July / August 2007 Issue

Building the right board of directors for a portfolio company about to go public is crucial to a successful offering. How can they source a board as they get ready for the glare of the public markets? 

Avoiding accounting and auditing delays, hence costs, for newly acquired portfolio companies can be accomplished by four steps. 

With private equity firms bigger and more complex than ever before, sophisticated chief financial officers are in high demand. No one knows this better than Clarke Murphy, the head of global private equity searches at executive recruiter Russell Reynolds. Murphy, based in New York, told David Snow recently that while investor relations professionals are probably at peak demand currently, private equity firms are on the hunt for CFOs and finance professionals who can bring a diverse mix of skills to the table. Excerpts from our conversation with Murphy are below. 

GPs are increasingly adopting or considering adopting fair value guidelines, but they want exceptions for venture capital investments, finds a new survey by the Center for Private Equity and Entrepreneurship. 

Much of the European private equity industry has embraced the concept of valuing portfolio companies according to fair value principles. But the goal of global harmonization cannot yet be claimed 

General partners in the US who have so far escaped full compliance with FASB 157 are now feeling heat from limited partners, and from a looming ‘footnote’ rule on fair value accounting. 

Blame the IRS Code’s Section 409A for a trend that is seeing executive compensation at private equity portfolio companies fall under the fair value umbrella.

Washington, DC-based Emerging Capital Partners recently closed the largest private equity fund raised for investments in Africa, at $523 million. The firm attributes its success to its diversification strategy, and reforms in the continent. 

The New York-based private equity firm has brought on Chris Durbin for to help with its financial services industry vertical. 

Resolving valuation disputes with auditors requires that GPs document their assumptions, backing them with outside expertise and historical metrics. 

In a continuing sign of private equity’s maturity, industry CIOs and IR executives have launched their own trade associations. 

China’s new guidelines for pre-merger antitrust filings still leave many questions unanswered. 

Blackstone is finally public, which means a new set of accounting and tax considerations. The firm’s eleventh-hour rejection of SFAS 159 highlights the treacherous valuation waters that publicly traded partnerships must navigate. 

Value-based due diligence evaluates the target’s projected run-rate earnings and free cash flow and related key assumptions that are driving the value of the transaction. 

Proper due diligence of pension liabilities around the world starts with acknowledging seven key facts. 

Enforcing the US Foreign Corrupt Practices Act (FCPA) remains a priority for several US regulatory bodies. Given the breadth of its reach, and the stiff penalties for infractions, private equity firms should know the details of the act, and any deal’s potential for violating the law. 

Vincent Pluvinage, who leads the private equity practice at intellectual property specialist firm Intellectual Ventures, argues that too many private equity GPs fail to fully unlock the potential of their portfolio companies’ IP. 

Private equity firms frequently use background investigators in emerging markets. These risk consultants need more than just local contacts to be effective. 

While most firms still have individual GPs monitor the health of portfolio companies, increasingly this is becoming a firm-wide, systematized function. 

Private equity lawyer Dr Geza Toth-Feher has gathered no moss in his career path. He has moved frequently among law firms and taken one break from the legal profession altogether. 

Brazil’s GP Investimentos, which has raised $1 billion and counting for its fourth fund, is primed for the big leagues as it readies itself to go regional in Latin America. In its 15-year history, the firm has been through a management succession and an IPO on the Luxembourg exchange. And no one has a corner office. 

When commissioning a report on the insurance risk of a potential target, private equity firms should share the deal and credit agreements with the provider as soon as possible. Otherwise, they may leave themselves open to serious liabilities. 

Former Deloitte & Touche senior partner Peter Nachtwey has replaced Carlyle’s CFO of 10 years, John Harris. 

For the second year in a row, Apax Partners has ranked the ‘friendliest’ environments for private equity around the world. The sequel finds that despite Western firms’ recent globe-trotting, the best destinations remain close to home. 

The UK private equity industry has responded to its increasingly vociferous critics with a new report which acknowledges the need for greater openness. 

A Proskauer Rose lawyer has created a rebuttal to an oft-cited carried interest tax study in the US. 

Washington’s recent inquest into carried interest tax was a hot-ticket affair. But lawmakers urged caution.