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Author Archives: James Bachman
Limited Partners Deserve More Information
Many limited partners are demanding to be more informed about the underlying companies in their private equity portfolios. More specifically, LPs want to get a better handle on how earnings, debt levels, and valuations are changing over time. These types of details are critical for portfolio managers because it allows them to better monitor the [...]
Obituaries are premature, a Deutsche Bank Research study
Thomas Meyer of Deutsche Bank Research just published a study titled Obituaries are premature. The study provides an overview of what has happened over the past few years and why the current environment is a good entry opportunity. The focus of the study is on buyouts with particular emphasis on activity in Europe.
Excerpt:
The financial crisis [...]
Posted in Review Tagged AUM, Buyouts, China, Deutsche Bank Research, Dry powder, Emerging Markets, Europe, India, Size Comments closed
The Bachman Index (20090702)
For venture-backed companies, 92 percent of job growth occurs post-IPO (NVCA)
Public companies (excluding financial services companies) in North America with more than $1 billion in annual revenue are sitting on as much as $950 billion of excess working capital (strategy+business)
Chartered Alternative Investment Analyst (CAIA) Association membership surpasses 3,100 members (Press Release)
U.S. expenditure on medical care [...]
Private Equity Mathematics, a PEI Media Publication
In March, PEI Media published a book titled Private Equity Mathematics. Oliver Gottschalg, Assistant Professor of Strategy and Business at the HEC Paris, edited the book. At $665 (not a typo), Private Equity Mathematics is certainly the most expensive book I (read Burgiss) have ever purchased. PEI has a knack for putting out beautiful publications and at [...]
The hazards of using IRR to measure performance: The case of private equity
Ludovic Phalippou, Associate Professor of Finance at the University of Amsterdam, is well known for his work in private equity. In this post, I summarize and review his recent paper titled The hazards of using IRR to measure performance: The case of private equity.
Abstract:
Most of the investments in asset classes such as real estate and [...]
Posted in Review Tagged IRR vs. TWRR, IRRs should not be averaged, MIRR, Performance Comments closed
The Bachman Index (20090622)
70 to 80 percent of transactions completed in emerging markets are minority stakes (EMPEA)
Leveraged buyouts represent less than 5 percent of the transactions in emerging markets (Emerging Private Equity Magazine)
In 2008, capital raised by emerging markets focused funds was $66.5 billion (EMPEA)
Saudi Aramco has 300 billion barrels of oil reserves (as compared to Exxon Mobil’s [...]
Right-Sizing the U.S. Venture Capital Industry
Paul Kedrosky, Senior Fellow at the Ewing Marion Kauffman Foundation, published an eight page study last Wednesday that argues that venture capital must shrink considerably for it to be a competitive asset class.
Excerpt:
The U.S. venture capital industry is at an inflection point. It has had many successes over the last three decades, and is prominent [...]
Posted in Review Tagged IRR vs. TWRR, Kauffman Foundation, Performance, Size, Venture Capital Comments closed
Real Estate and Private Equity: A Review of the Diversification Benefits and Some Recent Developments
Urbi Garay and Enrique ter Horst of IESA have published an article in the Journal of Alternative Investments (Spring 2009 issue) that summarizes recent research in the area of portfolio diversification.
Excerpt:
This article examines the literature on the benefits of adding real estate and private equity investments to an investor’s portfolio, and also examines some recent [...]
Posted in Review Tagged Diversification, IRR vs. TWRR, Journal of Alternative Investments, Real Estate Comments closed
Cogent Research Bulletin No. 2: Good News for LPs on FAS 157
Katita Palamar and Brelen Jinkens of Cogent Partners recently published a corporate white paper describing how recent changes in FAS 157 requirements are going to affect LPs.
Excerpt:
Limited Partners have been struggling with how to apply FASB Standard 157 requirements for quite some time now. As a leading secondary market advisor to private equity LPs and a [...]
Posted in Review Tagged AICPA, Cogent Partners, Compliance, Fair Value, FAS 157, Waste of Time Comments closed
Inside Private Equity: Erratum on Page 97