The McIntire Center for Financial Innovation
The Center for Growth Enterprises

Present

The 2007 Fall Forum

Value Creation and the Private Equity Revolution

October 12, 2007
Old Cabell Hall Auditorium
The Lawn

The success that private equity firms enjoyed over the past decade now eclipses even the Michael Milken era, when leveraged buyouts (LBOs) came into vogue. With returns of over 23.6% in 2006 and a buyout firm average of 15.6% over the past three years versus a 9.9% for the S&P 500, it is not surprising that cash flowed to private equity firms by the billions. Interest in these “closed” firms is even greater than investor cash flow. They receive significant attention in the financial press, the top academic finance journals, and the popular press, including author Tom Wolfe’s new expose of the era’s excesses in his article, “The Pirate Pose."

Although 2006 was a banner year, with more than 27% of all acquisitions made by financial buyers, 2007 is trending even higher. Facing high valuations, growing competition, and mounting pressure from limited partners, today’s private equity firms are seeking nontraditional strategies to achieve more predictable returns. Some firms are shifting their exit preferences away from the initial public offering market toward partnerships with strategic investors. For others, it means a heightened focus on operational performance.

Currently, a variety of key questions are relevant for a more mature stage of the private equity boom. How long can it last? Where is the private equity “revolution” headed from here? Some believe it will continue indefinitely, but other observers expect private equity firms to overreach, emboldened by past successes and their financial clout. Is this really a better business model that spells enhanced returns for its investors and the economy at large? Or is it just another cycle that grew out of regulatory reaction to the dotcom bubble? What can we expect in the future from this new wave of investment firms? For example, accepting the hypothesis that there is more value to operating as a private company than a public one leads to an exponential increase in the number of acquisition targets.

Clearly, the ability to embrace new strategies and tactics, including changes in the way the firm and investment targets do business, could be the difference between private equity firms who continue to prosper through more challenging times. As questions surface as to how long the streak will last in the face of rising multiples, a growing liquidity crisis, and potentially higher interest rates, it offers us a rare opportunity to probe the qualities and characteristics of truly great private equity firms as they seek to embrace forward-looking strategies and position themselves for continued gains.

The 2007 Fall Forum will explore the future of private equity in increasingly unsettled capital markets and will address the theoretical and operational bases of value creation that this investment revolution embraced. Sharing their insights into the “closed” world of these fascinating investment firms is an outstanding group of private equity investment professionals (see program below). The Fall Forum promises to be a particularly stimulating gathering. We urge all members of the McIntire community to attend, to learn, and to enjoy.

Agenda

Home

Forum Agenda

Participant Biographies

Previous Center Programs

Board Information

• Boards Schedule of Events
• Hotel Information
• Board Online Registration