulation--probably stricter than what the U.S. Congress will pass--and the UK has already passed a major tax hike on those making more than £150,000 (about $247,000) a year.  This makes it less risky because U.S. fund managers would be less likely to flee to Europe. 

A proposal to change the tax treatment of fund managers' profits known as "carried interest" last year passed the U.S. House of Representatives, which has approved such measures several times only to have them die in the U.S. Senate.

But as lawmakers run out of revenue to offset things such as a pending bill in the Senate to extend unemployment insurance, the idea is getting a second look by once skeptical senators, congressional aides said.

The Senate last month approved a $140 billion bill to extend jobless benefits through the end of the year and renew a series of popular tax breaks. That bill also closed several tax loopholes to bring down the costs, but the House then used some of those revenues in its healthcare overhaul, hence the need for more revenue.  Source

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Latin America Buyouts

Association Predicts Latin Buyouts to Reach 3-Year High

Here's an interesting piece on private equity firms investing in Latin America.  The president of the NY-based Latin American Venture Capital Association (who is predictably optimistic) says that private equity investments in the area will probably rise to a three year high in 2010.  More and more investors may be willing to invest in risky emerging markets, looking for big gains off Latin America's burgeoning economies.  Funds in Latin America took heavy losses and struggled to fundraise during the financial crisis as investors shied away from risk.  

Ambrose said private equity remained strong in 2009, despite an overall decrease in fund-raising and deals reported in the region. Last year, funds raised $3.63 billion from investors, a tumble of 43 percent from 2008, while investments fell 29 percent to $3.27 billion.

"This could be an excellent year for deals because international investors are looking for increased exposure to Latin America," Ambrose said.

In Brazil, opportunities are in the consumer and industrial sectors as wages climb and companies are not highly leveraged, she noted. Education, health and housing and mortgage investments could also be the target of private equity money in Chile, Colombia, Mexico and Peru, Ambrose said.

She said global giants including Blackstone Group (BX.N), the world's largest buyout firm, and Kohlberg Kravis Roberts & Co KKR.UL are rushing to raise funds and seal deals in Latin countries outside Brazil.

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Cerberus DynCorp Private

Cerberus Taking DynCorp Private for $1.5 Billion

One of the largest buyout firms, Cerberus Capital Management, has struck a $1.5 billion deal with DynCorp to take the company private.  DynCorp is a well-known military contractor providing security, aviation and intelligence analysis services.  Cerberus agreed to pay stockholders $17.55 per share, a 49% premium above its closing price last week.  Now seems to be the ideal time to purchase DynCorp with share prices dropping over the last two years as the firm has been hit by allegations of fraud and concerns of long-term profitability.

"This transaction is a major milestone for DynCorp International's continued leadership in serving our customers and supporting U.S. national security and foreign policy objectives," said William Ballhaus, the company's chief executive, in a statement.

The Falls Church, Va.-based company  said Cerberus would pay stockholders $17.55 a share in cash, representing a 49% premium over its Friday closing price.

But that price pales compared with DynCorp's all-time high of $27.58 reached in January 2008. The stock has since been pummeled as investors worried over the company's long-term growth and allegations of fraud and mismanagement at some of its partner and rival firms. Source

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Spain Corporate Debt

Private Equity Firms Investing in Spain's Debt-Heavy Firms

Spain's companies which are struggling with masses of debt are catching the attention of private equity firms.  Private equity firms are looking to buy big stakes in distressed Spanish companies, hoping to make a profit by turning around the flailing firms.  Many Spanish firms are hurting due to the lack of available credit and private equity firms may help by providing capital and helping reduce the corporate debt.

Lawyers say they see the groups are increasingly negotiating with companies' creditor banks, hoping to secure a reduction in debt in exchange for taking a slice of the company's equity.

"We are beginning to have more movement in this area. Prices may now be becoming interesting," said Inigo Villoria, insolvency lawyer at Clifford Chance in Madrid.
Spanish companies built up massive debt loads during the boom years of the early 2000s when entry to the euro gave access to cheap credit, pushing non-financial business debt to one of the highest rates in the developed world.

Corporate debt, excluding banks, stood at 136 percent of gross domestic product in 2008, outstripping Britain, the United States, Japan and fellow eurozone members like France and Germany, according to a McKinsey Global Institute study.  Source

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Leveraged Buyouts Volume 2010

Leveraged Buyouts Volume

Leveraged Buyouts Volume Drops in First Quarter of 2010

The small uptick in private equity activity in mergers and acquisitions in the end of 2009 failed to carry through to 2010.  In the first quarter of 2010, deals totalled $28.2 billion, which is a 24% drop from Q4 2009.  It should be noted that this is about double the leveraged buyouts that occurred in the first quarter of last year so there is a marked recovery still.  Private equity-backed exits have been met with a warmer reception last year at $24 billion in such deals.  The IPO market remains stronger than a year ago but still less than stable.

The largest announced private-equity backed buyout in the first quarter was the $3.7 billion bid for Extended Stay Hotels by TPG, Starwood Capital and Five Mile Partners, said Dealogic.

If successful--the bid is up against a counterbid from another investor group--TPG will be the biggest generator of investment banking revenue with a total $87 million paid in fees.

The exit environment for private-equity owned companies improved on the previous quarter with $24.1 billion worth of deals, up from $20.3 billion in the last quarter of 2009. Secondary buyouts, where buyout firms sell to each other, accounted for $7.5 billion of deal value, said Dealogic.

The initial public offering market was patchy compared with the previous quarter--a total of $3.1 billion was raised in the public markets, down 47% from $5.9 billion in the last quarter.  Source

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Private Equity Fundraising Q1 2010

Private Equity Fundraising Q1

Private Equity Fundraising Falls 8% in First Quarter 2010

U.S. private equity fundraising fell 8% in the first quarter of this year compared to the same period in 2009.  Firms have been struggling to find new investors and retain current ones and without having a strong year of performance, it is difficult to raise interest in funds.

As I have frequently compared, hedge funds had great performance in 2009 and a significant number of institutional fundraising targets are investing with hedge funds.  Leveraged buyouts and corporate finance funds made up more than 50% of this quarter's fundraiser.  Venture capital fundraising increased by 41% from the same period of 2009.

U.S. private equity fund-raising dipped 8% to $17.6 billion during the first quarter, compared with the same quarter in 2009, according to new figures released by Dow Jones LP Source.

The amount is substantially lower than the $65.9 billion raised in the first quarter of 2008, showing just how hard the industry has been hit by the economic downturn and credit crunch.

"The fundraising total is negligible, but the story behind the numbers is telling," said Jennifer Rossa, managing editor of Dow Jones Private Equity Analyst.

"Many commitments made during the first quarter were to funds early in their fundraising process unlike the same period last year when many closes were holdovers from 2008."  Source

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Pension Fund Private Equity Investment Returns

Pension Fund Private Equity Returns

Pension Funds Fail to Gain off Private Equity Investments

Private equity investments do not typically offer the quick rewards than traditional investments or hedge funds may because buyout managers tend to take a more long-term focus on returns.  But a recent article in the Times reveals that pension funds have not made they type of returns they expected to through investing in private equity.  The 10 biggest public pension funds have reportedly paid buyout shops at least $17 billion in fees since 2000 and have failed to reap the type of rewards that buyout managers suggested were possible.

But few big public funds ended up collecting the 20 to 30 percent returns that private equity managers often held out to attract pension money, a review of the funds’ performance shows.

Many public pension funds are struggling to recover from a collapse in the value of their portfolios, despite large private equity investments that were supposed to help cushion their losses.

Fees are at the center of the debate over the divergent fortunes of private equity managers and their investors, because fees often make a big dent in any investment gains.
That “raises the question as to why they accept to pay this level of fees,” said Oliver Gottschalg, a professor at the HEC School of Management in Paris who conducted the study on private equity fees.

State and local pension assets declined by 27.6 percent from the end of 2007 to the end of 2008, wiping out $900 billion, according to the Government Accountability Office. Source

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Private Equity Compliance Services

The following is our paid service provider directory listings of private equity compliance firms:

The ICS Compliance Asset Management / Broker-Dealer Group, comprised of highly experienced investment compliance consulting and senior industry professionals averaging more than 20 years of experience including backgrounds as Chief Compliance Officers and/or Federal Regulatory Examiners, provides clients with invaluable expertise, complex compliance solutions and insight. We deliver compliance services to Investment Advisors, both registered and those seeking registration with either the Securities and Exchange Commission or their respective state(s), who provide advisory services to mutual funds, private funds, hedge funds, private capital funds, fund of funds, CLOs as well as Broker-Dealers.

During ICS Compliance’s 13-year history, we have developed a tailored approach and strong regulatory awareness, giving clients with the confidence that comes from hiring experts in compliance. To learn more about our services, please contact Gary Swiman, President of ICS Compliance Asset Management / Broker-Dealer Group at 267.670.1958 or gswiman@ICScompliance.com, and visit us online at www.ICScompliance.com/AssetManagement.aspx.


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Link to This Resource: Private Equity Compliance Services

http://privateequityblogger.com/2010/04/private-equity-compliance-services.html

Family Offices Group

Family Offices

As I've noted previously, family offices represent an emerging investor group for private equity firms.  The following is an announcement about a new resource for finding family office clients.

The Family Offices Group successfully acquired the domain name FamilyOffices.com and will now be offering their Family Offices Database and Family Office Report through this website.

The Family Office Report is a free PDF E-Book on family offices published by the Family Offices Group each year.  This report focuses on family office trends, capital raising tips, and challenges facing the family office industry.  Download it now by visiting the free family office book page of FamilyOffices.com

The Family Offices Database contains 700 unique listings of single and multi-family offices.  If you are reaching out to or marketing to family offices this resource will save your team hundreds of hours of research and networking hours in obtaining these same valuable contact details. To view a video overview of this resource please click here, otherwise please see http://FamilyOffices.com for more information.

Next time you need to gain information on family offices please keep the Family Offices Group and FamilyOffices.com in mind. We are committed long-term to provide a lot of value within this community.



Popular private equity articles:

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Tags: Family Offices, Family Office, Single Family Offices, Multi-family offices, books on family offices, databases or directories of family offices in Excel, family offices directory

Link to This Resource: Family Offices Group

http://privateequityblogger.com/2010/04/family-offices-group.html

Private Equity Fees and Terms

The Debate Between Private Equity Firms and Investors

Representatives from the buyout industry and investors met this week to discuss the demands investors have for their managers.  The meeting was sponsored by the Institutional Limited Partners Association and some of the biggest names in private equity attended to discuss a series of demands issued by investors in the last year.

Investors are primarily asking for lower fees and more rights, but it's unclear whether private equity firms are willing to meet this challenge.  On one hand, investors feel unsatisfied after 2-3 years of poor performance by private equity firms and do not see the sense in paying so much for so little return.  This is reasonable, but I do not think that managers are going to budge much and will largely meet these concerns symbolically (like attending the ILPA meeting).

It's not that managers are so stubborn or so greedy, it's that they feel that they will soon be performing well enough again to justify their fees and that they need to keep those fees to keep their staff from leaving to competing firms like hedge funds or the surviving investment banks.  I think those small to mid-size firms that are really having trouble attracting investors (not those firms that attended the ILPA meeting) will probably offer lower fees and better terms to investors and then gradually raise fees to a competitive level once returns increase and investor confidence stabilizes.

One good comparison is the hedge fund industry which has been trying to evade investors demands for lower fees and better terms since the recession began.  After a year of stellar performance hedge funds survived long enough to regain some footing in negotiations so they can tell investors "Look at the returns I generated for you in 2009, I can do the same for the next X years if you stay with me."  And if investors leave the hedge fund there are many others waiting to invest with a well-performing hedge fund.  Private equity firms may be waiting for such a good turn around, whether they get it or not, well that's the looming question mark. 

For more on investors demanding lower fees see this post



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Tags:  private equity fees, private equity terms, private equity firm fees, management fees, buyout fees, performance fees, Institutional limited partners association, ILPA demands, investors

Link to This Resource: Private Equity Fees and Terms

http://privateequityblogger.com/2010/04/private-equity-fees-and-terms.html