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June 13, 2007 Time for the Private Equity Groups to IPO?
Why does an IPO make sense for a private equity firm, but not for the
portfolio companies they own? This question continues to nag at me, as I
wonder how long until a private equity firm takes a private equity firm
private, so they can avoid those nasty quarterly earnings calls and take a
more long-term investment view. Should we, the individual investors, play in
this game? Part of me says, if Steve Schwarzman is selling I am not buying.
Yet, owning an interest in Blackstone has proven to be a tremendous
investment and having access to some of the strongest best performing funds
in the world could be a phenomenal opportunity to further diversify your
portfolio with a quality proven financial investor. Is now the time to
purchase an investment in private equity as multiples, returns and premiums
all have trended upwards significantly in the past four years? Is the buyout
world just beginning or is it about to crack? Will the public markets crack or
fuel private equity groups? Will they now begin to face the same pressures
that crippled their portfolio companies: 1) quarterly earnings pressures; 2)
the high cost of public compliance; and maybe worst of all 3) be forced to
dissect the value of their investment portfolio and reveal the inner
workings of their powerful investment process? A new paradigm may well be
upon us...wait, as someone once told there "are no new paradigms". What goes
up must...
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