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Citigroup Passes Goldman as Adviser to Buyout Firms
By Margaret Popper Bloomberg
June 7, 2004

The relationships with the companies in which merchant banks invested weren't as lucrative as anticipated, said Colin Blaydon, a finance professor at the Tuck School of Business at Dartmouth College in Hanover, New Hampshire.

Merchant banks "thought they would get investment banking or commercial lending business and neither really panned out, and more and more they had to share their fees with the limited partners in the deal," Blaydon said. "All they accomplished was to increase their risk exposure and freak out shareholders when they had to run the losses form their investment portfolios through their income statements."
Read more »

KKR Sells Borden Chemical for $655 Mln
The New York Times
June 6, 2004

Buyout firms like KKR typically like to divest assets in a three-to-seven year time-frame after purchase. One industry watcher said KKR's relatively long holding period for Borden probably prompted the firm to elect to sell Borden outright rather than conduct the IPO, which would leave it holding some shares for a period of time.

``The length of time KKR held it would certainly lead them to find it attractive to have a full and complete exit rather than a partial exit,'' said Professor Colin Blaydon, a private equity expert at the Dartmouth College's Tuck School of Business. Read more »

SmartBrief from Broadgate Private Equity
June 9, 2004

Starting this week, Broadgate's Private Equity Smart Brief will begin to feature Q-and-A sessions with private equity's thought leaders for their perspective on the industry. We had a chance to catch up with Colin Blaydon, the Director of the Center for Private Equity and Entrepreneurship at Dartmouth's Tuck School. Colin Blaydon's current research topics include private equity best practices, securities and deal structure, venture capital valuation, and the strategies and governance of firms providing or receiving private equity financing. Colin is a member of the advisory boards of Merrill Lynch Private Equity, DHM Arcadia Partners, Borealis Ventures, The Council for Excellence in Government and The Journal of Private Equity Finance.
Read more »

To Standardize or Not to Standardize: Recent Developments in the Private Equity Valuation Debate
By Michael P. Harrell & Jennifer A. Spiegel
The Debevoise & Plimpton Private Equity Report
Spring 2004

The NVCA has maintained its neutral position in the private equity valuation debate by declining to endorse the new PEIGG Guidelines. Instead, the NVCA recommended that its members "create, follow and communicate clearly the specific procedures and methodologies used for valuing their portfolios." This recommendation is consistent with findings of the Center for Private Equity and Entrepreneurship of the Tuck School at Dartmouth, which suggest that for most investors clearer and more detailed explanations of the valuation methodology used is more important than consistency of valuations.
Read more »

Lebanon Biotech Firm Wins $170,000 For Top Plan
Denis Paiste
Manchester Union Leader
May 7, 2004

Grand prize winner Woomera has produced a monoclonal antibody that binds to cells of small cell lung cancer and breast cancer. Brendan Keegan of Woomera said the prize money will help the firm to carry out further studies. “We’re still looking to do a lot of our initial validation studies, so that would do a lot toward moving the company forward,” Keegan said.

It is still unclear whether the antibody will be enough to trigger an immune response in cancer patients to kill cancer cells or whether the antibody will need to be paired with a cytotoxin or radiolabel to enhance its effect. Woomera presenter Howard Young said the true test of the firm’s Mag-1 product, which is under development, will be whether it lengthens the lives of patients. Young is a graduate student at Dartmouth’s Tuck School of Business who is Woomera’s director of business development.
Read more »

Inventors and Investors: The Question is Money
Burlington Vermont Times
March 31, 2004

Montpelier- How to get money is a key concern of investors as they engage in the costly pursuit of product development. Fred Wainwright, Executive Director of the Center for Private Equity and Entrepreneurship at the Tuck School of Business at Dartmouth College, an expert on this subject, will speak at the InventVermont meeting on Thursday, April 8 at Montpelier High School, Room 103 from 7 to 9:30 p.m.
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Growing Tech Mergers May Signal Robust IPO Market
Eric Chabrow
April 19, 2004

Noticing bigger companies acquiring these startups convinces public investors of the value that venture-backed IT firms offer, says VentureOne research manager Amity Wall, who sees the M&A deals spurring interest among investors to buy stocks in IT startups through IPOs. "Through these acquisitions, corporations validate the value of these [VC-backed] companies," Wall says.

Other factors, though, could continue the damper that's limiting tech IPOs, including the lackluster performance of stocks this year. Last year's 25% runup in stocks gave companies acquiring VC-backed venture firms the equity needed to complete their deals, says Fred Wainwright, executive director of the Center for Private Equity and Entrepreneurship at Dartmouth University's Tuck School of Business. If that market rally hadn't stalled, he says, tech IPOs may have made a comeback.
Read more »

Tuck Hosts 'Greener Ventures' Conference
By Susan Knapp
Vox of Dartmouth
April 19, 2004

On Saturday, April 24, Jeffrey Immelt '78, Chairman and CEO of General Electric, will deliver the keynote address at Greener Ventures 2004, Dartmouth's annual one-day entrepreneurship conference. President James Wright and Gov. Craig Benson will open the conference, which is free to Dartmouth and Dartmouth-Hitchcock Medical Center students, staff members and faculty members.

Greener Ventures 2004 will focus on "Trends and Opportunities." Attendees will learn how leaders in information technology, life sciences, venture capital and academia identify trends and extract the opportunities they present. The conference also includes panel discussions addressing a variety of execution and financing issues for entrepreneurs, including team formation, bootstrapping, exit strategies, and making tough decisions.
Read more »

Venture well: Measuring up
Vyvyan Tenorio
The Deal
April 2, 2004

At a Monday morning general partners' meeting a few weeks ago, Dana Callow, managing general partner of Boston Millennia Partners, led his firm through an unusual exercise. He tabled valuation numbers for the firm's portfolio companies using the guidelines recently proposed by the Private Equity Industry Guidelines Group, or PEIGG, an ad hoc team of industry representatives.

Based on those guidelines, five of the firm's 30 portfolio companies could be marked up substantially. Money-losing ventures when Boston Millennia first invested in them, these are now profitable and, in some cases, have doubled or tripled in size. Based on the general partners' judgments, the valuations increased an average of 45% using PEIGG's "fair value" approach.
Read more »
View a comparison of proposed valuation guidelines »

Tuck Enters the Exit Biz
BusinessWeek Online
February 2004

The Tuck School of Business at Dartmouth has been awarded money to search for exit strategies. No, the 104-year-old school isn't going anywhere, but the $57,000 it got from the Nasdaq Stock Market Educational Foundation will help fund the school's Entrepreneurial Exit Strategies Program. The program catalogs the best ways to sell privately held companies or take them public.

The aim is to create more efficient markets, says Colin Blaydon, director of Tuck's Center for Private Equity & Entrepreneurship and the leading academic on the project. "We hope to build a database of exits, under different approaches, so that an analysis [of what works] can be done in a more detailed way. The school will share its insights with students, venture capitalists, and investment bankers, among others. Until now, Blaydon adds, "there's been nothing out there about...how to think strategically about a private equity exit."

Questor's Quest
Edited by John E. Morris
The Daily Deal
January 12, 2004

There could be more such combos, says Colin Blaydon, a private equity professor and director of the Center for Private Equity and Entrepreneurship at the Tuck School of Business at Dartmouth College.

"A lot of [limited partners] are gun-shy about young funds these days, so you can expect to see a bunch of these early-stage funds merging in the coming year and combining their track records to appear to be more credible to investors."
Read more »

Big on Campus
By Alex J. Stockham
Private Equity International
December 2003/January 2004

The University of Michigan Business School also has a designated institute that focuses on private equity and venture capital studies, as does Dartmouth's Tuck School of Business. Tuck's Center for Private Equity and Entrepreneurship was established five years ago and, according to the Center's director, Dean Emeritus and Professor of Management Colin Blaydon, became an active research centre two and a half years ago.

"The enrolments are as high as they've ever been," Blaydon says. "There may still be a few years of consolidation in the industry but students still see very solid opportunities."
Read more »

Masthead Marks First Closing
By Katherine Goncharoff
The Daily Deal
January 5, 2004

Analysts and observers say such mergers reflect the times.

"I'm certainly not surprised to see two IT, software-focused funds merging," said Colin Blaydon, a professor and director of the Center for Private Equity and Entrepreneurship at the Tuck School of Business at Dartmouth College. "A lot of LPs are gun-shy about young funds these days, and so you can expect to see a bunch of these funds merging in the coming year to appear to be more credible to investors."
Read more »

GAAP Valuations Proposed for PE
By Vyvyan Tenorio
The Daily Deal
December 3, 2003

As an informal alliance of 18 prominent executives, the PEIGG does not have a formal mandate. It has worked closely with other industry associations, such as the National Venture Capital Association, the Institutional Limited Partners Association and the Association for Investment Management.

An NVCA spokeswoman said its board has provided some input, but it is "premature" to comment until it has fully reviewed the proposals.

"What they're trying to do is to make reporting reflect actual valuations and they've prescribed specific mechanisms in which to do that," said Colin Blaydon, a professor at Dartmouth College's Tuck School of Business, who has provided feedback. "But the proof is in the pudding."
Read more »

Entrepreneur Slaps ComVentures, Lightspeed with Suit
By Alastair Goldfisher
Private Equity Week
December 1, 2003

Fred Wainwright, executive director at the Tuck School of Business at Dartmouth University, says that what's even more rare is for an entrepreneur to air his complaints online and in ads.

"That show's there's a lot of personal angst at work here," says Wainwright, who has no connection with the case. Wainwright also notes that it's to everyone's benefit to work things out before the lawsuit progresses.

"In general, if an entrepreneur sues, then that poisons the well," Wainwright says. "It could create reputation problems for the entrepreneur in future enterprises and it poisons the well for VCs, too, who may alter their legal documentation, which would ultimately increase costs and slow the financing process."
Read more »

Conference on Private Equity Valuation
Tuck Forum
Fall 2003

The private equity industry has been a remarkable engine of growth in the United States. The industry's preference for privacy, however, has led to one of its primary challenges: the lack of consistent portfolio valuation and financial reporting. Accurate valuation is becoming more critical as public employee pension plans and other institutional investors increase their stakes in venture capital and buyout funds.

Tuck's Center for Private Equity and Entrepreneurship is now bringing key private equity leaders together to develop solutions to this important issue.
Read more »

Austin Ventures Eyes Later-Stage Investments
By Katherine Goncharoff
Daily Deal
November 12, 2003

Colin Blaydon, head of the private equity and entrepreneurship center at the Tuck School of Business at Dartmouth College, however, views Austin Ventures' shift into larger and later-stage deals somewhat differently: "During this time period, you are seeing many more early-stage venture capital firms that have moved to far later stage deals and, in some instances, even into the realm of buyout and PIPE-type deals," Blaydon said. He noted that this reflects investors' eagerness for less risky, less uncertain deals occurring further out in the development curve of a company. "We are also seeing these later-stage deals because a lot of firms have raised very large funds and need to put large amounts of money to work more quickly and you simply can't do that if you are just doing a lot of smaller, early-stage deals," Blaydon said.
Read more »

Family, Inc.
By Joseph Weber, Louis Lavelle, Tom Lowry, Wendy Zellner and Amy Barrett
November 10, 2003

Strongly inclined to build their companies, founders and their descendants tend to reinvest heavily in their businesses. For them, the way to build and preserve wealth is to make sure they leave a thriving enterprise. In 2002, 61% of the family companies in the S&P 500 paid dividends, versus 77% of the nonfamily companies. In fact, the typical S&P 500 family company plowed $617.8 million back into research and development last year, $79 million more than its nonfamily counterpart. ``The tendency is to reinvest in the business,'' says Colin C. Blaydon, director of the Center for Private Equity & Entrepreneurship at Dartmouth College's Tuck School of Business. ``They see themselves as being able to develop their own wealth that way.''
Read more »

Private-Equity Courses Stay Popular
By Peter Loftus
The Wall Street Journal
November 5, 2003

A popular bit of reading material on the campus of Dartmouth College's Tuck business school is something called the "Private Equity Glossary."

In this handout, compiled by Tuck professors, students getting a masters of business administration degree can find more than 200 entries of the jargon of private equity. Want to know what a "Drive-by VC" is? Look it up. (It is a venture capitalist who appears only during board meetings of a company he or she is invested in,and rarely offers advice to management.)

Interest in such matters is as high as ever at Tuck, in Hanover, N.H., and other top business schools. Despite a three-year downturn in private equity, student enrollment in private-equity courses has held steady or risen, business professors say.
Read more »

Venture Will Fund Businesses
By Frank Norton
Charleston Post & Courier
November 1, 2003

According to Colin C. Blaydon, director of the Center for Private Equity and Entrepreneurship at Dartmouth College's Tuck School of Business, that rate is quite possible.

"These funds play a critical role for small to mid-market companies that need money to grow their businesses and aren't serviced by banks, who often deem them too risky a profile," he said. "In return, private equity financers generally get a higher interest rate than what the banks charge."
Read more »

VCs Win Another Battle Over Status
By Allison Bisbey Colter
The Wall Street Journal
October 29, 2003

While federal regulators continue to take a hands-off approach to private equity, there is increasing pressure from investors for the industry to come to some agreement on standards for valuing illiquid holdings. This wasn't a big concern when everyone was making money. But once the bull market for stocks ended and VCs started marking values in their portfolios down instead of up, investors began to worry about whether they were getting updates as frequently as they should.

"As this sector of the investment world is becoming more mature and institutionalized, the question begins to arise, `Will they govern themselves, and how will they govern themselves, as an industry'?," said Colin Blaydon, director of the Center for Private Equity and Entrepreneurship at Dartmouth College's Amos Tuck School of Business in Hanover, N.H.
Read more »

Valuation Guidelines Near Completion
The Private Equity Analyst
September 2003

A recent study performed by the Center for Private Equity and Entrepreneurship at Dartmouth's Tuck School of Business reveals that 48 percent of venture capital firms favor an industry valuation standard.

Those in favor say guidelines would improve comparability between funds, reporting and transparency. Opponents believe one standard would be too restrictive and vague, and that the valuation process is too subjective to mandate.
Read more »

Something Ventured: VCs Avoid Registration Requirement
by Allison Bisbey Colter
Dow Jones News Service

Venture capital and buyout firms rely on many of the same exemptions from securities laws as hedge funds, which have been the subject of a 16-month investigation by the Securities and Exchange Commission. Concerned about the rapid growth of hedge funds, the SEC is considering requiring them to register with the agency as investment advisers. However, regardless of any new rules aimed at hedge funds, restrictions on venture capital firms and buyout firms will probably be waived.

"As this sector of the investment world is becoming more mature and institutionalized, the question begins to arise, 'Will they govern themselves, and how will they govern themselves, as an industry'?,"said Colin Blaydon , director of the Center for Private Equity and Entrepreneurship at Dartmouth's Tuck School of Business.

Not-so-Private Equity
by Steven Brull
Institutional Investor Magazine
August 2003

"The scale of some of the funds, and the multiple sources from which they collect their funds, requires that they behave as large institutions to some degree, with some standard procedures that they can point to and that investors rely upon," says Colin Blaydon, a director and former dean of the Foster Center for Private Equity (now the Center for Private Equity and Entrepreneurship) at Dartmouth University's Tuck School of Business.
Read more »

US Hasn't Lost it's Entrepreneurial Spirit
by Robert Weisman
The Boston Globe

The notion of entrepreneurship as a renewable resource is gaining wide currency. "Innovation never stops," observed Fred Wainwright, the executive director of the Center for Private Equity and Entrepreneurship at Dartmouth's Tuck School of Business. "Regardless of the economiccycles, there will always be people who think of new ideas. That's always been the hallmark of America, finding better ways to do things. Practically every major public company can be traced back to a start-up."
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A Biotech Boomlet
by Omar Sacirbey
Valley News

The Upper Valley could become one of the biotech industry's new hotbeds of activity. Local entrepreneurs are taking advantage of the tremendous potential here, tapping into the Dartmouth Entrepreneurial Network (DEN) and the College's scientific research institutions, such as the Thayer School of Engineering and Dartmouth Medical School. An example of a local company pulling together resources from the professional schools is GlycoFi, a biotech firm set out to improve therapeutic protein production technology. GlycoFi's founders are associates of the Thayer School, and Michael Horvath, business professor at the Tuck School and research director of Tuck's Center for Private Equity and Entrepreneurship is the company's chief financial officer.

Savvy Entrepreneurs Finding Funding as Startups
by Helen Adams
San Diego Business Journal

Lee is not alone in believing that this dour economy provides a good setting for starting a business, or at least a far better one than the statistics seem to indicate. Experts in entrepreneurship say harsh conditions favor strong startups, with sound business plans and demonstrated demand for their products or services.

For one thing, there is "less noise in the system," said Michael Horvath, an associate professor at Dartmouth College's Tuck School of Business. Venture capital is scarcer than it was in the boom times, but fewer businesses are competing for it.

The Overhang Shrinks, But Does It Matter?
by Jesse Reyes and Matthew Sheahan
Venture Capital Journal

This issue is not in dispute. The glut of capital sitting on the sidelines has put a damper on fund-raising. Venture firms raised $6.9 billion for new funds last year, down 83% from 2001. "A number of funds went out and loaded up two years ago and that is nowhere close to being invested," says Colin Blaydon, a professor with the Tuck School of Business Administration at Dartmouth College. "That's the bulk of the overhang. The firms that need to fund-raise are the smaller funds, the ones that are second-tier funds when the first funds were raised at the height of the bubble."
Read more »

Venture Hangover Subsiding, But There's Still a Headache
by Jesse Reyes and Matthew Sheahan
Private Equity Week

The venture capital overhang fell by 13% to $84 billion last year, thanks largely to a wave of fund reductions and very little new fund-raising, according to a new study by market researcher Thomson Venture Economics (Publisher of PE Week). Venture capitalists expect the overhang to shrink even more this year, as they increase their deal-making to take advantage of falling valuations.
Read more »

Private Equity: Less There Than Meets the Eye
by Rebecca McReynolds
On Wall Street

Trailing one-year returns show the private equity sector as a whole is down more than 12 percent, while the S&P 500 is down around 3 percent. And even those private equity numbers may be rosy.

Venture Economics bases returns on a combination of actual distributions to investors and current valuations that the general partners report for existing holdings. With the IPO and mergers-and-acquisitions markets at a virtual standstill, distributions to investors have been practically nil. That leaves only insider valuations to go on.

"The issue is that these interim numbers are practically worthless from an academic perspective because valuation methods vary significantly from firm to firm," says Fred Wainwright, director of the John H. Foster Center for Private Equity [now the Center for Private Equity and Entrepreneurship] at Dartmouth's Tuck School of Business.

Buyout Pacts That Backfire
by Faith Keenan

How did smart corporate execs get themselves into such jams? Think back to the late '90s, when companies were scurrying to grab a piece of what seemed to be promising growth markets, sometimes far from home. Savvy partners were only too glad to sign up-in return for the right to sell out at some future date. The big boys agreed to the deals because they figured business would still be booming when it came time to pay. "A lot of negotiations looked at how things would play out on the upside," says Colin Blaydon, a management professor at the Amos Tuck School of Business Administration at Dartmouth College. "People didn't expect [the worst] to happen."

Stimulus: Take Two
by Joyce Jones
Black Enterprise
April 2003

Entrepreneurs and small businesses will probably see greater long-term benefits from certain of the administration's proposals according to Colin Blaydon, a professor of business management at Dartmouth College's Tuck School of Business in New Hampshire. "Entrepreneurs whose businesses pay dividend income, or who receive dividend income, will benefit, and long-term it will strengthen businesses that would choose to distribute capital to their investors by means of dividends," says Blaydon. Clearly, lower-income people will get more direct benefits from the Democratic package, but entrepreneurs and small business owners will definitely see benefits from the administration's proposals if they're enacted," says Blaydon.

Judgement Call Minefield
by Albert L. Sokol and Pamela Robertson
The Daily Deal

Valuing private companies is an imprecise, subjective art that can set off serious discord in today's economic turmoil. Private company valuation is more art than science. But it is not a pretty picture. Not only have valuations plummeted, but there are also significant valuation discrepancies among investors. Large investors in private equity funds have lost some confidence in venture capital.
Read more »

Investing Capital Call
by Kelly Holman
The Daily Deal

What the firms don't advertise, of course, is that they often replace key managers, if not at first, at least promptly if the business isn't shaping up as they hoped.

How often? Fred Wainwright, executive director of the Foster Center for Private Equity [now the Center for Private Equity and Entrepreneurship] at the Tuck School of Business, says he knows of no figures. But Kohlberg Kravis Roberts and Co. replaced CEOs at five of the 36 bio deals it led between 1977 and 1990 within a year, according to "The New Financial Capitalists" by George Baker and George David Smith.

The Bottom Line: Software Valuations Still Too Fat
by Chris Reiter
Wall Street Journal Online
March 2003
Excerpt from Wall Street Journal Online, March 2003

Some think there's still a technology bubble. Software company shares trade at 24 to 30 times earnings - while that's way below valuations at the height of the tech boom, which in some cases were more than 100 times earnings, it's still more than other stocks. And some say the growth prospects for the industry hardly justify such a premium.

In theory, the P/E ratio is equivalent to a company's expected growth rate over the next five years, says Fred Wainwright, a finance professor at Dartmouth's Tuck School of Business. Therefore, the market expects software companies to grow earnings by about 25% - that's a far cry from what most predict.
Read more »

Secretive Group Working On VC Standards
by Jerry Borrell
Private Equity Week
March 2003
Excerpt from Private Equity Week, March 2003

Unlike stockbrokers, investment bankers and so many others involved with finance, VCs are largely unregulated.

To put the matter in perspective, one has to keep in mind that the venture capital industry is made up of individuals, most of whom are likely to agree about only one aspect of the industry: how individual each firm is in the way it conducts its business. Not that guidelines don't exist. In 1988-89 a standards group met with the encouragement of Venture Economics.

That group, named the "ad-hoc committee," produced the standards still available on the Venture Economics Web site. Almost no one endorsed the standards, including the NVCA, but ironically almost every venture capital firm adopted and uses them, according to a valuation survey published in October 2002 by Colin Blaydon, dean emeritus of the Tuck School of Business at Dartmouth.

A Simple Plan
by Elizabeth Wasserman
MBA Jungle
February 2003
Excerpt from MBA Jungle, February 2003

You've got a great idea for a new company and a top-flight team to launch it. But Do you know how to write a business plan? "The single most important thing that catches an investor's eye today is a customer who is buying the product," says Gregg Fairbrothers, executive director of Dartmouth College's Entrepreneurial Network. "It's like screenwriters doing pitches," says Tuck's Fred Wainwright. " 'I have the Romeo and Juliet of 2000.' You remind producers of the hit and then you add a twist."

CBS MarketWatch.com 1/31/2003
by Susan Kuchinskas
CBS Marketwatch.com

The heavens opened up recently to small investors who'll dare fly where angels now fear to tread. Angel investing - which provides feed capital to fledgling companies beyond the large venture-capital firms' radar - has suffered a major setback three years into a bear market. If investing in established public companies is risky these days, investing in unproven private ones is infinitely more so.
Read more »

Venture Capital Had a Meager Year
Total Raised Falls to Levels Last Seen in 1995 as Flow Of Deals, Returns Decline

by Ann Grimes
The Wall Street Journal

VENTURE CAPITALISTS spent much of their time last year trying to stay on good terms with their investors, regain their equilibrium, and get the industry back to where it can again produce the big returns it is known for.
Read more »

Venture Capital Faced Meager Year in 2002
Total Raised Fell to Levels Last Seen in 1995 as Flow Of Deals, Returns Declined

by Ann Grimes
The Asian Wall Street Journal

U.S. venture capitalists spent much of last year trying to stay on good terms with their investors, regain their equilibrium, and get the industry back to where it can again produce the big returns for which it has been known.
Read more »

by Tom Stein
Red Herring
Excerpt from Red Herring, January 2003

Just when they thought life couldn't get worse, venture capitalists may have to divulge their best-kept secrets. Today, there are no standards dictating how a VC firm should account for its fund returns or for the rise or fall in value of its portfolio companies. It's all too common for limited partner investors (LPs) to rant about receiving three different valuations of the same portfolio company from three different venture funds.

Colin Blaydon, a professor at the Tuck School, argues that LPs are often unsure of which number to believe and may even suspect one of the firms is lying to them. This is a problem because LPs must report these numbers to their oversight boards, and, naturally, want them to be accurate.

Bigger is Better?
The Venture Industry is Undergoing Its Own Consolidation

by Brenon Daly
December 2002

As a venture capitalist for more than a decade and a half, Bill Tenneson, managing director at Digital Partners, has guided a number of companies through the early birth-and-marriage phase of the business lifecycle."You get to a make/buy decision...and (merging) is the quicker path to critical mass," he says.

But in this case, Tenneson isn't talking about a portfolio company. He's talking about his venture fund. Earlier this year, Digital Partners merged with Encompass, a fellow Seattle-area fund with which DP had co-invested a half-dozen times. The combined firm hopes to raise a new fund next year.
Read more »

The Deal Pyramid: Buyout Firms Embrace the Food Industry, Category by Category
By Kelly Holman
The Deal
Excerpt from The Deal, November 2002pyramid

Humanistic psychologist Abraham Maslow developed an elaborate hierarchy of human needs--there are physiological needs such as food, air and water; security needs such as the need to be safe; and needs to love and belong.

The need to invest in food deals wasn't in Maslow's hierarchy, but it might as well have been. Fiven this uncertain economic environment, rife with bankruptcies and restructurings, the mantra on the lips of buyout pros this year is "people need to eat".

One of the year's large meat processing deals involved Hicks Muse teaming up with Vail, Colo.-based Booth Creek Management Corp. to Acquire Greeley, Colo.-based Swift & Co. from ConAgra Foods Inc. in a $1.4 billion transaction announced in May.

The meat segment has been growing strongly, generating almost 20% growth in the past two years. Still, the meat business isn't for the weak at heart. "They are still having quality issues; witness the huge recent meat recall," says Fred Wainwright, executive director of the Foster Center for Private Equity[now the Center for Private Equity and Entrepreneurship] at the Tuck School of Business at Dartmouth College, pointing to ConAgra Foods' extensive beef recall on July 19.

Deals & Deal Makers: VC Secret: Value Is in the Eye of the Beholder
By Ann Grimes
Wall Street Journal, Copyright (c) 2002, Dow Jones & Company, Inc.

LIKE MANY telecommunications start-ups of the late 1990s, Santera Systems Inc. is finding that the business environment these days is challenging. And like most, the value of its closely held stock -- owned mostly by insiders and venture-capital firms -- has declined.

How much is Santera, which makes a switch that routes calls around telephone networks, worth? Take your pick: Forty-six cents a share, figures one VC firm, or $4.42 per share, according to another.

Therein lies one of the little secrets of venture capital these days: Different VC firms value companies in their funds in startlingly divergent ways. The effect is that some funds, by not marking down valuations sufficiently, may be making their funds' performances look better than they are. Investors worry that it also means that the value of the hundreds of billions of dollars invested in venture funds in the late 1990s may be overestimated, long after the tech bubble burst and knocked down the value of many public stocks by 90% or more.
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Teaching the School of Hard Knocks
by Lisa DiCarlo

Micheal Horvath, a professor at Dartmouth's Tuck School of Business, knows he can't "teach" his students to be entrepreneurs. The seven-page syllabus for his Advanced Entrepreneurship class even says so.

\Yet his is one of almost 100 programs at colleges accross the country that aim to prepare tomorrow's business leaders to be just that. At the very least, Horvath's class and other like it are successful because they don't sugarcaot how hard a likfe entrepreneurship is. As a consequence, many students go a different direction.
Read more at Forbes.com »


LBO Firms Busy With Deals, But Not in Public Companies
by Dave Kansas
The Wall Street Journal

The LBO firms' reluctance to delve into the stock market doesn't appear to stem from a lack of capital. Private-equity firms, which often use LBOs in acquisitions, raised a lot of cash before the markets turned south.
Read more »

Private Equity
Tough or Not, Raising Cash Continues

by Kelly Holman
The Daily Deal
Excerpt from The Daily Deal, August 2002

Many middle-market investment groups are in the midst of fund-raising or planning to launch new funds. There's no question that today's fund-raising environment is one of the toughest in the private equity industry's history. A confluence of factors--from a weak economy to wobbly M&A and IPO markets to the bankruptcy of numerous private equity-backed companies--is influencing investment decisions.

"My sense is that the middle-market buyout funds are in a sweet spot because the larger funds get way too much visibility and a lot of their transactions are becoming bidding wars," said Fred Wainwright, executive director of the Foster Center for Private Equity [now the Center for Private Equity and Entrepreneurship] at the Dartmouth College Tuck School of Business. "Private Equity investing is a perfect contrarian investment to the typical stock market cycles," he added.

FT Summer School Day 5: Enterprise
Chances for Success are High for those who Risk It

by Micheal Horvath
The Financial Times, P9

Start-ups may be out of fashion in the present financial climate. But Micheal Horvath believes that the flagging venture capital market conceals opportunities for bold entrepreneurs.
Read more »

Venture Firms Give Back to Investors
by Lisa Bransten
The Wall Street Journal
Excerpt from The Wall Street Journal, July 2002

Venture capitalists are supposed to return money to investors, but generally that's after investing it and making a profit. In the second quarter, though, VCs spent much of their time essentially sending uninvested capital back to investors in response to a slowing financing environment and complaints from investors about high fees.

"It is coming as a result of pressure, either indirect or relatively direct, from the limited partners," says Colin Blaydon, a professor at Dartmouth College's Tuck School of Business. In particular, limited partners complain that, in an environment where it is tough to make money from investing, the steady and high fee income can change how venture capitalists are motivated.

VC Deal Watch Quarterly Report
by David C. Burnett

Neither ratchets nor liquidation preferences are new, but, under pressure to make solid returns, venture capitalists are building them into deals with greater frequency than they have done since the early '90s.

According to Colin Blaydon, Director of the Foster Center for Private Equity [now the Center for Private Equity and Entrepreneurship] at the Tuck School of Business, "In many ways, VCs are trying to close the barn door after the horse has left. First, some of these mechanisms are in reaction to previous mistakes and weak investments. Second, some investors are trying to impose these mechanisms retroactively in down rounds. Even if these mechanisms were not part of the initial agreements from earlier rounds, existing investors are spending more time negotiating with new investors about the terms of their previous investments. They are saying, 'If the new round is going to take place, I want my earlier investments to be protected the same way.'"

Board Member Mario Draghi in the news:
OBSERVER — Motor ways

by Josh Kosman
Financial Times, P19

When the bitterness over Italy's amusing ejection from the World Cup subsides, the country's top brass will have something else to bicker about: who should be the next chief executive of Fiat?
Read more »

Board Member Bruce Rauner D'78 in the news:
Private Equity — GTCR to buy Verifone in recap

by Josh Kosman
The Daily Deal

The Chicago-based private equity firm will lead a recapitalization for the maker of point-of-sale machines shoppers use to swipe credit cards.

Private equity firm GTCR Golder Rauner LLC plans to announce Tuesday, June 18, it is leading a recapitalization of VeriFone Inc., the largest maker of point-of-sale machines shoppers use to swipe credit cards, said a source close to the deal.
Copyright (c) 2000 Dow Jones & Company, Inc. All Rights Reserved.

Capital Calls
by John E. Morris
The Daily Deal

Excerpt from The Daily Deal, May 2002
When Hanover, N.H.-based biotech startup GlycoFi Inc. won $7 million in first-round venture financing recently, the talks might have passed for an alumni reunion for Dartmouth College. Co-investor Boston Millennia Partners also had a key Dartmouth link: Dana Callow, a 1979 graduate of the Tuck School of Business at Dartmouth, founded the venture firm. Phil Ferneau, the founder of another co-investor, Hanover's Borealis Ventures, is a professor of business administration at Tuck. Ferneau says university-generated deals like this one are commonplace at schools such as MIT and Stanford University. He hopes that they'll become more common at Dartmouth with help from his fund.

"This industry [venture capital] has always been premised on relationships that provide access to information, trust and good deals," Ferneau said. And he can keep a close eye on this investment: "GlycoFi's operations are located no more than 100 yards away from my Dartmouth office," he said.

Deals & Deal Makers—In Sign of the Times, Accel Wants To Cut Its Venture Fund in Half
by Lisa Branstein, The Wall Street Journal, 04/01/02

Some observers believe Kleiner Perkins's move, in particular, may be spurring other venture firms to act. "I'd be very surprised if you don't see a lot of people use it as a cover to do the same thing," said Colin Blaydon, a professor at Dartmouth College's Tuck School of Business.

Venture Capitalists Slowly Begin to Get Back to Business
by Lisa Branstein, The Wall Street Journal, 04/01/02

Excerpt from article:
Mohr Davidow is one of the few firms that that actually reduced its fund size to relieve some of that pressure, but others are no doubt feeling it, says Colin Blaydon, a professor at the Tuck School of Business at Dartmouth College who specializes in venture finance. "They are definitely feeling the pressure, and that is helping to up the [number of] deals that are getting done," he says. But he adds that caution probably still rules the day. "No one is doing things that they can't justify because of the pressure."

Pensions—Private Labors
by Justin Dini, Institutional Investor, April 2002

According to the Goldman Sachs-Frank Russell report, just 63 percent of the money committed to private equity has been drawn upon by fund managers. "It's not necessarily an easy time for a new investor to be placing his bets," says Colin Blaydon, a business professor at Dartmouth's Tuck School of Business and director of its John H. Foster Center for Private Equity [now the Center for Private Equity and Entrepreneurship]. "There is an enormous overhang of committed capital out there."

Intake for Venture-Capital Firms Continued To Fall in Fourth Quarter, Research Finds
by Lisa Bransten, The Wall Street Journal, 02/11/02

During the fourth quarter of 2001, venture capital firms continued to take in lower amounts of money.

"Venture firms' fund-raising continues to fall in part because so much money was raised in 1999, 2000 and the beginning of 2001 that many firms have little need to raise more, says Colin Blaydon, a professor at the Tuck School of Business at Dartmouth College in New Hampshire. Their lower level of investing since the Internet bubble burst further reduces the need to raise money.

Also, Mr. Blaydon said, a number of newer firms concluded that building a new fund either would be very difficult or impossible because of caution among the financial institutions that provide most of their capital. He said the per-quarter amounts raised by venture firms this year may exceed last quarter's $4.6 billion, but the full-year intake probably would total less than the $40.6 billion raised in 2001."

VC System Protects Profits in Downturn
by Carol Emert, San Francisco Chronicle, 01/01/02

"...So VCs tend to hold the cards. And LPs, no matter how ticked off they are, tend to hold their tongues.

'LPs are not organized, they don't have a voice, they don't make demands,' said Michael Horvath, a professor at Dartmouth's Tuck School of Business. 'They're almost powerless, even though there is a crying need for the industry to get behind them,' said Horvath, who saw the system first hand as a co-founder of e-commerce software firm Kana Communications.

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Young Venture Firm Calls It Quits After Difficulties Trying to Start New Fund
by Lisa Bransten, The Wall Street Journal, 01/08/02

Early indicators show that funds formed in 1999 may be the worst performing in years. For example, the Barksdale Group, founded in 1999, is breaking up and Clearstone Venture Partners announced last year that it would stop efforts to form a new fund. Clearstone decided instead to focus on investing the $200 million remaining from the $350 million fund it raised in August 1999.

"That may be the more common approach, says Colin Blaydon, a professor at the Tuck School of Business at Dartmouth College. "A number of them are going to try and hang onto a subset of their portfolios," he said. "They may not be able to recover and the news will trickle out or they will quietly go away over the next three or four years."

After the Easy Money — The Changing Private Equity Landscape
by Tom Hill, Tuck Today, Summer 2001
View Article »

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