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PE4FAMS Private Equity for Families Blog

The Private Equity for Families Blog

Insight for those who want to include private equity or direct investment in privately-held businesses in their portfolios. The opinions expressed in the PE4Fams blog are those of  Rob McCreary and not necessarily those of CapitalWorks or its employees.

Robert McCreary CapitalWorks private equity Cleveland

McKinsey Report Applauds PE Model

One of our portfolio company CEOs sent me a really interesting comparison of the PE business model with the public company business model. “What private-equity strategy planners can teach public companies” By Matt Fitzpatrick, Karl Keliner, and Ron Williams (Link Here) is a ringing endorsement for several value creation

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Honey, I Just LBO’ed the SPX

On the back of the predicted sixth consecutive quarterly decline in the earnings per share of the S&P 500 I decided to see how we would have done if we had done a leveraged buyout of the S&P 500 in 2014 and then again in 2015. I did two

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Governmentis Interruptus

The President announced last week that it is time to regulate driverless cars. This usually means finding a way to tax the new technology or strangle it while a more nimble and less regulated country steals the technology or copies it. But in the heat of a quest for

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What’s Up with Libor?

Most PE firms borrow on a variable rate basis from banks. The pricing is based on LIBOR which is the acronym for London Interbank Offered Rate which is the rate at which banks are willing to lend to each other. LIBOR has often been the bellwether for real costs

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The Generational Divide Comes Together Around Mentoring

I have been introduced to a new concept in the work place called “reverse mentoring”. It was supposedly first introduced by Jack Welch to bridge the technology chasm between older and younger GE workers. Techopedia.com defines it as follows: “Reverse mentoring refers to an initiative in which older executives

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A Blind Man Driving a Ferrari

American business is like a Ferrari. It purrs at 140 mph, corners well at half that speed and is coveted by everyone. The US dollar, our capital markets, the US banking system, our rule of law, easy capital flows, startup successes, invention, innovation and orderly corporate governance all come

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Private Equity Firms Seen As Broker Dealers

A recent article in the June 30, 2016 edition of The Wall Street Journal by Norm Champ titled “An Iniquitous Raid on Private Equity” highlights the latest intrusion by the SEC on the freedom of private equity managers to arrange their relationships with their portfolio companies. In an enforcement

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Pollsters and Politics Are Great Bedfellows

Early in my career I read great advice for surviving the world of financial prediction: “Give them a date and give them a number, but never give them both at the same time”. The profession of making business predictions is a graveyard for professionals who almost got it right.

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No Hands on the Wheel

Coming back from Ft. Wayne Indiana last week I drove for 1 ½ hours in my Subaru Outback without touching the accelerator or brake! I actually went for almost ½ mile with no hands on the steering wheel. That experiment ended when a red warning light started to flash

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When You Have $100 Billion in Cash You Buy LinkedIn

I don’t get why this $26 billion deal makes sense. I guess it is like buying Facebook or You Tube but without any retail consumers. I use Twitter solely to receive business and sports information and “follow” people and organizations whose opinion I admire. I do not use Facebook

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Breaking the Sound Barrier

The sound barrier has been broken by all the TV networks and my ears are hurting badly. It is only June 15, 2016 and the big onslaught of paid for political garbage hasn’t even started and I still feel like I fell asleep next to an amplifier at a

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Saudi Wins the Game of Oil Chicken

Daniel Yergin is to oil what Seth Klarman is to stock Picking. I hold each of them in high esteem for being experts in their respective worlds. Mr. Yergin is a Pulitzer Prize winning author for his history of the petroleum industry from 1850 through 1990. Reviews call his

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Private Equity Still on Top

We recently received a Private Equity factsheet from Preqin. Founded in 2003 Preqin has become a trusted source of information about alternative asset strategies like private equity, venture capital, real estate, hedge funds and mezzanine funds. Many alternative asset managers share their performance statistics with Preqin and we are always

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New Broker Rules May Affect Capital Markets

I am sure the Department of Labor did not intend to benefit private equity sponsors when it announced it’s new “stockbrokers are fiduciaries” program. The fall out may already be starting, I was surprised to learn that JP Morgan will not allow its brokers to solicit trades in “non-investment

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Bring Common Sense Back To Business Regulation

We had lunch with the Chairman of one of our portfolio companies last week. He is a successful entrepreneur who owns and operates several businesses. By his own admission he loves business. However all the capitalists at the table agreed that the slow death by a thousand cuts of

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Too Toxic To Touch

We recently had an opportunity to look at an interesting manufacturing company that was a participant in an underfunded multi- employer pension plan. While the target company’s deficit was small, the group plan to which they contribute was significantly underfunded. We could not move past the deficit overhang and

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Hasty Rulemaking Will Alter Employment Relationships

I am stunned by the rapid fire set of initiatives by the Labor Department under the leadership of the ambitious Thomas Perez. In the last six months he has called for changes in the minimum wage, the level of pay that will exempt an employee from overtime and the

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War On Cash Should Start With Penny

In the last several weeks there have been a number of articles about negative yields on 10 year government bonds in Japan and Germany.  In an article by Min Yeng in The Wall Street Journal titled “German Yields Near Zero” Jack McIntyre, a portfolio manager at Brandywine Global Investment

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Debt Is An Insistent Mistress

Key Private Bank publishes periodic updates on sectors of the economy they cover from an equity research standpoint. In one of their latest publications “Key Perspectives: Energy Outlook March 2016 – Revisiting Lower For Longer” Stephen Hoedt wrote an update on his publication from November regarding the duration of

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Five Foes of Team Success

I participated in a one day strategy session for one of our portfolio companies where the lunch time entertainment was a You Tube video of Patrick Lencioni speaking about his business bestseller “Overcoming the Five Dysfunctions of a Team”. I don’t know if our facilitator was suggesting our management

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Surfin Safari

I have noticed one constant about confirmed retirees. Universally, they rarely talk about what they did for their careers. I mean almost never. I have met, played golf with, played tennis with, skied with, gone to dinner with and had a few beers with an assortment of people who

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