Journal of Private Equity最新文献

{"title":"When Too Much Is Too Little: Evaluating the Italian Startup Act","authors":"Luca De Angelis","doi":"10.3905/jpe.2018.1.071","DOIUrl":"https://doi.org/10.3905/jpe.2018.1.071","url":null,"abstract":"Public policies aimed at incentivizing the birth and growth of start-up ecosystems in developed countries have so far produced mixed results, and the vast majority have resulted in wasting taxpayers’ money. This failure is the result of mechanically importing policies that have worked in other countries without understanding (1) the real economic goal of start-up policies and (2) how to adopt strategies that have worked elsewhere to the local context. Countries should promote start-ups not because they are a “nice to have” but because, if done right, start-ups can boost the innovation content of an economy and spur economic growth. Governments indeed have a role to play but must target innovation, or they are wasteful. Applying this framework to the Italian 2012 Startup Act, the author finds the effort has not yet produced good results and propose some solutions.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"3 1","pages":"29 - 39"},"PeriodicalIF":0.0,"publicationDate":"2018-08-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75591546","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Editor’s Letter","authors":"F. Mathis","doi":"10.3905/jpe.2018.21.3.001","DOIUrl":"https://doi.org/10.3905/jpe.2018.21.3.001","url":null,"abstract":"Dave bliDe Publisher The Spring 2018 issue of The Journal of Private Equity confirms a pattern of continuing expansion in funding power and investor confidence in seeking new opportunities in venture capital and private equity markets (refer to Market Snapshot, p.82). This persisting trend is due to several factors. Research suggests that the growing wealth of the top 5% of the global population is supporting an expanding investment appetite for higher risks. These investments are in some cases direct investments, but more often they are channeled through institutional investors such as investment banks, investment funds, wealth managers, pension funds, insurance companies, prime brokers, trusts, and family offices. Also, advanced countries’ financial markets remain relatively liquid from central bank measures to end the great recession and restore economic growth and full employment. However, government inaction (infrastructure) and disruptive actions (threatening tariffs on imports) have reduced the attractiveness of public domestic markets and shifted attention to higher-risk private equity markets in other developed and emerging economies markets. The enhanced search for higher “alpha” is emphasizing the increasing importance of private equity in the emerging countries—as illustrated by the expanding number of articles from emerging markets appearing in The Journal of Private Equity. The f lat-lining of public stock markets in the United States and other developed countries so far in 2018 substantiates this shift. The growing supply of liquidity seeking opportunities will eventually exhaust the better investments, and then raise the vulnerability to financial problems with higher-risk investment ventures. New analytical techniques will be necessary to find higher investment returns and avoid these potential future risks. As private equity managers and general partners come under increasing pressure to find more alpha opportunities faster, innovative new approaches to private equity and venture capital investments may be required. The decision-making process of locating attractive investment possibilities in developed countries, and especially in emerging markets, will expand data needs and also increase uncertainties that must be analyzed carefully to avoid performance problems. The requirement is to analyze big data rapidly, to continuously collect and add new information, and to re-analyze in order to monitor and control company performance in line with private equity objectives.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"21 1","pages":"1 - 4"},"PeriodicalIF":0.0,"publicationDate":"2018-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47276924","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"New Method of Determining Cost of Equity in Private Equity Investments","authors":"Manu Sharma","doi":"10.3905/JPE.2018.21.3.023","DOIUrl":"https://doi.org/10.3905/JPE.2018.21.3.023","url":null,"abstract":"In this article, the author develops an equation to calculate the cost of equity when valuing private equity investments. The cost of ownership is employed as a discount rate when discount cash flow methodology is employed to determine the value of the capital of a company. The equation is built incorporating three factors: market returns, private equity index returns, and illiquidity. Illiquidity is essential, as private equity investments do not trade as readily as securities trading in public stock markets. By using different weights for each of the factors with boundary conditions, the author illustrates how different weights of elements can be used to influence the cost of equity in a private equity investment.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"21 1","pages":"23 - 25"},"PeriodicalIF":0.0,"publicationDate":"2018-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.3905/JPE.2018.21.3.023","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41980319","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"How Proper Information, Effective Risk Management, and Legacy Capital Can Solve the Funding Gap","authors":"J. Milam","doi":"10.3905/jpe.2018.21.3.009","DOIUrl":"https://doi.org/10.3905/jpe.2018.21.3.009","url":null,"abstract":"One of the articles in the Spring Edition of The Journal of Private Equity explores why positive risk-adjusted returns, namely alpha, has been limited to a select group of venture funds and investors. That article recommends possible causes and proffered solutions. This article explores in greater detail the (potential) answers to the chronic “negative alpha” typical of the venture asset class. The author also presents the most recent thinking on venture portfolio construction, and shared investment selection philosophies and practices from the public securities market (hint: picking stocks does not work). Included are insights from institutional investors that have heretofore avoided the venture asset class due to the chronic “negative alpha,” and how a new approach using Smart Beta filtering could attract more institutional capital earlier in the startup lifecycle. The interests and motivations of the modern Impact investor today are remarkably similar with the original roots, and could represent the next wave of capital flowing into early-stage entrepreneurial companies. Success may come with a lowering of the cost of capital for entrepreneurs seeking funding and the equity risk premium applied by investors, moving the efficient frontier on the asset class up and to the left.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"21 1","pages":"13 - 9"},"PeriodicalIF":0.0,"publicationDate":"2018-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48717158","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Sovereign Wealth Funds’ Investments and Corporate Bondholders","authors":"G. Bulgarelli, Gianfranco Gianfrate","doi":"10.3905/jpe.2018.21.3.014","DOIUrl":"https://doi.org/10.3905/jpe.2018.21.3.014","url":null,"abstract":"The authors investigate the impact of Sovereign Wealth Funds’ (SWFs) investments on the target firm’s bondholders. Their sample comprises 166 deals carried out during the period 2000–2016. They find that when SWFs invest in target companies, a reduction of the perceived credit risk follows and the value of the debt for existing bondholders rises. The market reaction for traded bonds appears to be positively associated with the level of transparency of the fund and to the rating of targets’ bonds. Overall, these results support the view that SWFs have a “certification role” for bondholders and determine a consistent increase in the value of invested firms that accrue to both shareholders and bondholders.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"21 1","pages":"14 - 22"},"PeriodicalIF":0.0,"publicationDate":"2018-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43554112","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Quantifying the Capital Requirements of Start-Ups in Early Growth Phase: Exploratory Evidence from a Seed Capital Fund in Brazil","authors":"Alex da Silva Alves, J. A. Pimenta-Bueno","doi":"10.3905/jpe.2018.21.3.026","DOIUrl":"https://doi.org/10.3905/jpe.2018.21.3.026","url":null,"abstract":"This article addresses the challenge of quantifying the capital requirements of new entrepreneurial firms in their early fast-growing phase, a topic the authors believe has not yet received much attention in the specialized entrepreneurial finance literature. All too often, entrepreneurs underestimate the capital requirements demanded by their planned growth paths, a practice that has obvious and severe consequences for both their firms’ and their own wellbeing. Unrealistic capital estimates also affect investors in these ventures, as a shortage of capital often causes ventures to fail to attain contractually agreed-upon goals. As a response to these challenges, the authors propose the framework of an empirically based tool to assist both entrepreneurs and investors in their challenging joint task of quantifying the relationship between capital requirements and innovation performance. In building and testing the model, they use data from Brazilian entrepreneurial firms in the portfolio of a Brazilian seed fund between 2008 and 2016.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"21 1","pages":"26 - 37"},"PeriodicalIF":0.0,"publicationDate":"2018-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.3905/jpe.2018.21.3.026","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46551529","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"On the MENA Private Equity Puzzle: Insights and Recommendations","authors":"Sulaiman T. Al-Abduljader","doi":"10.3905/jpe.2018.21.3.038","DOIUrl":"https://doi.org/10.3905/jpe.2018.21.3.038","url":null,"abstract":"This article analyzes the Middle East and North African private equity markets by incorporating key aspects representing four main clusters: governance, regulatory/legal frameworks, management, and finance. Using a convergent interviewing technique to explore 352 institutions across 13 countries in the region, the findings present specific contributions concerning all four clusters. The results guided the design of a systematic post-acquisition approach to value creation beyond financial engineering that is perceived to be more applicable to emerging markets, given the current evolving regulatory frameworks. Lastly, the author presents policy recommendations for establishing an active alternative investments market. The results reveal the need to depart from stand-alone, country-specific, government-owned SME exchanges into a regional, partially privatized Alternative Investments Market.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"21 1","pages":"38 - 52"},"PeriodicalIF":0.0,"publicationDate":"2018-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48600169","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Are Buyout Sponsors Market Timers in RLBOs?","authors":"Jerry X. Cao","doi":"10.2139/ssrn.1031690","DOIUrl":"https://doi.org/10.2139/ssrn.1031690","url":null,"abstract":"Using a comprehensive sample of RLBOs (reverse leveraged buyouts) from 1981 to 2006, this paper analyzes buyout sponsors’ exit strategies to assess whether their market timing affects the LBO restructuring process. The results indicate that LBO duration is negatively related to hot both IPO market conditions and industry valuation, which suggests that sponsors spend less time restructuring LBOs under more favorable external market conditions. RLBOs with shorter LBO duration experience greater deterioration of performance and the listing of immature LBOs (quick flip) leads to a high probability of bankruptcy. Moreover, post IPO, buyout sponsors tend to exit selectively; that is, they are more likely to exit when industry valuation is higher, and the more reputable sponsors are more likely to do so via facilitating takeovers.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"41 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2009-08-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87084015","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Managerial Incentives and Value Creation: Evidence from Private Equity","authors":"Phillip Leslie, Paul D. Oyer","doi":"10.2139/ssrn.1341889","DOIUrl":"https://doi.org/10.2139/ssrn.1341889","url":null,"abstract":"We analyze the differences between companies owned by private equity (PE) investors and similar public companies. We document that PE-owned companies use much stronger incentives for their top executives and have substantially higher debt levels. However, we find little evidence that PE-owned firms outperform public firms in profitability or operational efficiency. We also show that the compensation and debt differences between PE-owned companies and public companies disappear over a very short period (one to two years) after the PE-owned firm goes public. Our results raise questions about whether and how PE firms and the incentives they put in place create value.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"29 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2008-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82686644","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Optimal Public Sector Support for the High Technology Sector in the Presence of Dynamic Venture Capital Funding","authors":"T. Agmon, A. Messica","doi":"10.2139/ssrn.878368","DOIUrl":"https://doi.org/10.2139/ssrn.878368","url":null,"abstract":"We derive a diffusive stochastic differential equation that describes the dynamics of the venture capital (VC) industry and use it to study two related issues that are concerned with the evolution of the venture capital and the high technology sectors over time. First, the short-term cyclical behavior of the venture capital industry is discussed. Then, we deal with the optimal funding of the public sector for supporting the high technology sector. We address the first issue via a differential equation. For the latter issue, we construct a decision-making model that yields the optimal funding of the public sector for the high technology sector. Our findings indicate that the VC industry is highly correlated with the US capital markets. Hence, the NASDAQ composite stock index can be used for the estimation of the evolution of the venture capital industry with respect to the relevant industry-related variables such as fundraising, the average deal size, the total number of investments and the like. In general, the optimal funding policy of the public sector is shown to be anti-cyclical with the VC funding. Namely, it should be a dynamic funding policy that is conditioned on VC investments and on the specific industrial sector that is supported. For example, the public sector's support for fast maturing sectors like software and information technology should be different than that of slow maturing sectors like pharmaceuticals and biotechnology.","PeriodicalId":43579,"journal":{"name":"Journal of Private Equity","volume":"12 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2006-01-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87162637","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}