Strong Buyout Fund Returns Drive Private Equity Stocks Higher

Private equity

Over the past decade, as private equity firms like Blackstone, KKR and Carlyle Group have grown into a gargantuan size and raised buyout funds nearing or eclipsing $20 billion, one critique of their cash gusher was that it would inevitably drive fund returns lower. Now, as the U.S. economy emerges from the Coronavirus pandemic and markets soar to new record highs, recent earning results from America’s big buyout firms reveal a trend of rising returns even as funds surged in size.

Fueled by piping-hot financial markets, returns from the flagship private equity funds of Blackstone, KKR and Carlyle are on the rise. Mega funds from these firms that recently ended their investment period are all running ahead of their prior vintages and raise the prospect that PE firms can achieve net investment return rates nearing or exceeding 20%.

Carlyle, which reported first quarter earnings on Thursday morning, is the newest firm to exhibit rising performance. Its $13 billion North American buyout fund, Carlyle Partners VI, which was launched in 2014 and ended its investment period in 2018, is now being marked at a 21% gross investment rate of return and a net return of 16%, or a 2.2-times multiple on invested capital.

The fund has realized $8.8 billion of investments, like insurance brokerage PIB Group and consultancy PA Consulting, and sits on a portfolio marked at nearly $20 billion. The returns are two-to-three percentage points ahead of Carlyle Partners V, the flagship buyout fund it raised just before the financial crisis. That fund is on track to earn a net IRR of of 14%, or a multiple of 2.1-times its invested capital.

Rising fund profitability, even at scale, is helping to fuel Carlyle’s overall profitability. Net accrued performance fees from Carlyle VI ended the quarter at nearly $1.4 billion and Carlyle sits on a record $3.2 billion in such performance fees that will likely be fully realized in 2021. The firm’s once-lagging stock has recently risen to new record highs.

The trend is even more clear at Blackstone and KKR, which have both used spongy IPO markets to realize multi-billion dollar investment windfalls in recent months.

Blackstone’s flagship $18 billion private equity fund, Blackstone Capital Partners VII, was closed in May 2016 and ended its investment period in February 2020, just before the Covid-19 economic meltdown. After taking public or exiting investments like Bumble, Paysafe and Refinitiv, this fund is now marked at a 18% net investment rate of return, five percentage points better than its prior fund, which raised in the aftermath of the 2008 crisis.

In the past two quarters, the fund has been the single biggest driver of Blackstone’s record profitability, generating over $1.6 billion in combined accrued performance fees. In the first quarter, the fund was responsible for 82-cents in quarterly per-share profits, filings show. Overall, Blackstone sits on a record $5.2 billion in net accrued performance fees.

At KKR, it’s a similar story. The firm’s $8.8 billion Americas XI fund, which was raised in 2012 and ended its investment period in 2017, is generating net IRRs of 18.5%, or a 2.2-times multiple on invested capital, according to the its annual 10-k filing from February. That sets up the fund to be KKR’s most profitable buyout fund since the 1990s.

KKR’s first quarter results, set to be released in early May, may show even bigger windfalls and higher returns. Its recent public offering of Applovin looks to be one of the greatest windfalls in the firm’s history, bolstering returns and profits for its even newer $13.5 billion Americas Fund XII. Asia could also be an area of big returns as its $9 billion Asian Fund III monetizes investments.

As returns rise, PE firms have seen their stocks soar to new record highs.

Once a laggard, Carlyle is up 36% year-to-date to a new record high above $42, according to Morningstar data. The firm, now led by chief executive Kewsong Lee, has returned an annual average of 23% over the past five-years.

KKR has done even better, rising 40% this year alone and 125% over the past 12-months. It’s five and ten-year total stock returns are now 33% and 13.5%, respectively.

The top performer in the industry is Blackstone Group, which recently eclipsed a $100 billion market value. Up 39% this year alone, Blackstone’s generated an average annualized total return of nearly 19% over the past decade, which is about five-percentage-points better annually than the S&P 500 Index.

Bottom Line: With public markets hitting new record highs, buyout firms are reporting LBO returns not seen since the 1990s. Their stocks, which once badly lagged the S&P 500, are beginning to beat the market.

I’m a staff writer and associate editor at Forbes, where I cover finance and investing. My beat includes hedge funds, private equity, fintech, mutual funds, mergers, and banks. I’m a graduate of Middlebury College and the Columbia University Graduate School of Journalism, and I’ve worked at TheStreet and Businessweek. Before becoming a financial scribe, I was a member of the fateful 2008 analyst class at Lehman Brothers. Email thoughts and tips to agara@forbes.com. Follow me on Twitter at @antoinegara

Source: Strong Buyout Fund Returns Drive Private Equity Stocks Higher

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Private Equity Investors Are Expecting a Tsunami of Deals – How Long Will It Last

A survey of private equity professionals released last Friday reveals these investors are turning their attention away from putting out fires and back to closing deals. This is positive news for entrepreneurs looking for an exit. However, don’t expect new investors knocking on your door anytime soon — most investors are focusing on closing deals they already have in the pipeline. There are also a few signs that investor confidence might be short-lived.

Related: A New Breed of Private Equity Investors Present More Exit Options Than Ever for Entrepreneurs

Investors will focus less on putting out fires

The survey was conducted by my firm, ECA Partners, which specializes in helping PE funds and their portfolio companies achieve their growth targets through a range of executive search, interim placement and consulting solutions. It is the third survey of PE professionals that ECA Partners has conducted since the lock downs began in April.

The most recent survey indicates that 50 percent of investors are expecting to spend more time over the next six months on portfolio company cost reduction and cash management, down from roughly 87 percent of investors holding the same view when surveyed in April and 81 percent in the May survey (see figure 1).

Related: Why Family-Business Entrepreneurs Should Embrace Private Equity Funding

A tsunami of deals

The survey reveals that PE investors are optimistic about closing deals over the next six months. About 61 percent of investors are expecting to spend more time closing deals over the next few months, up from 21 percent holding the same view in April and 28 percent in May. This is the first appreciable shift we’ve seen since the onset of Covid-19, one that suggests growing optimism about deal activity and the PE sector in general. .

This optimism is likely  influenced by a pickup in deal activity during the summer. Although deal activity ground to a halt in April and May, there were over 5,500 PE deals in the first nine months of 2020. This is the highest year-to-date number of deals since records began in 1980. However, these acquisitions were overall worth about six percent less than over a similar period in 2019, indicating that, under Covid, PE firms are focusing on smaller companies.

We are also seeing a smaller, though still significant, uptick in the sourcing of new deals. In April, deal sourcing plunged, with 61 percent of respondents telling us they expected to spend less time sourcing new deals than pre-Covid. This picked up to a degree in May, but has picked up more dramatically since as only 8 percent expect to spend less time sourcing new deals in our most recent survey.

Related: Six Ways In Which Private Equity Can Catalyze The Growth Of Your Business

How long will the acquisition spree last?

Although the increase in acquisitions is cause for optimism, concerns about the sector remain. Fundraising by PE firms has fallen by a fifth in the first three quarters of the year compared to 2019. This decrease in available funds will eventually mean fewer acquisitions across the PE sector. However, PE firms also entered the year with a $1.5 trillion cash pile, a record amount — something that could mitigate or at least delay the effects on deal activity from the 2020 decline in fundraising.

Because private equity deals are almost always partially financed by leverage, deal volume will also be driven by the willingness of lenders to underwrite deals. As noticed in Q2 of this year, traditional sources of acquisition financing tend to become less willing to underwrite deals as the degree of uncertainty in the economy increases. If 2020 has shown us one thing, it is the unpredictability of economic uncertainty, and how deeply it can be influenced by non-economic factors, such as the pandemic or political instability. It is thus easy to imagine scenarios in which further instability or another exogenous shock derails the current recovery and injects more uncertainty into the equation.

What this all means for entrepreneurs

If you are a business owner who’s thinking about selling your business, my advice to you is to think more about the big picture rather than trying to over-engineer every detail. Take a step back and think about how long you’d like to continue running your business. What are your life aspirations and financial needs? And then think long and hard to understand how flexible your plans are. For example, would you be willing to work a few years longer if deal activity drops again and you are not able to find the right investor for your business?

To illustrate, consider this famous example from the adjacent sector of VC-backed startups. In 2019, Uber CEO Dara Khosrowshahi was widely criticized for running a “train wreck IPO,” leading to what was called the biggest IPO flop in history. Critics pilloried Khosrowshahi for only fetching the bottom range of his $44 to $50 per share target price range at the IPO. A number of circumstances, including the poor post-IPO performance of its competitor Lyft two months earlier, led to the decision to come in at the low end of the target price for the over-subscribed IPO. Investors at other Silicon Valley companies, such as Postmates, saw this as a sign of the timing being poor and consequently postponed their IPOs.

But in hindsight, Khosrowshahi looks clairvoyant. How many of his 2019 critics now appreciate the fact that he took Uber public before the global pandemic reduced the demand for the company’s services?In other words, if you can avoid it, don’t sell a company you’ve worked hard to build in a fire sale. At the same time, if you are thinking about exiting, don’t lose sight of the forest for the trees. There are still plenty of buyers out there. As long as you are looking for a reasonable offer, you are likely to find a suitable buyer.

By: Atta Tarki Entrepreneur Leadership Network Writer

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Total worldwide debt is expected to continue growing over the coming months, despite having just climbed to a fresh all-time high. Given the three previous waves of global debt accumulation have all ended with financial crises, CNBC’s Sam Meredith takes a look at the risks associated with the latest build-up. Read more: https://www.cnbc.com/2020/01/14/globa…https://www.worldbank.org/en/research…https://www.iif.com/Research/Capital-… —– Subscribe to us on YouTube: http://cnb.cx/2wuoARM Subscribe to CNBC International TV on YouTube: https://cnb.cx/2NGytpz Like our Facebook page: https://www.facebook.com/cnbcinternat… Follow us on Instagram: https://www.instagram.com/cnbcinterna… Follow us on Twitter: https://twitter.com/CNBCi#CNBC#Debt#Economy

Inside Thoma Bravo’s $9 Billion Mortgage Market Windfall

Upon further review, it was deemed a giant mistake.

In 2018, the Federal Reserve’s four interest rate hikes put its benchmark rate at between 2.25% and 2.5% by year-end, ending a decade of free money. The hikes eventually got painful as rising rates stalled the housing market and a mini stock market meltdown in the fall of 2018 ensued, leading to outcries from Trump. Within months the Fed backtracked. Now, the big question is whether rates will fall below 0%.

For San Francisco-based software private equity giant Thoma Bravo, the Fed’s epic interest rate boomerang is set to usher in a huge deal making coup, an about $9 billion windfall in a 16-month span on Ellie Mae, a software provider to the mortgage market. Thoma Bravo put up about $2.2 billion of equity to take Ellie Mae private in a leveraged buyout in April 2019, financing the rest of the $3.7 billion purchase price. Earlier in August, it struck a deal to sell the company to Atlanta-based Intercontinental Exchange for about $11 billion in cash and stock.

Ellie Mae is a case study in the deal-making zeitgeist. The window of opportunity for Thoma Bravo was just a few months as the Fed shifted course, and the price paid was far beyond traditional buyout valuation multiples. But stock market darlings like Ellie Mae are rarely put up for sale. Now a mixture of low rates, surging growth, and soaring multiples make these software businesses more valuable than ever.

On public markets, Ellie Mae should have been the type of company buy-and-hold investors own in perpetuity. Its Encompass software is a soup-to-nuts platform for mortgage originators, where they can manage marketing, originate and process home loans, and complete closing and funding documents. It’s in a poll position to do away with the paper mortgage once-and-for-all.

Its Ellie Mae Network also connects lenders and investors with originators sourcing loans, acting as a digital network for mortgage loans. With a base of stable subscription fees and those tied to loan processing volumes, Ellie Mae attracted the savviest small and mid-cap mutual funds like Brown Capital, Kayne Anderson Rudnick, and Primecap. From its April 2011 IPO through mid-2018, Ellie Mae shares rose twenty-fold as annual revenues grew from $50 million to over $500 million. 

When mortgage rates started to rise due to the Fed in 2018, Ellie Mae’s processing revenues dried up and public investors mistakenly abandoned the company’s stock. Over a span of three months between August and November, Ellie Mae’s stock plunged about 50%, culminating in late October when the company revealed a growth slowdown.

“Rising rates, low housing inventory, and overall home affordability are serving as significant headwinds to the overall mortgage market… they are prompting us to reset our assumptions for the year,” admitted CEO Jonathan Corr on an Oct 28 earnings release. Soon investors were valuing Ellie Mae as a declining business with uncertain prospects, instead of the blue chip growth multiple it had one commanded.

Buyout funds saw an obvious mistake. Within days, three firms including Thoma Bravo were knocking on Ellie Mae’s door, inquiring about taking the company private.

An unnamed buyer set the stakes for Ellie Mae at $100 a share, or $3.7 billion. Ultimately, after about three months, about eight interested parties kicked the tires on buying Ellie Mae. The sale process leaked, causing the original high bidder for Ellie Mae to back out of its original offer, opening a window for Thoma Bravo. In mid-February, Ellie Mae’s board decided to sell to the new highest bidder, Thoma Bravo, at $99 a share, or about 40% more than its October lows. But a coup was in the offing. The purchase price was nearly 20% below Ellie’s midyear high.

Two decades ago, Orlando Bravo, the billionaire co-founder of Thoma Bravo focused the firm on software, building specialized teams of investors targeting companies in digital applications, web infrastructure and cyber security. Its playbook is to refocus struggling tech businesses on their strengths, and acquire competitors or new technologies to bolster growth. The Ellie Mae LBO was a mixture of its typical moves.

Led by Thoma Bravo managing partner Holden Spaht, it first laid off about 10% of Ellie’s workforce and cut costs, and further boosted the bottom line by outsourcing some of its workforce from the expensive Bay Area. Thoma Bravo shuttered some stagnating investment initiatives. With customers, it increased pricing, removing discounts given to some older clients even as the product improved. With increased profitability, Ellie Mae and Spaht also searched for acquisitions to improve its overall software bundle.  

In October 2019, Ellie Mae paid about $350 million to buy Capsilon, a natural language processing and machine learning startup that could help customers more accurately pull data from voluminous mortgage applications, lowering errors and exceptions. The business filled out an area where Ellie Mae had invested heavily, but not seen great results.

By 2020, the Federal Reserve was back at zero interest rates and telling the bond market to expect no changes for the foreseeable future. Mortgage rates were touching new record lows and the housing market was on fire. Ellie Mae’s business was surging. Its networked business, connecting all parts of the mortgage market on one platform, had picked up market share. Forecast revenues of about $900 million were almost double the trailing revenues at the time of Thoma Bravo’s buyout, and operating cash flow more than tripled.

The Coronavirus pandemic came early in 2020 and rates only fell further. After a brief slowdown, the housing market took off with record increases in new and pending transaction activity. Valuations for software companies also began to soar as the pandemic revealed the financial potency of companies digitizing entire industries. Thoma Bravo considered an initial public offering of Ellie Mae, but found a ready buyer in Intercontinental Exchange, the parent company of the New York Stock Exchange.

Already a giant cog in the trading of stocks, bonds and derivatives globally, mortgages had long been an area of investment for ICE but where success was still halting. In one fell swoop, it could finance a deal for Thoma Bravo’s portfolio company at record low rates and catapult ICE into an industry lead. While the bet is no sure thing, low mortgage rates and geographic shifts created by the pandemic may give the housing market years of pent up activity for Ellie to service. And thanks to the Fed, ICE has already raised $6.5 billion in financing at rates of between 0.7% and 3% for debt maturing between 2023 and 2060.

For Thoma Bravo, the $11 billion deal will yield over $9 billion for its limited partners, over $7 billion above its cost. So far, it’s the signature deal of Thoma Bravo’s $12.6 billion flagship Fund 13, and all but certain to make it an early standout among a recent crop of record-size buyout funds. As it sells down shares in cloud software provider Dynatrace, another giant coup housed mostly in a prior fund, Thoma Bravo is poised to return well over $10 billion to its limited partners in the midst of the Coronavirus pandemic.

The firm isn’t alone in seeing massive gains from investments where quick action and conviction were paramount, even at once-unthinkable valuations.

BC Partners bought nascent online pet retailer Chewy for $3 billion a few years ago,  then merged and split it from brick and mortar retailer PetSmart. Now Chewy’s worth $24 billion. Large buyout funds like Blackstone that have tilted their portfolios towards growth bets are sitting on potentially the biggest windfalls in their history, like warehouse space operator GLP and trading platform Tradeweb, a spun off piece of its $17 billion Thomson Reuters financial data deal.

Vista Equity Partners is beginning to take a portfolio teeming with valuable software companies like Ping Identity and Jamf public. The idea that buyout firms must act decisively in order to put money to work in this market was on display when Mukesh Ambani’s Reliance Industries raised about $10 billion from a “who’s who” of PE firms at the depths of the pandemic by selling a small piece his Jio mobile business. 

In public markets, investors targeting expensive, but fast growing enterprise software and internet companies such as Whale Rock, Abdiel, Light Street, ARK Investments, Tiger Global, Zevenbergen and Baillie Gifford are having some of their best years ever as the pandemic accelerates digital change. The conviction has even extended to those traditionally dubbed value investors. 

A few years ago, Warren Buffett and Charlie Munger lamented missing out on tech giants like Amazon, Google and Facebook. Then they invested $35 billion into Apple over the span of about a year, a massive sum even at Berkshire. Now their shares are worth $90 billion. Without the courage to invest in Apple at valuation nearing $1 trillion, Berkshire easily could have “missed” what stands to be among its best-ever investments alongside Geico.

Antoine Gara

By: Antoine Gara

I’m a staff writer and associate editor at Forbes, where I cover finance and investing. My beat includes hedge funds, private equity, fintech, mutual funds, mergers, and banks. I’m a graduate of Middlebury College and the Columbia University Graduate School of Journalism, and I’ve worked at TheStreet and Businessweek. Before becoming a financial scribe, I was a member of the fateful 2008 analyst class at Lehman Brothers. Email thoughts and tips to agara@forbes.com. Follow me on Twitter at @antoinegara

The 50 Best Private Equity Firms for Entrepreneurs

Private equity firms have been called all kinds of nasty names over the years: asset strippers, corporate raiders, vulture capitalists. Don’t be deterred by these labels. The PE firms making headlines over high-profile corporate bankruptcies such as Toys “R” Us are rarely the same investors who back small businesses. In fact, more and more companies are taking private equity investment. In the U.S., the number of PE-backed businesses is up 25 percent compared with 2014, according to research firm PitchBook. So don’t forget to call PE firms something else: business builders.

PE by the numbers
$752 billion Amount of uninvested capital that PE companies have at their disposal. That’s a record, up from $469 billion in 2014.
Source: Preqin
25% Increase from 2014 through 2018 in the number of private equity-backed U.S. companies, up from 6,177 to 7,737.
Source: PitchBook
10.1% Revenue growth at PE-backed middle-market companies in 2018. Non-PE-backed middle-market companies grew more slowly that year–7.9%.
Source: The National Center for the Middle Market at the Ohio State University
$713B The total value of private equity deals in the U.S. in 2018. That figure has increased 35 percent from 2014.
Source: PitchBook

For some private equity firms, investing in founder-led businesses is a big part of the strategy–if not the strategy itself. Before you test the private equity waters, however, you should first take a hard look at your company. “Founders need to think about what they want out of a PE fund,” says Nick Leopard, founder and CEO of Accordion Partners, a financial consulting firm that works with private equity-backed companies.

Some entrepreneurs turn to private equity to help execute their vision; others bring in PE firms to collaborate on new strategies or to finance acquisitions. “Doing that self-inspection first is really important,” Leopard says.

Private equity firms are now sitting on a record amount of uninvested capital, which is good news for businesses seeking funds. That cash pile is prompting those firms to expand their purview and do deals with businesses that just five years ago would have been unlikely targets, according to Tom Stewart, executive director of the National Center for the Middle Market. ”

They’re investing in younger, earlier-stage companies, and they’re more willing to take a minority stake than they were, because they’ve got to put the money to work,” Stewart says. “It’s more of a sellers’ market.”

Family businesses are often strong can­didates for outside investment. “It’s a rare family that can continue to evolve and grow a business without help from a third party,” says Dave Brackett, co-founder and CEO of private credit manager Antares Capital, which has helped finance acqui­sitions for more than 400 private equity firms. “You constantly need to innovate and bring people on board.”

Selling a meaningful stake in your company can be life-altering. That’s why we’ve created this list of founder-friendly private equity firms. We identified firms that have invested in founder-led companies, gathered data on how their portfolio companies have grown, and asked entrepreneurs to tell us about their experiences–including what any founder should know about outside investors.

That research has yielded our list of 50 firms with a track record of successfully backing entrepreneurs. Think of it as the first step in doing your own due diligence.

The Top 50 Founder-Friendly Private Equity Firms

PE FIRM U.S. HQ SIZE OF TARGET PORTFOLIO COMPANIES
Accel-KKR Menlo Park, CA $15M-$200M annual revenue
Alpine Investors San Francisco, CA $5M-$100M annual revenue
Berkshire Partners Boston, MA $100M and above in annual revenue
Blue Point Capital Partners Cleveland, OH $20M-$300M annual revenue
Brentwood Associates Los Angeles, CA $25M-$500M annual revenue
Bridge Growth Partners New York, NY $50M-$500M annual revenue
CCMP Capital New York, NY $250M-$2B enterprise value
Clayton, Dubilier & Rice New York, NY Typically invests $100M and above
Clearview Capital Stamford, CT $4M-$20M EBITDA
Cortec Group New York, NY $40M-$300M annual revenue
Endeavour Capital Portland, OR $25M-$250M annual revenue
Frontier Capital Charlotte, NC $10M-$30M annual revenue
General Atlantic New York, NY $25M-$300M annual revenue
Genesis Park Houston, TX $5M-$100M annual revenue
Great Hill Partners Boston, MA $25M-$500M enterprise value
Gridiron Capital New Canaan, CT $75M-$650M enterprise value
JMI Equity Baltimore, MD
San Diego, CA
$10M-$50M annual revenue
JMK Consumer Growth Partners New York, NY $2M and above in annual revenue
Kayne Anderson Capital Advisors Los Angeles, CA $5M-$50M annual revenue
LLR Partners Philadelphia, PA $10M-$100M annual revenue
Main Post Partners San Francisco, CA $25M-$250M annual revenue
MidOcean Partners New York, NY $100M-$500M enterprise value
Mountaingate Capital Denver, CO $5M-$25M EBITDA
Palladium Equity Partners New York, NY $10M-$75M EBITDA
Pamlico Capital Charlotte, NC $10M-$150M annual revenue
Permira Menlo Park, CA
New York, NY
$200M-$5B enterprise value
Prospect Partners Chicago, IL $10M-$75M annual revenue
Quad-C Management Charlottesville, VA $75M-$500M enterprise value
Ridgemont Equity Partners Charlotte, NC $5M-$50M EBITDA
The Riverside Company New York, NY $400M enterprise value or less
Sagemount New York, NY $15M-$250M annual revenue
Serent Capital San Francisco, CA $5M-$100M annual revenue
Shamrock Capital Los Angeles, CA $20M-$300M annual revenue
Shorehill Capital Chicago, IL $3M-$15M EBITDA
ShoreView Industries Minneapolis, MN $20M-$225M annual revenue
Sole Source Capital Santa Monica, CA $35M and below EBITDA
Source Capital Atlanta, GA $10M-$75M annual revenue
Spell Capital Minneapolis, MN $5M and above in annual revenue
The Sterling Group Houston, TX $50M-$750M annual revenue
Stripes New York, NY $10M and above in annual revenue
TA Associates Boston, MA $100M-$250M annual revenue
Tecum Capital Wexford, PA $3M-$15M EBITDA
Thomas H. Lee Partners Boston, MA $250M-$2.5B enterprise value
Tower Arch Capital Draper, UT $20M-$150M annual revenue
TPG Growth San Francisco, CA $15M and above in annual revenue
Trilantic North America New York, NY $100M-$1B enterprise value
Tritium Partners Austin, TX $5M-$100M annual revenue
Trivest Partners Coral Gables, FL $20M-$200M annual revenue
TSG Consumer Partners San Francisco, CA Declines to disclose
Wynnchurch Capital Rosemont, IL $50M-$1B annual revenue

By: Graham Winfrey

Source: The 50 Best Private Equity Firms for Entrepreneurs

Private equity funds are groups of investors that flip companies for a profit. It’s the technique they use that makes them special, as Paddy Hirsch explains. #MarketplaceAPM #PrivateEquity #Investing Subscribe to our channel! https://youtube.com/user/marketplacev…

Dubai Emerging Market Maverick Abraaj Gets A Lifeline – Kenneth Rapoza

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The past 12 months weren’t great for emerging markets—but it’s been far worse for Dubai-based private equity firm Abraaj Group and its founder Arif Naqvi. Bad fortune of being in the wrong place with the wrong people at the wrong time, including a scandal at a key lender, is what did them in. Its fall from being a respected, $14 billion powerhouse in the world of impact investing in private equity to a company offered a buyout of just $1 is in one of the biggest stories in emerging markets this year. At one time, it was the largest private equity firm in the world, attracting the likes of the Gates Foundation…………

 

 

 

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Billionaire’s Secret Buyout Formula: 110 Instructions and an Intelligence Test – Miriam Gottfried & Laura Cooper

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Billionaire investor Robert Smith believes corporate buyouts can be reduced to a formula. His private-equity firm, Vista Equity Partners, has codified that notion into 110 acronym-heavy directives known as Vista Best Practices. They are secret—stored on a company server that makes a record every time anyone downloads or prints them. Target companies must have “critical factors for success,” or CFS, within their control. Employees of acquired companies and candidates for hiring must submit to tests. A personality test aims to determine which of them are suited to which jobs. Salespeople are better off being extroverted, and software developers more introverted………

Read more: https://www.wsj.com/articles/billionaires-secret-buyout-formula-110-instructions-and-an-intelligence-test-1531151197?mod=djmc_pkt_ff&tier_1=21662325&tier_2=dcm&tier_3=21662325&tier_4=0&tier_5=4508749

 

 

 

 

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3 Things To Watch Following McDonald’s Q3 Earnings – Alicia Kelso

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With global comp sales up 4.2% and U.S. comp sales up 2.4%, McDonald’s turned in a strong third quarter, and investors are happy for now. But we all know that running a restaurant chain is about more than just making investors happy, right? Beyond the financials, a number of narratives emerged during the company’s earnings call Tuesday morning that could qualify as storylines to watch through Q4. For starters, the company continues to endure its largest construction project ever with its Experience of the Future initiative…….

Read more: https://www.forbes.com/sites/aliciakelso/2018/10/24/three-storylines-to-watch-following-mcdonalds-q3-earnings-report/#3f804e0d26d5

 

 

 

 

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DTCC Study: Tech Inspired By Bitcoin Could Work For U.S. Equity Markets – Sarah Hansen

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The Depository Trust & Clearing Corporation (DTCC), which provides infrastructure services to financial markets across the globe, has released the results of a new study indicating that the distributed ledger technology (DLT) first popularized by bitcoin is capable of supporting the average daily trading volumes in the U.S. equity market: more than 100 million trades per day. The study was conducted by consulting firm Accenture with support from the technology service providers Digital Asset (DA) …….

Read more: https://www.forbes.com/sites/sarahhansen/2018/10/16/dtcc-study-tech-inspired-by-bitcoin-could-work-for-us-equity-markets/#7494c5db36d0

 

 

 

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Ivory Tower In The Cloud: Inside 2U, The $4.7 Billion Startup That Brings Top Schools To Your Laptop – Antoine Gara

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In 2014, when Douglas Shackelford was named dean of UNC’s Kenan-Flagler Business School, his most important strategic initiative was clear. UNC was a top-tier public university, but its B-school, barely in the top 20, was on a mission to greatly expand its enrollment without spending much cash. “Our traditional revenue sources were changing, and not in a good direction,” says Shackelford, 60. So UNC forged ahead with a little-known company called 2U, based in Lanham, Maryland. In exchange for 60% of future tuition revenues, 2U would invest $5 million to $10 million building out UNC’s software and marketing capabilities…….

Read more: https://www.forbes.com/sites/antoinegara/2018/09/25/mbas-in-pjs-inside-2u-the-47-billion-startup-that-brings-top-schools-to-your-laptop/

 

 

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