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Private Equity Skills

admin — Thu, 24 Sep 2009 17:28:00 +0000

Private Equity Skills

What Skills Students Should Learn for Private Equity

I’ve been traveling for the last three weeks and during the flights I have been going through some white papers that I’d been meaning to read. One particularly interesting paper is by a professor at Stetson University titled “Understanding the Skills Needed for Careers in Private Equity Investing.” The research identifies a major disconnect between general finance education and that needed for investing in private equity.

Although many professionals receive a general business school education and work one or two years at an investment bank or other finance firm, it would be great if an MBA included a more focused study on private equity to prepare graduates for a very unique field. There are signs of a shift toward educating students on private equity is the Tuck School of Business’s Center for Private Equity and Entrepreneurship as well as the University of North Carolina’s Kenan-Flagler Private Equity Fund which is largely run by students. I hope that more research is done to show how students and business schools would benefit from a curriculum with a strong focus on private equity.

It’s crucial that students at least have a basic understanding of how to value companies, structure a deal, complete accurate due diligence, manage a portfolio and negotiate with investors and keep them satisfied. The price for on-the-job training for a venture capitalist could be millions of dollars from your investors, so it’s important to have a curriculum that addresses specific skills necessary for working in private equity. The skills that private equity professionals should have beyond the existing MBA and finance degree curriculum are:

Being able to realistically value businesses in an illiquid start-up context
Contractually structuring the investment
Maintaining an effective personal network to both ensure adequate deal flow, and also assist portfolio companies in securing critical resources
Possess the negotiating skills associated with both purchasing and selling an investment
Be able to coordinating thorough and effective due diligence

If you have not developed these skills or your business school has not addressed these needs, the author prescribes ways to improve these crucial areas:

Do not rely on the “general business requirements” to meet these skills.
Some of these skills are process skills, meaning that they are developed by practice – not merely through understanding the process.
Due diligence is on virtually no one’s curriculum. There are great books available and free resources online to give you at least a surface knowledge of this area.
A course in private equity investing can be demonstrated to accomplish the purposes of the business capstone class, and might be offered in lieu of Strategic Management, for example.

To read the full white paper, see here.

See our private equity career guide for more information on what you need to succeed in private equity

Directive on Alternative Fund Managers

admin — Thu, 24 Sep 2009 12:52:00 +0000

Directive on Alternative Fund Managers

Costs of EU’s Directive on Alternative Fund Managers

European hedge funds are facing tough regulation and stiff taxes from the UK and European Union. Last month, the UK announced that it will begin taxing individuals earning more £150,000 (about $247,000) a year at a rate of 51%. This decision led many hedge funds to leave the UK for more business-friendly countries, namely Switzerland.

Now, the European Union is considering a law that will effect not only private equity and hedge funds but also EU tax revenues. The proposed rules are estimated to cost almost $3 billion in its first year and about $1.5 billion each following year. The Directive on Alternative Investment Fund Managers seeks to regulate and impose capital requirements on funds managing more than 100 million euros.

A significant cost may fall on the hedge funds and private equity firms which will shoulder a major burden in compliance costs. A recent survey estimates that compliance expenses will rise by about a third from the directive.

London, home to at least 80 percent of Europe’s estimated $400 billion in hedge-fund assets and about 60 percent of Europe’s private-equity firms, may suffer as funds decide that leaving is easier than complying with new regulations, the survey authors said.

“Thousands of jobs and millions of pounds in tax revenues could be at stake,” according to a report by Mats Persson, research director at Open Europe. “There would be little incentive for fund managers to remain in the EU at all.” The survey showed 2 percent of investors in the funds support the proposal, while 46 percent oppose it.

Britain’s Financial Services Authority last week organized a one-day conference in London about the costs and consequences of the directive, which Paul Myners, the U.K. treasury minister called “flawed.” Poul Nyrup Rasmussen, the Danish former prime minister whose Socialist Party president introduced the legislation, said this month that the proposal may need “tightening.” source

Read about the UK Hedge Funds Tax

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Tags: Directive on Alternative Fund Managers, Directive on Alternative investment Fund Managers, eu hedge fund regulation, european union, hedge funds, private equity, uk tax laws, investments

Hedge Fund Transparency Regulation

admin — Mon, 21 Sep 2009 17:40:00 +0000

Hedge Fund Transparency Regulation

SEC Hints at Regulation Increasing Hedge Fund Transparency

U.S. regulators are hesitant to impose any drastic rules on the hedge fund industry, as hedge funds post impressive results in 2009 signaling the beginnings of a recovery. Security and Exchange Commission Chairman Mary Shapiro did say that she hopes to bring in a bit more transparency to the industry but it is far from the worst-case scenario some hedge funds have been bracing for.

If Congress, as is expected, requires hedge funds to register with the agency, the SEC will in turn require “some level of public reporting,” Schapiro told a conference at Georgetown University on Friday. But the public shouldn’t expect to get the same peek at what hedge funds are doing as regulators will.

Schapiro said she is “very aware of the tension” hedge funds feel about greater disclosure, fearing that it will give their competitors a leg up. So instead of demanding detailed public disclosures, she said the SEC will seek “fairly detailed reporting to regulators and some level of public reporting to investors.” Source

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Tags: Hedge Fund Transparency Regulation, investments, Hedge Fund Transparency, mary shapiro, securities and exchange commission, sec regulation, hege fund industry, hedge funds sec

HSBC Hedge Fund Losses

admin — Wed, 02 Sep 2009 15:09:00 +0000

HSBC Hedge Fund Losses

HSBC Alternative Investments Takes Biggest Losses

The hedge fund industry suffered heavy losses during the recession, unfortunately making the “biggest loser” a more competitive category than years past. HSBC Alternative Investments took the worst hit in terms of outflow.

The fund of hedge funds business failed to retain investors and lost 4.2 billion Swiss francs (almost $4 billion) in the first six months of this year. Since HSBC Alternative Investments hit its peak last September, its assets under management has fallen a staggering 52% from a combination of redemptions and losses on investments. The fund of hedge funds industry has been one of the hardest hit during the recession.

The Geneva-based fund of hedge funds business of HSBC reported the single-largest outflow, in absolute terms. Investors yanked 4.2 billion Swiss francs from the private bank in the first six months of the year, the Financial Times reports. That, combined with huge investment losses, leaves the firm’s fund of funds business with just US$22.27 billion, 52% less than it managed at its peak last September, when it boasted US$46.28 billion.

HSBC AI blamed its decision not to chase market share or deposits by increasing rates and lowering margins for the continued first-half redemptions, according to the FT. But CEO Alexandre Zeller said high-net worth clients are again finding a taste for risk and are looking to return to the market. Source

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Tags: HSBC Alternative Investments, HSBC AI, HSBC Alternative Investments losses, HSBC earnings, redemptions, losses, investors, decline, investments, limited partners, hedge funds

Hedge Funds Deliver the Goods

admin — Mon, 17 Aug 2009 18:33:00 +0000

Hedge Funds Deliver the Goods

Here is a video interview with Rick Steele, CEO of TechInvest. Mr. Steele runs the Intercept Capital Fund a long/short market neutral hedge fund. Within this video Mr. Steele comments on hedge funds and fund of hedge fund performance.

Tags: Hedge Fund, Hedge Funds, Alternative Investments, Australian Hedge Fund, Investments, Investing, Australia, Online hedge fund investing, web investing in hedge funds

Hedge Funds Deliver the Goods

admin — Mon, 17 Aug 2009 18:21:00 +0000

Hedge Funds Deliver the Goods

View over 100 videos within our Video Library

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Tags: Hedge Fund, Hedge Funds, Alternative Investments, Australian Hedge Fund, Investments, Investing, Australia, Online hedge fund investing, web investing in hedge funds

What the Ultra High Net Worth Invest in now

admin — Mon, 06 Jul 2009 05:48:00 +0000

What the Ultra Rich Invest in now

Below is a short article on what family offices and some ultra high net worth investors are investing in right now:

Simon Mellon, who’ll be heading up Bonner & Partners Family Office, our soon-to-be-launched money management and tax optimization service, is keeping in close contact with Notes HQ.

Simon is a global finance insider with a decade’s worth of experience working in capital markets. And right now he’s advising investors to remain cautious until a clearer picture emerges about the market’s direction.

When I was a child I could never sit still on a long road journey. I was always asking, “Are we there yet? Are we there yet? ARE WE THERE YET???” My father would always reply “Nearly, son… Nearly,” even though we were still miles from our destination.

This is exactly how the financial markets seem to me right now. It’s been more than two years since the credit crisis kicked off, and I’m getting itchy in my seat: I want to be back out there playing with the other financial (whizz) kids. But it feels like the end of this current rocky road is still on the distant horizon.

Wall Street wants you to believe things improving… that we are on the road to recovery… and that “green shoots” are starting to appear in the economy. Call me a cynic, but I’m just not convinced. Read more…

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Tags: Ultra Rich Investing, investments, family office, family offices, wealth management, financial planning, financial, finance, business, investments, stock market, stocks

Hedge Fund Infrastructure Investments

admin — Thu, 02 Jul 2009 17:59:00 +0000

Hedge Fund Infrastructure Investments

While we don’t usually publish videos put out by industry service providers, below is a very professional interview-based video created by Advent Software. Within this video they talk about hedge fund infrastructure, investing in improving operations, and the pay-off periods of doing so. Click here to view the embedded video below.

View over 100 videos on hedge funds within our Hedge Fund Video Library.

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The Demise of Hedge Funds

admin — Wed, 24 Jun 2009 19:18:00 +0000

The Demise of Hedge Funds

This video below talks about out Bull Path Capital Management and how they have converted their hedge fund into a mutual fund. While this is great free advertising for Bull Path, this is a misleading video about the hedge fund industry. We had over 100 professionals attend our hedge fund startup event in New York last week, one of the most popular articles on my website is on hedge fund startups, and last week a report showed that more hedge funds are starting right now than any other time within the past 3 years. I should have this line be the tagline of my whole blog: “I believe that hedge funds will be stronger than ever in just 3 years.”

Click on the image below to watch a video by Bloomberg on the “Demise of Hedge Funds.”

View over 100 videos on hedge funds within our Hedge Fund Video Library.

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Tags: Demise of hedge funds, hedge fund, hedge funds, alternative investments, investing, investments, mutual fund, hedge fund mutual funds, long short mutual funds

New Hedge Funds Launched in 2009

admin — Mon, 22 Jun 2009 07:29:00 +0000

New Hedge Funds Launched in 2009

Here is a great video put out by Bloomberg on how hedge funds are being started almost every day. The news caster is quoted as saying that 8 hedge funds are being started in July 2009 which will manage over $2B total. While I’m sure that this reporter is trying to stress that these are not all small hedge fund shops, I can assure you that there are far more than 18 hedge funds launching in July. Capital for these hedge funds is coming from seed capital providers, large banks and institutions looking to benefit from the cyclical nature of the markets. Many of these new funds are using managed accounts to provide banks with more transparency and less liquidity risk. If you are viewing this article via email please click here to watch the embedded video below.

View over 100 videos on hedge funds within our Hedge Fund Video Library.

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