The information provided in this blog offers perspective on our professional activities. Selected articles may appear elsewhere in corporate publications.
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.
Many corporations look to bolt on innovation to existing divisions through investment in arms-length startup companies. The process of engaging enterprise investors can be more measured than identifying often-cavalier financial ones.
Ultra high-net-worth individuals commonly rely on professional managers to oversee 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. Cross-border activity complements local-market commitments.
These investment pools traditionally use trading strategies to generate returns with public securities. The industry is seeing a tilt toward illiquid holdings, including pre-IPO shares and physical assets. The distinction between hedge funds and private-equity funds can blur.
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 these investors.
The ultra rich deploy cash on an affinity basis through known relationships. As a capital source, quiet wealth is more sensible than bling. Flash and excess can mask unstable balance sheets. Costa Smeralda and Cabo San Lucas are strategic marketing destinations.
Pundits often fail to distinguish between tax avoidance and tax evasion. Entrepots like Panama, Dubai, and Singapore are viewed with prejudice. Criticism can be without merit. These jurisdictions benefit from failed rule-of-law in many developing nations.
State-owned entities use cash reserves to invest for the long-term. These institutions vary in their asset-management charters and economic-development goals. Some act independently of government policy; others are subject to political whim.
Not every investor is concerned about the cash-flow or earnings features of a stand-alone business. Corporate buyers may look at a company for the overall impact of the acquisition on their market share. Or they may simply aim to take out a competitor.
Investment firms that exchange cash for ownership stakes are the lifeblood of the technology industry. The impact of venture capital reaches far beyond Silicon Valley. One common feature of these intermediaries is the extreme-risk nature of their businesses.
To place a deal successfully is to understand the narrative of the investment cycle. The extended period of low interest rates that we saw after the financial crisis broke down resistance to higher risk opportunities. The search-for-yield is now a recurring theme.
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