The number one issue for every entrepreneur is money - getting money, raising money, or convincing investors to give you money - that according to Jacoline Loewen who is one of the Nation’s best known advisors to entrepreneurs who seek capital, venture captial and private equity.business pod cast. Loewen & Partners raises capital for companies with revenues over $10 million.
Listen to Robert Gold to talk about Jacoline's latest book, Money Magnet, which explains how to find private equity investors. This lively interview will appear in a future episode of the BusinessCast podcast.
September 5, 2008
September 2, 2008
The UK's Telegraph is reporting that TPG Capital has raised a $20 billion fund, one of the largest ever raised; Blackstone raised the world's largest ($21.7 billion) in August, and Goldman Sachs raised another $20 billion last April. So what is going on? Aren't private equity funds suppose to be dwindling without access to the credit they so desperately need from the banks? Apparently not.
The credit crisis has created enough uncertainty in the public markets that investors are looking to private equity funds for the stability they crave. Of course, it may be a while until we see the blockbuster, highly leveraged, billion dollar buy-out deals that we saw in 2007's "summer of love" (some say another year), but this does not mean that private equity funds are not active, quite the contrary.
These funds continue to buy the collateralized debt obligations (CDO) that the banks so desperately look to offload. Last month Lone Star was the latest private equity fund to buy CDOs from a distressed vendor, Merrill Lynch. The financial firm sold $7 billion worth of CDOs at 22% of their face value to Lone-Star. These deals make a very small splash in the pages of newspapers today; part of the credit is due to PE professionals' growing media-savvy in their efforts to keep their faces from front covers, and partly due to the complexity of these deals that really do not make for engaging reading in 500 words or less.
August 27, 2008
Entrepreneurs have set skills for a set size of business
Terry Matthews is quoted in Report on Business magazine, "I'm increasingly convinced that being an entrepreneur-the first time-is circumstantial. But being a serial entrepreneur is something that I truly believe is deep-rooted in the individual." Terry goes on to explain that the start up stage involves a whoel different set of skills to once the company has matured and is running with set systems.
My book, Money Magnet, spends a whole chapter taking business owners though the concept that their skills which got them to where they are may not be the skills they need to take the company to the next stage of growth - hence, invite in private equity partners. Visit my book's website for a free download of this chapter. http//www.moneymagnetbook.ca
Terry is with Celtic House, one of the top funds for IT companies who are also featured in Money Magnet.
My book, Money Magnet, spends a whole chapter taking business owners though the concept that their skills which got them to where they are may not be the skills they need to take the company to the next stage of growth - hence, invite in private equity partners. Visit my book's website for a free download of this chapter. http//www.moneymagnetbook.ca
Terry is with Celtic House, one of the top funds for IT companies who are also featured in Money Magnet.
Walking Away from a $3 Billion Deal
Interesting article in the Harvard Business Review online about ABRY, a media-focused private equity firm started in 1989 whose partners managed to raise way more money for their latest fund than initially planned.
What would you do?
John Loewen says, "As you know, partners receive fees for the cash managed and that brings a huge issue of taking this money while knowing you perhaps may not be able to place the money."
This article and case study takes you through the moral points and how they were navigated by this fund - which was ethically prudent.
Now how about the media headlining this story of private equity walking away from a money-for-jam situation?
Nope, not that interesting beacuse no heads rolling or blood letting.
What would you do?
John Loewen says, "As you know, partners receive fees for the cash managed and that brings a huge issue of taking this money while knowing you perhaps may not be able to place the money."
This article and case study takes you through the moral points and how they were navigated by this fund - which was ethically prudent.
Now how about the media headlining this story of private equity walking away from a money-for-jam situation?
Nope, not that interesting beacuse no heads rolling or blood letting.
August 26, 2008
Western Downward Drift and the Olympics
Welcome to guest blogger: Dr Michael Power - Investec Bank:
Final Medals Tally Total:
China 100
United States 110
Russian Federation 72
Australia 46
Korea 31
For the marketing and the sheer entertainment value - the Beijing Olympics exceeded even the advanced hype. But, as the images fade, we should remember that this contest was not the only one of Olympian proportions to be playing out in the world at the time. There is also an economic marathon taking place between runners in the West and those in the East, a national relay race that will eventually see the baton of economic primacy being carried – symbolically having been dropped by the US Team in the 4x100m relay race in Beijing – by China. The final medal table of the Beijing Olympics may yet come to symbolise the start of this hand-over process.
Many in the West probably still think – and the lazy love of the familiar more than brute logic is often the father of their thoughts – that the West’s current economic malaise is nothing more than a very bad case of cyclical flu. In such a context, aspiring Western politicians will continue to peddle promises to build a better tomorrow: witness Barack Obama and his “Yes, we can!” pledge. By contrast, few will dare articulate just how structurally passé the West’s current model might soon be and therefore just how difficult delivering on those electoral promises could become.
Many in the West probably still think – and the lazy love of the familiar more than brute logic is often the father of their thoughts – that the West’s current economic malaise is nothing more than a very bad case of cyclical flu. In such a context, aspiring Western politicians will continue to peddle promises to build a better tomorrow: witness Barack Obama and his “Yes, we can!” pledge. By contrast, few will dare articulate just how structurally passé the West’s current model might soon be and therefore just how difficult delivering on those electoral promises could become.
Final Medals Tally Total:
China 100
United States 110
Russian Federation 72
Australia 46
Korea 31
Canada 14
Overriding the forebodings of that small clique of Westerners not in denial, the ‘yes we can’ apologists for the West still dominate the airwaves of CNBC and Bloomberg. Those daring to suggest that something more seminal might be happening are usually dismissed as the economic equivalent of doomsday merchants wearing “End is Nigh” sandwich boards.
I believe profoundly that the essence of what makes mankind such an optimistic species is our dogged faith in the idea of “hope springs eternal”: indeed Obama’s book captures this determination in its title, “The Audacity of Hope”. For it is humanity’s pre-disposition to dream of a better tomorrow that is the source of that river of human endeavour that irrigates the seeds of a brighter future. And so powerful can be this flow of sweaty optimism, it can cut valleys through granite mountains of counter-logic in forcing its way towards the greener pastures of progress. But hope alone cannot guarantee progress and the wellspring of industriousness that feeds the West’s river is not nearly as plentiful as it used to be. Instead, today’s sweaty optimism rises most abundantly where the sun also rises: in the East.
In this game-changing world, a few commentators – George Soros, Marc Faber and Jim Rogers – have suggested that the West is in its worst financial crisis in 30 years precisely because the economic baton is being passed from West to East. As the great economist, Joseph Schumpeter, might have noted, perhaps we are at a crossroads in history where Western destruction is now being offset by Eastern creation. In our far from decoupled world, the West’s economic yin cannot change without impacting the East’s economic yang, and vice versa.
On the one side, the West (and especially its Anglo Saxon heart), by living way beyond its means on the chimera of easily available credit, ever rising household indebtedness and ever increasing fiscal and current account deficits, has enjoyed many decades of prosperity. And, even in the wake of the credit crunch, most Westerners still believe that this model of prosperity is both soundly-based and sustainable. The last year has proved to us it is not.
On the other side, the East (and especially its Chinese heart), by living well within its means with a high domestic savings ratio (45% in China compared to a negative rate in the US), regularly running current account surpluses and maintaining high levels of foreign exchange reserves (the Greater China Club – China, Hong Kong, Taiwan and Singapore – now have over $2.5 trillion) has deferred consumption today and, by funding investments from these savings, set about building a better tomorrow. At the same time, a not insignificant portion of the East’s savings have also been diverted to plug that savings gap in the West and especially in the US.
By postponing consumption for well over a decade, the East’s hoped for tomorrow has now started to materialise in a better today – Beijing’s splendour is evidence of that! And despite the desire by some of the East’s Old Guard to extend its era of abstinence, many Asian governments are now encouraging their constituents to enjoy a bigger share of the fruits of yesterday’s labours. This suggests that the Asian model – one based not upon self indulgence but rather self denial – was ultimately not sustainable either.
Overriding the forebodings of that small clique of Westerners not in denial, the ‘yes we can’ apologists for the West still dominate the airwaves of CNBC and Bloomberg. Those daring to suggest that something more seminal might be happening are usually dismissed as the economic equivalent of doomsday merchants wearing “End is Nigh” sandwich boards.
I believe profoundly that the essence of what makes mankind such an optimistic species is our dogged faith in the idea of “hope springs eternal”: indeed Obama’s book captures this determination in its title, “The Audacity of Hope”. For it is humanity’s pre-disposition to dream of a better tomorrow that is the source of that river of human endeavour that irrigates the seeds of a brighter future. And so powerful can be this flow of sweaty optimism, it can cut valleys through granite mountains of counter-logic in forcing its way towards the greener pastures of progress. But hope alone cannot guarantee progress and the wellspring of industriousness that feeds the West’s river is not nearly as plentiful as it used to be. Instead, today’s sweaty optimism rises most abundantly where the sun also rises: in the East.
In this game-changing world, a few commentators – George Soros, Marc Faber and Jim Rogers – have suggested that the West is in its worst financial crisis in 30 years precisely because the economic baton is being passed from West to East. As the great economist, Joseph Schumpeter, might have noted, perhaps we are at a crossroads in history where Western destruction is now being offset by Eastern creation. In our far from decoupled world, the West’s economic yin cannot change without impacting the East’s economic yang, and vice versa.
On the one side, the West (and especially its Anglo Saxon heart), by living way beyond its means on the chimera of easily available credit, ever rising household indebtedness and ever increasing fiscal and current account deficits, has enjoyed many decades of prosperity. And, even in the wake of the credit crunch, most Westerners still believe that this model of prosperity is both soundly-based and sustainable. The last year has proved to us it is not.
On the other side, the East (and especially its Chinese heart), by living well within its means with a high domestic savings ratio (45% in China compared to a negative rate in the US), regularly running current account surpluses and maintaining high levels of foreign exchange reserves (the Greater China Club – China, Hong Kong, Taiwan and Singapore – now have over $2.5 trillion) has deferred consumption today and, by funding investments from these savings, set about building a better tomorrow. At the same time, a not insignificant portion of the East’s savings have also been diverted to plug that savings gap in the West and especially in the US.
By postponing consumption for well over a decade, the East’s hoped for tomorrow has now started to materialise in a better today – Beijing’s splendour is evidence of that! And despite the desire by some of the East’s Old Guard to extend its era of abstinence, many Asian governments are now encouraging their constituents to enjoy a bigger share of the fruits of yesterday’s labours. This suggests that the Asian model – one based not upon self indulgence but rather self denial – was ultimately not sustainable either.
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