Joseph Mariathasan: Creating value in private equity buyouts

first_imgGPs, it is generally held, can add value in three ways. The first is by leveraging the transaction and repaying the debt before selling the company. If the enterprise value remains unchanged, replacing debt by equity by using internal cashflows to pay off debt would make the equity holders better off.The second way is by improving the operations of the portfolio company, and the third is by selling the company at a higher price/earnings valuation multiple than the multiple for which it was bought.According to Vasvari, the LBS research is based on greatly improved datasets than were available in the past. These are primarily from Standard & Poor’s Capital IQ database, supplemented by a number of other sources. The private equity dataset is improving all the time – US pension funds have been forced to disclose information on their PE investment cashflows and fees, and more GPs are realising there is value to be gained indirectly, at least for them, by creating greater transparency. As a result, the conclusions are not only more robust but overthrow, the LBS team argues, some of the negative results of previous studies comparing listed and private equity.The LBS report argues that value creation is initiated at the moment of acquisition, as, on average, private equity funds pay EBITDA multiples that are more than 8% lower than the valuation multiples paid by public corporations for similar deals. These discounts are particularly significant at the smaller end of the market, where there is less competition. This is perhaps unsurprising, as trade buyers may be prepared to pay higher prices because they can generate synergies with their existing businesses PE firms cannot (although another reason suggested is that GPs are likely to be better negotiators than their public peers).LBS also finds that GPs managing smaller funds of less than $500m (€448m) tend to generate the most post-acquisition sales growth at portfolio companies. They attribute this to a strategic  focus on effective investments in growth, and capital expenditures without increasing leverage. In contrast, GPs managing large funds pursue greater operational improvements, as opposed to growth strategies, as their companies show much greater EBITDA growth than the companies owned by smaller funds.The report finds evidence of persistence of outperformance. Established GPs with management of 10 or more funds achieve significantly higher EBITDA and asset growth than the less-established GPs. They also make greater investments partly funded by debt. LBS attributes this to GPs with more funds under management having developed deeper knowledge on the operational side, whereas newer GPs appear to focus on sales growth.Another interesting finding is that, relative to benchmark non-PE-owned firms, matched year by year, industry and other characteristics, companies acquired by private equity firms increase their leverage, operating profitability, assets and sales over the first three years of PE ownership. LBS argues that this shows that GPs, while focused on growth, are also generating significant operational improvements.The LBS research is interesting as a statistical exercise in providing evidence of value creation. For investors, the question that was not asked may be just as relevant – would a passive listed equity fund leveraged to the same extent as the average private equity fund covering the same region underperform or outperform the average private equity fund net of fees? If that can ever be proven, then private equity may be an asset class in which every pension fund should invest. Joseph Mariathasan is a contributing editor at IPE Joseph Mariathasan considers London Business School research aiming to quantify PE’s true valueA key plank of private equity (PE) investment has been the claim PE firms can create more value through ownership than owners of publicly listed companies. Professor Florin Vasvari and his colleagues at the London Business School (LBS) have recently published some research that attempts to quantify evidence of how value is being added. This research is important in the ongoing debate as to whether and how PE adds value, and whether PE firms can justify the fees they charge.Because general partners (GPs) of private equity firms usually control the boards of their portfolio companies, they are generally more actively involved in governance than the directors and shareholders of publicly listed companies. Many GPs would also try to use their own industry and operating expertise to add value while structuring strong equity-based incentive schemes for the company senior management.Many recent studies quoted by LBS provide strong evidence that LBOs create value by significantly improving the operating performance of acquired companies. Some also argue that leverage can improve performance through the discipline it imposes on management, putting pressure on them not to waste money or misappropriate resources. last_img read more

IMCA Duel In The Desert early entries top 230

first_imgNorthern SportMod drivers pre-entered for the Duel are: Terry Phillips, Springfield, Mo. Steven Noland, Terra Bella, Calif. Robby Claborn, Santa Maria, Calif. Andy Obertello, Hollister, Calif. B.J. Haslam, Shelley, Idaho Chase Alves, Casa Grande, Ariz. Jack Aguiar, Tulare, Calif. Austin Arneson, Fargo, N.D. Fred Ryland, Brentwood, Calif. Scott Saunders, Colorado Springs, Colo. Dylan Thornton, Santa Maria, Calif. Braxton Yeager, Green Rover, Wyo. R.C. Whitwell, Longdale, Okla. Rick Durica, Las Vegas Kendra Vollmer, Idaho Falls, Idaho Bob Moore, Sioux City, Iowa;  Tim Ward, Chandler, Ariz. Weekend pit passes are $100. Re­served pit parking and backstretch tailgate spots are available by call­ing 702 632-8223. J.C. Elrod, San Martin, Calif. Steve Streeter, Madera, Calif. Mark Garner, Antioch, Calif. Sheyne Bradley, Casa Grande, Ariz. Bryan Renken, Gillette, Wyo. Lakota Cleveland, Rock Springs, Wyo.; Chester Kniss, Oakley, Calif. Dale Neitzel, Billings, Mont. Buddy Kniss, Oakley, Calif. Kyle Wood, Bakersfield, Calif. Austin Kuehl, Cave Creek, Ariz. Duane Orsburn, Hornbrook, Calif. Donald Riley, Pahrump Guy Ahlwardt, Antioch, Calif. Ryan Williams, Waxahachie, Texas Shane DeVolder, Pacifica, Calif. Jaxon Saathoff, Beatrice, Neb. Zach Fettinger, Klamath Falls, Ore. Troy Householder, Reliance, Wyo. Trevor Fitz-Gibbon, Camarillo, Calif. Jake Donnelly, Idaho Falls, Idaho Ben Stockton, Kansas City, Mo. The Duel will be broadcast by IMCA.TV. Twenty-two states and two Canadian provinces are now represented by the early Duel entries. Slade Pitt, Rock Springs, Wyo. Todd Carlock, Kingsburg, Calif. Terry Bahr, Gilbert, Ariz. Steve Boucher, Susanville, Calif. Eddie Belec, Arvada, Colo. Danny Meier, Dunmore, Alb. Chris Evoniuk, Dickinson, N.D. Doff Cooksey, Brentwood, Calif. Kersey Ferrando, Stayton, Ore. Chris Clark, Jackson, Wyo. Garrett Jernagan, Bakersfield, Calif. Cody Kuglin, Great Falls, Mont. Chris Nieman, Quincy, Calif.;  Cody Olsen, Omaha, Neb. Dick Brack, Longmont, Colo. Scott Drake, Diamond, Mo. Grey Ferrando, Stayton, Ore. Cody Thompson, Sioux City, Iowa Daniel Drury, Eldora, Iowa Jason Hilliard, Cache, Okla. Jacob Hobscheidt, Plattsmouth, Neb. Michael Johnson, Bakersfield, Calif. Heath Denney, Urda, Utah Jessie Hoskins, Longdale, Okla. Darrell Hughes II, Manteca, Calif. Albert Gill, Central Point, Ore. Jeremy Payne, Buckeye, Ariz. Brandyn Johnson, Mesa, Ariz. Robert Elliott, Clinton, Okla. Mickey Stubbings, Helper, Utah Jacob Jones, Jacob, Pocatello, Idaho Roger Bonneville, Calgary, Alb. Nick DeCarlo, Martinez, Calif. Jason Beaulieu, Campbell River, B.C. James Cecil, Bakersfield, Calif. Kellen Chadwick, Oakley, Calif. John DeMore, Spring Creek Drivers in both divisions can still enter when they arrive at the Las Vegas Motor Speedway Dirt Track on Wednesday or Thursday for the Nov. 13-16 Duel in the Desert. Pre-registered Modified drivers include: Luke Krogh, Dickinson, N.D. Duane Rogers, Imperial, Calif. Craig Nieman, Reno Paris Archie, Sparks Matthew Mayo, Bakersfield, Calif. Brenda Kirby, Bullhead City, Ariz. Raymond Keldsen Jr., Aromas, Calif. Brody Spangler, Dove Creek, Colo. Matthew Ratzlaff, Monte Vista, Calif. Racing starts at 4 p.m. Thursday, Friday and Saturday. Top 20 Showdown races for Modifieds and Northern SportMods following the Wild West Tour join the final night’s program. Cody Laney, Torrance, Calif. Christy Barnett, El Paso, Texas Logan Drake, San Luis Obispo, Calif. Zack VanderBeek, New Sharon, Iowa Randy Brown, Chowchilla, Calif. Tripp Gaylord, Lakewood, Colo. A.J. Sharpensteen, Amarillo, Texas Mike O’Patik, Fort Morgan, Colo.;  Doug Rivera, Yuma, Ariz. Matthew Jenner, Vancouver, Wash. Casey Delp, Rock Springs, Wyo. Austin Ruskauff, Santa Maria, Calif. Kyle Heckman, Bakersfield, Calif. Bryan Wordelman, Salt Lake City, Utah Shane Simper, Vernal, Utah Danny Perry III, Laughlin Andy Clower, Laveen, Ariz. Freddie Plourde, Santa Rosa, Calif. Kyle Menlove, Salt Lake City, Utah Bill Cornwall, Pocatello, Idaho Drew Christianson, Minot, N.D. LAS VEGAS, Nev. – More than 230 IMCA Modified and Karl Kustoms Northern SportMod drivers are officially pre-entered for the biggest event of the season in IMCA’s Shaw Race Cars Western Region. Jorddon Braaten, Central Point, Ore. Chett Reeves, Bakersfield, Calif. Travis Olheiser, Dickinson, N.D. Matt Looft, Swea City, Iowa Regan Tafoya, Farmington, N.M. Ryan Roath, Peoria, Ariz. Jason Pugh, Clovis, Calif. Danny Wagner, Bay Point, Calif. Kenny Vollmer, Idaho Falls, Idaho Shawn Harker, Nebraska City, Neb. Ryan McDaniel, Olivehurst, Calif.;  Jason Nation, Bakersfield, Calif. Bryson Curry, Laveen, Ariz.;  Ethan Dotson, Bakersfield, Calif. Tom Fraser, Antioch, Calif. Bradley Hopkins, Henderson Mikey Bell, Quitman, Ark. Theo Van De Sande, Castro Valley, Calif. Brendyn Nordyke, Holly, Colo. Isaac Sanders, Brookings, Ore. Chris Toth, Holtville, Calif. Chaz Baca, Mesa, Ariz. Shane DeMey, Denison, Iowa Mitchell O’Patik, Canal Winchester, Ohio;  Robert Miller, Gardnerville;  Jason Hughes, Watts, Okla. Justin Foux, Red Bluff, Calif. Billy Tabor, Corvallis, Mont. Casey Renken, Gillette, Wyo. Mark Gaylord, Boring, Ore. Chris Falkenberg, Turlock, Calif. Jake Sachau, Denison, Iowa Nick Trenchard, Klamath Falls, Ore. Sean Stacy, Kearny, Ariz. Scott Brown, Meriden, Kan. Chris McKellar, Bakersfield, Calif. Brian Pearce, Oakley, Calif. Dominic Ursetta, Arvada, Colo. Michael Thing Jr., Camp, Calif. Mike Villanueva, Atwater, Calif. Brian Brennan, Rozet, Wyo. Matt Mayo, Bakersfield, Calif. Speedy Madrid, Laveen, Ariz. Mitch Machado, Rohnert Park, Calif. Jeff Streeter, Madera, Calif. Vinny Raucci Sr., Las Vegas Vinny Raucci Jr., Las Vegas Jimmy Reeves, Albert, Kan. Bill Brack, Mead, Colo. Brad Pounds, Bakersfield, Calif. Reed Payne, Idaho Falls, Idaho Jason Ferguson, Meridian, Calif. Heath Grizzle, Drasco, Ark. Brandon Schmitt, Sun Prairie, Wis. Brent Curran, Antioch, Calif. Randy Miller, San Jose, Calif. Michael Hale, West Jordan, Utah Benjamin Chukuske, Welcome, Minn. Taylon Center, Mesa, Ariz. Ricky Childress, Bakersfield, Calif. Ty Rogers, Somerton, Ariz. Jeff Taylor, Cave City, Ark. Christopher Frisbie, White Sands Missle Range, N.M. Russell Allen, Brawley, Calif. Ryan McDaniel, Olivehurst, Calif. Matt Sanders, Brookings, Ore. Chris Morris, Taylor, Texas Shelby Frye, Casa Grande, Ariz. Anthony Merritt, Hemet, Calif. Monty Nordyke, Holly, Colo. Taylor Kuehl, Cave Creek, Ariz. Adam Kates, Tonganoxie, Kan. Paul Stone, Winton, Calif. Steve Bitting Jr., Phoenix, Ariz. Tim Balding, Santa Rosa, Calif. Jacob Pace, Kearny, Ariz. Nick Spainhoward, Bakersfield, Calif. David Pitt, Rock Springs, Wyo. Steven Bowers Jr., Topeka, Kan. Clay Daly, Salinas, Calif. Rex Higgins, Bloomfield, N.M. Shawn LaRocque, Winnemucca Dan Philpott, LaPine, Ore. Robert Sanders, Bakersfield, Calif. Kevin Johnson, Bakersfield, Calif. A minimum of $777 will be paid to start the 28-car main event and to winners of Thursday and Fri­day, Nov. 14 and 15 qualifying features. Thursday and Friday Northern SportMod qualifiers both pay $500 to win. Tate Johnson, Homestead, Mont. Michael Moore, Irving, Texas Ronnie Roy, Rock Springs, Wyo. Tanner Black, Otis, Kan. Derek Nance, Merced, Calif. Ricky Saunders, Colorado Springs, Colo. Kelly Henderson, Minot, N.D. Alex Stanford, Chowchilla, Calif. Austin Manzella, Bakersfield, Calif. Ricky Thornton Jr., Adel, Iowa Tommy Hensley, Bedford, Iowa Matt Micheli, Live Oak, Calif. Chad Melton, Mineral Wells, Texas Brian Carey, Aztec, N.M. Jarrod Mounce, Atwater, Calif. Josh Stringer, Pahrump Bill Lundock, Golden, Colo. Cody Malcom, Shelley, Idaho Chuck Delp, Rock Springs, Wyo. Justen Yeager, Green River, Wyo. Dave Pearson, Ridgecrest, Calif. Lawrence O’Connor, Port Hardy, B.C. Jeremy Richey, Medford, Ore. Wade Taylor, Spring Creek Tim Ragsdale, Merced, Calif. Joe Duvall, Claremore, Okla. Nevin Kennemore, Standish, Calif. Dennis Schoenfeld, Van Buren, Ark. Bubba Stafford Jr., Wittman, Ariz. Allen Owen Jr., Pocola, Okla. Jerry Flippo, Bakersfield, Calif. Joe Docekal, Dysart, Iowa Christina Ratzlaff, Monte Vista, Colo. Chris Delp, Rock Springs, Wyo. Alan Riley, Florence, Mont. Arie Schouten, Omaha, Neb. Cory Hemphill, Yuma, Ariz. Johnny Saathoff, Beatrice, Neb. Tony Hofbauer, Huxley, Iowa Chase Hansen, Myton, Utah Crystal Hemphill, Yuma, Ariz. Brock Aeschbacher, Rigby, Idaho D.J. Shannon, Merced, Calif. Coltin Jackman, Blackfoot, Idaho Mike Ziegler, Brush, Colo.  Cody Burke, Salinas, Calif. Modifieds race for $7,777 to win, Northern SportMods for a top prize of $1,777 at the 22nd annual event. Saturday night’s Modified feature is a 2020 Fast Shafts All-Star Invitational ballot qualifier.  Collen Winebarger, Corbett, Ore.last_img read more

Clippers facility shuttered, but players exhibiting enthusiasm online

first_imgJudging by the large piles of footwear pictured on his Instagram feed, Clippers sneakerhead/center Montrezl Harrell is just about ready to go.He and his Clippers teammates will join the 21 other NBA teams bound for the Orlando bubble this week, where the league will finish its 2019-20 season that was interrupted by the coronavirus pandemic in March.The Clippers return as one of the teams favored to win the title at the conclusion of what’s anticipated to be a three-month completion. Official competition will commence July 30 with seven seeding games leading into the playoffs — all of it to be held in a closed environment at Walt Disney World Resort, without fans, and at a cost of more than $150 million to the league, according to ESPN.But just as the NBA ramped up preparation last week with the start of required individual workouts on Wednesday, the Clippers shut down their practice facility in Playa Vista on Thursday, a precautionary move following the news that a member of their traveling party tested positive for the coronavirus. Five other NBA teams reportedly also shuttered their practice floors following positive tests in the past week. Newsroom GuidelinesNews TipsContact UsReport an Error The NBA has stated that it will have stringent health and safety protocols in place for when teams land on campus at Walt Disney World Resort.The Clippers haven’t commented since closing their building, but before anyone in the Clippers’ camp had been reported to test positive for the coronavirus, coach Doc Rivers talked about how eager he and his squad were to get back to it.“I’m excited about getting going,” Rivers said last week on a Zoom chat with media. “I think anybody would be excited about going back to work. We’ve been out of work — not just athletes, but most of this country — for three-plus months, so I think anybody would want to go back to work.“I think obviously, in our profession, we’re working for something hopefully that results in something big for us, so that’s the selfish part.”Accomplishing that “something big” will be a test of teams’ adaptability, off the court and on it.center_img “It will be different, the no fans, and the fact that you can hear everything,” Rivers said. “I don’t think we need scouts right now because every time a coach makes a call, we’re going to hear it. We make one, they’re going to hear it. Even when a coach makes a signal, the players will yell it out.“I don’t think there will be a lot of secrets, that’s for sure. Players will hear things they’ve never heard before. Officials, unfortunately, will hear things they’ve never heard before.“Obviously we’d rather have fans there,” Rivers added. “(But) you put two men in a boxing ring, or five or 10 guys on the court, the game is going to turn into a competition. It always does, and it always will.”Patrick Beverley might know something about that.While on the attack playing the video game “Call of Duty” online recently with NBA Draft prospect Tre Jones on the “Work From Home” series on YouTube, the Clippers’ feisty guard assured host DragonFly Jonez and anyone else watching that he’s fired up to play in Florida — even without fans.“It’s gonna expose teams even more,” said Beverley, who fortified himself during the video game session with a carrot and a banana. “I’m treating everybody the same. Every team I play, I’m playing them like we playing Golden State when they had Kevin Durant. Every point guard I play, I’m playing Steph Curry. Every shooting guard I’m playing, I’m playing James Harden. Every 3-man I’m playing, I’m playing LeBron (James) and KD, and down the road…”last_img read more