The information provided on this blog offers perspective on our professional activities. Selected articles may appear elsewhere in corporate publications.
To place a deal successfully is to understand the narrative of the investment cycle. The extended period of low interest rates that was seen after the financial crisis broke down resistance to higher risk opportunities. Now the search for yield is a recurring theme.
Many large companies look to bolt on innovation to existing divisions through investment in arms-length startup companies. The process of finding a strategic investor can be more measured than identifying an often-cavalier financial investor.
Those looking for cash infusion are skittish about disclosure, but unexpected surprises can derail investor interest. Capital sources are well-versed on conducting background checks and targeting accounting practices. Due diligence is a marketing concept.
Ultra high-net-worth individuals commonly rely on professional financiers to manage their fortunes. The scope and size of family offices is difficult to pinpoint because of lack of public data. Some have evolved from single-family to multiple-family service providers.
Investors bend to their biases when making allocation decisions. Wealth sourced in emerging markets tends to have a higher risk tolerance than that based in mature economies. Capital controls can be both literal and implied.
One flaw of early financial theory is that it assumed investors act rationally. In reality, they do not. Market-based behavioralism is an expanding field of study. Understanding investors’ illogical or arbitrary choices helps to refine the private-placement process.
Once discounted as anomolies, Shariah-responsive institutions—including pension funds, foundations, and insurance businesses—have matured in tandem with burgeoning growth across the developing world. Those seeking capital can ill-afford to ignore them.
Quiet wealth may be a better target than bling. Flash and excess can mask unstable balance sheets. The ultra rich frequently deploy cash on an affinity basis through established relationships. Spending time in Monte Carlo may be a strategic marketing idea.
Pundits often fail to distinguish between tax avoidance and tax evasion. Entrepots like Panama, Dubai, and Singapore are viewed with prejudice. That criticism can be without merit. These jurisdictions benefit from failed rule-of-law in many developing nations.
State-owned entities traditionally use cash reserves to invest for the long-term. In practice, however, there are a range of institutional charters that fall into this institutional category. Some act independently of government policy; others are subject to political whim.
Investment firms that exchange their cash for an ownership stake are the lifeblood of the technology industry. The impact of venture capital reaches far beyond Silicon Valley. One common denominator of these intermediaries is the extreme-risk nature of their business.
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