{"title":"It's time to make lemonade from this bumper lemon crop. But choose your ingredients wisely","authors":"R. Feeney","doi":"10.3905/jpe.v15i3.300","DOIUrl":"https://doi.org/10.3905/jpe.v15i3.300","url":null,"abstract":"","PeriodicalId":342515,"journal":{"name":"The Journal of Private Equity","volume":"23 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133016403","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}
The Venture Capital and Private Equity industry in India has grown significantly in recent years. Using the data from the years 2004 – 08, the life cycle analysis provides findings that can impact the long term growth of the industry. A large proportion of the deals are round 1 investments with a dramatic drop in subsequent rounds. Most investments are in late stage financing and take place many years after the incorporation of the investee firm. The industry is also characterized by the short duration of the investments. To ensure long term growth of the industry in India, investments should be made in early stage financing, investors should stay invested for a longer duration, and larger rounds of funding should be made in the portfolio companies.
{"title":"You say its half full and I say its half empty: A Lifecycle Analysis of VC-PE Investments in India","authors":"T. R. Annamalai","doi":"10.3905/JPE.V15I4.301","DOIUrl":"https://doi.org/10.3905/JPE.V15I4.301","url":null,"abstract":"The Venture Capital and Private Equity industry in India has grown significantly in recent years. Using the data from the years 2004 – 08, the life cycle analysis provides findings that can impact the long term growth of the industry. A large proportion of the deals are round 1 investments with a dramatic drop in subsequent rounds. Most investments are in late stage financing and take place many years after the incorporation of the investee firm. The industry is also characterized by the short duration of the investments. To ensure long term growth of the industry in India, investments should be made in early stage financing, investors should stay invested for a longer duration, and larger rounds of funding should be made in the portfolio companies.","PeriodicalId":342515,"journal":{"name":"The Journal of Private Equity","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115550227","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}
The concept of Relative Valuation has been studied taking into account the equity and the value multiples and other factors that affect the under and over valuation of stocks in the market. A detailed study has been conducted on how the relative valuation should be conducted in order to find the comparables that are closest to the Target Company. Relative valuation is based on the assumption that the value of an asset equals its market value. To do relative valuation, the prices of similar or comparable assets are taken as variables to estimate the value of an asset and to control possible differences. The Relative valuation is based on two fundamental principles including intrinsic value of an asset cannot be estimated by any valuation method. It is always equal to what the market is willing to pay for the asset depending on its unique characteristics. The markets are inefficient and assets are not priced perfectly, but because assets are comparable, errors in pricing can be identified and corrected more easily. Because absolute market prices cannot be compared, they need to be converted into standardized values so that price multiples are created. Then, the multiples of the asset are compared to the multiples of the comparable asset to decide whether the asset is overvalued or undervalued.
{"title":"Conceptual Framework of Relative Valuation","authors":"Manu Sharma, esha parashar","doi":"10.3905/JPE.V16I3.436","DOIUrl":"https://doi.org/10.3905/JPE.V16I3.436","url":null,"abstract":"The concept of Relative Valuation has been studied taking into account the equity and the value multiples and other factors that affect the under and over valuation of stocks in the market. A detailed study has been conducted on how the relative valuation should be conducted in order to find the comparables that are closest to the Target Company. Relative valuation is based on the assumption that the value of an asset equals its market value. To do relative valuation, the prices of similar or comparable assets are taken as variables to estimate the value of an asset and to control possible differences. The Relative valuation is based on two fundamental principles including intrinsic value of an asset cannot be estimated by any valuation method. It is always equal to what the market is willing to pay for the asset depending on its unique characteristics. The markets are inefficient and assets are not priced perfectly, but because assets are comparable, errors in pricing can be identified and corrected more easily. Because absolute market prices cannot be compared, they need to be converted into standardized values so that price multiples are created. Then, the multiples of the asset are compared to the multiples of the comparable asset to decide whether the asset is overvalued or undervalued.","PeriodicalId":342515,"journal":{"name":"The Journal of Private Equity","volume":"71 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131404109","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}
This article highlights the reasons for setting up a Singapore domiciled private equity fund and goes on to examine how this Singapore private equity fund can thereafter embark on investment into China.
{"title":"Singapore domiciled private equity funds and taming the Chinese Dragon","authors":"Joel Teo","doi":"10.3905/jpe.v15i4.395","DOIUrl":"https://doi.org/10.3905/jpe.v15i4.395","url":null,"abstract":"This article highlights the reasons for setting up a Singapore domiciled private equity fund and goes on to examine how this Singapore private equity fund can thereafter embark on investment into China.","PeriodicalId":342515,"journal":{"name":"The Journal of Private Equity","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122303080","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}
Pub Date : 2017-02-28DOI: 10.3905/jpe.2017.20.2.046
Y. Kopeliovich
One of the major difficulties in evaluating private equity investments is developing data and meaningful tools that are like those that are commonly used in creating metrics for today’s public stocks. Illiquidity and irregular distribution of cash flows initially create those difficulties. In this paper, we show how we can utilize the thoroughly analyzed public indexes and their performance data to create benchmarking platforms that attempt to mimic the investment strategies of mezzanine funds. While the replication is not perfect, we believe that our benchmark platform provides some early glimpses into analytics that should be further explored by anyone evaluating and investing in private equity with finite maturity horizons.
{"title":"Benchmark Construction and Performance Evaluation of Mezzanine Finance Funds","authors":"Y. Kopeliovich","doi":"10.3905/jpe.2017.20.2.046","DOIUrl":"https://doi.org/10.3905/jpe.2017.20.2.046","url":null,"abstract":"One of the major difficulties in evaluating private equity investments is developing data and meaningful tools that are like those that are commonly used in creating metrics for today’s public stocks. Illiquidity and irregular distribution of cash flows initially create those difficulties. In this paper, we show how we can utilize the thoroughly analyzed public indexes and their performance data to create benchmarking platforms that attempt to mimic the investment strategies of mezzanine funds. While the replication is not perfect, we believe that our benchmark platform provides some early glimpses into analytics that should be further explored by anyone evaluating and investing in private equity with finite maturity horizons.","PeriodicalId":342515,"journal":{"name":"The Journal of Private Equity","volume":"328 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133988798","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}
Pub Date : 2017-02-28DOI: 10.3905/jpe.2017.20.2.052
Sarita Mishra, DINABANDHU BAG, Siddharth Misra
In this study, the decision model for the evaluation of a venture firm is derived by using Analytical Hierarchical Process. All the evaluation criteria are arranged in a hierarchical manner and divided into several sub-criteria, and the priorities of each alternative criterion are then systematically examined by using each one’s derived weight. The finding of this study is consistent with a report published by Bain Capital in collaboration with the Indian Venture Capital Association in 2015, which showed that the focus of venture capitalists has shifted toward the high-technology industry and that there is a high demand for non-imitable technology products.
{"title":"Venture Capital Investment Choice: Multicriteria Decision Matrix","authors":"Sarita Mishra, DINABANDHU BAG, Siddharth Misra","doi":"10.3905/jpe.2017.20.2.052","DOIUrl":"https://doi.org/10.3905/jpe.2017.20.2.052","url":null,"abstract":"In this study, the decision model for the evaluation of a venture firm is derived by using Analytical Hierarchical Process. All the evaluation criteria are arranged in a hierarchical manner and divided into several sub-criteria, and the priorities of each alternative criterion are then systematically examined by using each one’s derived weight. The finding of this study is consistent with a report published by Bain Capital in collaboration with the Indian Venture Capital Association in 2015, which showed that the focus of venture capitalists has shifted toward the high-technology industry and that there is a high demand for non-imitable technology products.","PeriodicalId":342515,"journal":{"name":"The Journal of Private Equity","volume":"3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126401019","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}
Pub Date : 2017-02-28DOI: 10.3905/jpe.2017.20.2.028
F. Söffge, R. Braun
In this article, the German-speaking countries in Europe (DACH) are treated as a distinct economic region. We analyze a proprietary sample of deal level data for 123 leveraged buyout transactions in the DACH countries between 1995 and 2010. By distinguishing between financial and operational value drivers through unlevering the overall times money multiple, we find that two-thirds of generated value stems from EBITDA growth, excess cash generation, and multiple expansion, while one-third of value generated stems from leverage. Buyouts are found to yield abnormal returns compared with public benchmarks. The overall average (median) operational alpha is 11.6ppts (5.7ppts) in our sample. Buyouts before the global financial crisis in 2008 show better performance, while post-crisis exits have a significantly higher operational alpha.
{"title":"Corporate Raiders at the Gates of Germany? Value Drivers in Buyout Transactions","authors":"F. Söffge, R. Braun","doi":"10.3905/jpe.2017.20.2.028","DOIUrl":"https://doi.org/10.3905/jpe.2017.20.2.028","url":null,"abstract":"In this article, the German-speaking countries in Europe (DACH) are treated as a distinct economic region. We analyze a proprietary sample of deal level data for 123 leveraged buyout transactions in the DACH countries between 1995 and 2010. By distinguishing between financial and operational value drivers through unlevering the overall times money multiple, we find that two-thirds of generated value stems from EBITDA growth, excess cash generation, and multiple expansion, while one-third of value generated stems from leverage. Buyouts are found to yield abnormal returns compared with public benchmarks. The overall average (median) operational alpha is 11.6ppts (5.7ppts) in our sample. Buyouts before the global financial crisis in 2008 show better performance, while post-crisis exits have a significantly higher operational alpha.","PeriodicalId":342515,"journal":{"name":"The Journal of Private Equity","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131366308","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}
Pub Date : 2017-02-28DOI: 10.3905/jpe.2017.20.2.073
Najeb Masoud
The purpose of this study is to focus on the gap between users’ understanding and actual auditing practices, and the extent to which this gap can be narrowed through the role of auditing education at Jordanian universities. The data was collected by a questionnaire survey of randomly selected members that looked at four interest areas: duties, legal and ethical structure, reliability and responsibility, and audit report. This study contributes in an important way to narrowing the audit education gap and identifying the public’s misunderstanding of audit regulations.
{"title":"Audit Expectation Gap among Undergraduate Accounting Students at Jordanian Universities","authors":"Najeb Masoud","doi":"10.3905/jpe.2017.20.2.073","DOIUrl":"https://doi.org/10.3905/jpe.2017.20.2.073","url":null,"abstract":"The purpose of this study is to focus on the gap between users’ understanding and actual auditing practices, and the extent to which this gap can be narrowed through the role of auditing education at Jordanian universities. The data was collected by a questionnaire survey of randomly selected members that looked at four interest areas: duties, legal and ethical structure, reliability and responsibility, and audit report. This study contributes in an important way to narrowing the audit education gap and identifying the public’s misunderstanding of audit regulations.","PeriodicalId":342515,"journal":{"name":"The Journal of Private Equity","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129568182","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}
Pub Date : 2017-02-28DOI: 10.3905/JPE.2017.20.2.069
Carolyn Campbell
Expanding operations into an emerging market is adventurous and challenging. It requires tenacity but also bedrock insight and ballast skills. Having operated in dynamic emerging markets (EM), “the waiter and the professor” are metaphors for critical, often overlooked, staffing candidates. Their competencies apply ubiquitously: the local office manager who sets up the office; the financial manager of the operations overseeing the critical first years’ business plan and budget; the government liaison for managing concessions; local advisers who provide tax, regulatory and other advice; and the professional staff. Companies hiring their EM work force should draw broadly from the local base: junior and senior, those with expat or foreign experience, and some pure locals, males and females.
{"title":"From Waitress to Professor: Surprising Lessons for Investing in 920 Emerging Markets","authors":"Carolyn Campbell","doi":"10.3905/JPE.2017.20.2.069","DOIUrl":"https://doi.org/10.3905/JPE.2017.20.2.069","url":null,"abstract":"Expanding operations into an emerging market is adventurous and challenging. It requires tenacity but also bedrock insight and ballast skills. Having operated in dynamic emerging markets (EM), “the waiter and the professor” are metaphors for critical, often overlooked, staffing candidates. Their competencies apply ubiquitously: the local office manager who sets up the office; the financial manager of the operations overseeing the critical first years’ business plan and budget; the government liaison for managing concessions; local advisers who provide tax, regulatory and other advice; and the professional staff. Companies hiring their EM work force should draw broadly from the local base: junior and senior, those with expat or foreign experience, and some pure locals, males and females.","PeriodicalId":342515,"journal":{"name":"The Journal of Private Equity","volume":"59 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114907389","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}
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