民间资本流动文献综述私人股本外文文献.docx

民间资本流动文献综述私人股本外文文献.docx

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民间资本流动文献综述私人股本外文文献

本份文档包含：

关于该选题的外文文献、文献综述

一、外文文献

文献信息

标题:

WhereAretheDeals?

PrivateEquityandVentureCapitalFunds'BestPracticesinSourcingNewInvestments

作者:

Teten,David;Farmer,Chris

期刊名称:

TheJournalofPrivateEquity；第14卷；第1期；页码：

32-52

年份:

2015.

WhereAretheDeals?

PrivateEquityandVentureCapitalFunds'BestPracticesinSourcingNewInvestments

ThereisacompanyinNewYorkthatisgoingtomakeitsinvestorsphenomenallyrich.Itisjustninemonthsold,foundedandselffundedbyaserialfinancialentrepreneur.Hehasrecruitedafive-personteamandisworkingonsellinginvestorshisvisionofaggressivegrowththroughbothtechnologyandsometargetedacquisitions.Weguaranteethatthisfive-personstartupwillhaveavaluationofover$1billionwithinsevenyears.

Unfortunately,wedonotknowthenameofthisentrepreneurorhiscompany...butwewillexplainhowitcanbefound.Inthisarticle,wediscussbestpracticesindealorigination:

systematicmethodstoidentifyapotentialinvestmenttarget,identifytheowners,reachout,andpersuadethemtowelcomeinvestment.Wedefinedealoriginationasthestageintheinvestingcyclewhenproactiveandreactiveeffortsaremadetoidentifyprivatecompanysecuritiesavailableforsale.

Wefindthatprivateequity（PE）andventurecapital（VC）fundsthatemployaproactiveoriginationstrategyhaveconsistentlyhigherreturns,drivenbybothgreaterquantityandhigherrelevanceofincominginvestmentopportunities.Weexpecttheuseofsocialmedia,inparticular,toincreaseasmoremillennialsachieveleadershiproles.

Toourknowledge,ourresearchandsurveyisthefirstsystematicstudyonthistopic;wehavenotfoundanyotherin-depthresearchonthetopicbyeitheracademicsorpractitioners.Inleadingthisresearch,weareleveragingourexperienceinworkingwithawiderangeoftop-tierinvestorsandourproprietarydatasetoftheoriginationpracticesofover150institutionalinvestorsaroundtheworldwithwhomwehaveconductedin-depthinterviews.Wealsohavepresentedourresearchtodozensofconferences,funds,andinvestmentbanksaroundtheworld,gainingadditionalinsightfromaudiencefeedback.

Wewilldiscussthedealoriginationprocessforallcategoriesofprivatecompanyinvestors:

buyout,distressed,growthequity,VC,andangels.Thebestpracticesweidentifyarealsopertinenttoamuchbroaderrangeofbusinesses:

*Corporatedevelopment/M&Agroups;

*Lenders/investorsindebtandothernon-equitysecurities;

*Hedgefundsthatinvestintransactionsonanegotiatedbasis（e.g.,publicinvestmentsinPE）;

*Salespeoplesellingtoexecutives;weviewinstitutionalinvestorsasbeingfundamentallysalespeopleoftheirfirm'scapital.

WhyDealOriginationMatters

Fundscanhaveasubstantialimpactontheirinvestmentsuccessbyimplementingbestpracticesindealorigination.Forexample,late-stageventurecapitalistsandgrowthequityinvestorswhohaveoriginationprogramsofsubstantialscaleandarefocusedoutsideofthemostcompetitivemarketsarealmostalltop-quartileperformersacrossstage,vintage,andsector.Asacasestudy,Exhibit1analyzesthetechnologyinvestmentsoftheleadinglate-stageventurecapitalandgrowthequityfundsbetween2000andthefirstquarterof2010.Thefundsontherightsideofthechartsourceandinvestheavilyoutsideofthetraditionalgeographiccentersoftheventureindustryandareconsistentlyamongthetop-performinginvestorsintheirclass.Since2007,allofthesefundshavebeenabletoraisefundsequaltoorlargerthantheprecedingfund.Bycontrast,mostofthefundsontheleftsidehavenotraisednewfundssincelate2005.

Similarly,Chenetal.[2009]foundthatVCfirmsbasedinlocalesthatareVCcentersoutperformthosethatarenot,regardlessofthestageoftheinvestment.Ironically,thisoutperformanceismostpronouncedoutsideoftheVCfirms'officelocations,particularlythoseareasoutsidetheventurecentersofnorthernCalifornia,Massachusetts,andtheNewYorkCitymetropolitanarea.Thisistrueinbothearly-andlate-stageinvestments.Averagesuccessratesforinvestmentsinthemainofficeregionsare14.5%,whilethebranchofficeandoutsideofficeinvestmentsuccessratesarebothapproximately17%.2Thefundsinbothofthesestudiesneedtouseaggressiveoriginationtacticstoreachoutsideoftheirlocalgeography.

CastleHarlan,a$3.2billionPEfund,foundsimilarresultsinaninternal2009studyofthesourcesandreturnsofalltheircompletedtransactions（68deals,38exited）.Therelevantdealteamratedtheimportanceofsevenproprietarystrategiestowinningeachdealusingascaleof0-10（10=maximum）.Forexample,finderandindustryexpertiseweretwoofthestrategies.Finderwastypicallyscoredwitheithera0fornofinderinvolvedora10forafinderplayingakeyroleinsourcingthetransaction.

HowardD.Morgan,Co-President,CastleHarlan,reportedthatacrossalldeals,themeantotal'proprietariness"scorewas21.2outofamaximumpossible70,and44ofthedeals（65%）scoredabove25.Mostofthe44dealsfullyexploited（i.e.,10outof10）atleasttwoproprietarystrategiesandalsobenefitedfromotherstrategies.Closingatransactionrequiresmultiplelevers;thepatternofusingmultiplestrategiestocloseadealistypicalandnotuniquetoCastleHarlan.

CastleHarlanfoundthatthemostproprietarydeals,definedasthosewithscoresof31ormore,hadasomewhathigherreturnthannonproprietarydeals,whileatthesametimethefirmtendedtopay,onaverage,apremiumfortheproprietarydeals.Thisimpliesthat1）thesecompanieswerehigherqualitythannonproprietarydeals,2）CastleHarlanperceivedaloweruncertaintyrisk,and/or3）thefundwasabletoaddmorevaluetothesetransactionsafteratransactionclosed.

Bycontrast,dealscharacterizedasbeingsourcedthroughfindersofanykindwereassociatedwithlowerentrymultiples,butalsorelativelylessattractiverealizedoutcomes.Onlynineinvestments（13%ofthetotal）hadafinderscoreof5ormore.Dealssourcedthroughaffiliatedinvestors,throughrelationshipswithcurrentmanagement,and/orthroughrelationshipswithnonincumbentmanagementwereassociatedwithslightlyhigherentrymultiples,butalsobetteroutcomes.Inotherwords,dealssourcedbyanoutsidefinderarestillsomewhatproprietary,buttheexpectedreturnofsuchdealsforCastleHarlanwaslowerthanwiththeotherpossiblesourcingstrategies.

Ernst&Young[2006,p.5]foundthatthreefourthsofthelargestPEinvestmentsin2006resultedfromproactivedealoriginationstrategies,including"companyorsectortracking,buildingrelationshipswithmanagement,[and/or]introductionsfromestablishedcontacts."Only11%ofthedealsresultedfromPEinvestorsstartingworkduringtheformalsaleprocess:

"Betterpreparation,strengthofrelationshipwithtargetmanagement,andsectorfocuswerethemostimportantfactorscitedinwinningadeal."

Althoughproprietarydealoriginationclearlycreatesacompetitiveadvantage,thechallengeisthatdealoriginationhasalowsuccessrateandtypicallyrequiresthemosttimeinvestmentofanyphaseoftheinvestingprocess.Inourentiredataset,themedianinvestorinprivatecompanieshadtoreview80companiesinordertocloseonetransaction.ThemedianPEandVCfundrequired3.1investmentteammemberstocloseonetransactioninoneyear.Exhibit2showsthemedianpipelinesizeacrossourentiredataset.

Morefundsarerealizingthatbythestandardsofmostcomparablesalesprocesses,originationtodayisaveryinefficientandlabor-intensiveprocess.Pappas,Allen,andShalock[2009]foundthat55%ofPEfundstheysurveyedreportedthattheywereplanningtochangetheiroriginationprocessesoverthenextthreeyears-ahigherpercentagethanintendedtochangefundraising,portfoliomanagement,oranyotherfundprocess.

DealSources

Themostsignificantsourcesofdealorigination,asshowninExhibit3,includepersonalandprofessionalnetworksandthereputationofthegeneralpartnersandprincipals.Acrossallfundswestudied,just44%oftotaldealflowcamedirectlyfromin-housesources.

Investmentssourcedthroughpersonalandprofessionalnetworkshavebeenshowntoyieldbetterreturns.Mutualfundmanagersinvestingincompaniesrunbyexecutiveswhoattendedthesameschoolatthesametimeasthefundmanagersearnreturns840basispoints（bps）higherthantheydowheninvestinginthebroaderuniverseofcompanies（Cohen,Frazzini,andMalloy[2007]）.TheresearchofSunesson[2009]onVCinvestorsshowedthesamepatternofdifferentialreturns,andSunessonaddedthatthisdifferenceshouldbegreateramonginvestorsinprivatecompaniesthaninpublicsecurities,becauseprivatemarketsarelessefficient.3

Thisseemscounterintuitive,whyshouldthesimplefactofacommonschoolconnectioncreatesuchadramaticincreaseinreturns?

Wethinkthereasonisthattheinvestors'privateinformationaboutcompanymanagementismuchmoreinsightfulthanpublicinformation.

Socialnetworksareparticularlypowerfulinthesearchprocessbecauseaninvestorisnavigatingunclearwaters.Ifproperlyeducatedandmotivated,eachrelationshipinyournetworkwillbeattunedforopportunitiesthatfityourinvestingmandate.Inordertotrainyourrelationships,itisimportantthatyouprovidethemwithsimple,clearinvestingcriteria.Noneofthemcanrememberalengthychecklist.Itisbettertobrandyourselftightly,（e.g.,"We'reinterestedineducationcompanieswithrevenuesover$25million."）.Wheneveryourrelationshipseessuchacompany,youwillbetopofmindforthatnar