The Future of Finance How Private Equity and Venture Capital Will Shape the Global Economy

by Schwartz, Dan; Rubenstein, David

• ISBN13: 9780470825112
• ISBN10: 0470825111
• Format: Hardcover
• Copyright: 2010-04-06
• Publisher: Wiley

Summary

The book provides insights into the potential role of private equity and venture in the post-economic crisis world. It looks at the industry from a number of perspectives: geographically, including text on Asia and the Middle East; and by type of investor, principally, private equity, venture capital, institutional investors, and the banks. It is not a textbook, casebook, or 'how-to' book, but rather a well-reported look at the industry today and an insightful commentary on where it's headed tomorrow. The author interviewed over 75 leading GPs, LPs, SWFs, and economists in the private equity, venture, and financial industries. A new and untested US political administration, multiple conflicts, and a rapidly changing economic landscape provide the backdrop. If tomorrow will be different than today, then the way business has been done in the past should be reexamined in a new light. Despite the pervasive resort to government bailouts, the answer may lie in an economic model that is based on smaller entities, accountability, direct links between ownership and management, and a corporate structure that is much less leveraged and broader in scope. As a result, private equity and venture could well emerge at the top of the financial league and as a weathervane for the underlying economy. There are a number of reasons for this proposition. For starters, private equity and venture may well be the last man standing. They also have a robust funding structure: long term deposits-investments-from their limited partners. They are flexible in their approach to investing opportunities. And while their portfolio companies are suffering from the same downturn afflicting the rest of the economy, the owners control both the balance sheet and the business. And that leads to deeper reasons which go to the nature of private equity: accountability and the alignment of interests. This argument also suggests a new 'corporate norm', whose implications for corporate governance are as yet, untested. The book includes commentary from leading pension funds and endowments, which are frequently omitted from industry books. It also looks at private equity and venture across the world. The US and Europe will offer mostly distress and restructuring opportunities. Asia will continue to expand, while the Middle East will fund basic infrastructure. Unlike the US and Europe, their economies will grow and require investment. No one knows whether today's general partners can reshape the financial markets and influence their underlying economies. How the industry is organized, funded, and invests will certainly change. But for the firms that survive the next 1-2 years, that possibility certainly exists. The book analyzes how and why this is the case for private equity and venture capital, while suggesting how the behavior of limited partners and banks will be different as well.

Author Biography

Dan began his career in the financial world in Houston and New York. In 1993, his firm acquired the Asian Venture Capital Journal in Hong Kong. Over the next 15 years, the AVCJ team built one of the world's top sources of ideas and information in private equity and venture capital.
Dan was born in Chicago and attended Oak Park and River Forest High School. He studied at Princeton University and graduated from the Woodrow Wilson School's undergraduate program in 1972. During his junior year, he received his Certificat from the Institut d'Etudes Politiques in Paris. He served with the U.S. Army Europe before earning a JD from Boston University and an MBA from Columbia. Dan resides in Hong Kong and San Francisco.

Table of Contents

Foreword	p. ix
Acknowledgments	p. xi
Tomorrow Will Be Different man Today	p. 1
Private Equity and Venture Capital: A Primer	p. 13
2009: A Very Challenging Year	p. 39
2010: Private Equity and Venture League Tables and Niches	p. 79
Private Equity and Venture Capital in Markets Around the World	p. 105
Industry Issues	p. 133
The Next Decade: A Future Scape	p. 165
Toward a New “Corporate Norm”	p. 185
Notes	p. 203
The Class of 2010 (People Interviewed in the Book)	p. 207
Index	p. 217
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