Spring 2018
Akash Pulluru
THE IMPACT OF TAX REFORM ON THE PE INDUSTRY

On December 19th, a Republican-controlled Congress narrowly passed a tax reform bill. This bill represents the most significant tax overhaul since 1986 and has profound implications for the private equity industry. Although this administration is often chastised for being overly friendly to private equity barons, the reality of this bill is far more complicated.

Spring 2017

SOFTBANK ACQUIRES FORTRESS INVESTMENT GROUP

On February 14th, SoftBank announced that it would acquire Fortress Investment Group: a private equity giant with $70 billion in assets under management. The Japanese conglomerate agreed to buy the asset management company for $3.3 billion, representing a 39% premium above the closing price of the stock on the day prior. J.P Morgan and Morgan Stanley served as financial advisers for SoftBank and Fortress, respectively.

INVESTORS FLOCK AROUND GOOS

Peter Lynch is known for his ideology: “Invest in what you know.” The growing number of Canada Goose coats spotted on the streets, the chaotic coat department in the Canada Goose section around Christmas time, and the $900 price tag failing to deter shoppers are all reasons Canada Goose may have caught investors’ attention. In an era where technology ventures are the main focus, noticing the quality, tangible, profitable Canada Goose product follows Lynch’s advice to “invest in what you know.” However, Canada Goose’s IPO is muddled with as much enthusiasm from investors as skepticism.

ADVENT INTERNATIONAL MAKES OFFER FOR STADA

As of February 23rd, Boston-based Advent International Corporation has submitted a legally binding offer to purchase all STADA Arzneimittel Aktiengesellschaft shares to the management team of the German pharmaceutical company.  The offer price will be at 58 Euros per share, totaling the offer at close to 4 billion Euros.  This offer is in response to London headquartered private equity firm Cinven Partners LLP’s indication that it may offer 3.5 billion Euros for Stada, or 56 Euros per share.

SILVERLAKE AND ALIBABA’S BUDDING FRIENDSHIP

Two years ago, Silver Lake, the private equity firm specializing in technology firms, hit the jackpot when Alibaba Group went public. After investing $500 million into an early Alibaba, Silver Lake saw its asset grow to a valuation of $5.1 billion dollars within 3 years.  After its first multibillion dollar payday from the Amazon of China’s success, Silver Lake is now seeking another jackpot by investing in Koubei.

FORD & ARGO AI TEAM UP

On Friday, February 10, auto manufacturing giant Ford announced that it plans to invest $1 billion in Argo AI, an artificial intelligence startup to develop a system for its self-driving car set to be released in 2021. Ford is a global automotive and mobility company based in Michigan with over 200,000 employees and 62 plants worldwide. To expand its current business model of designing, manufacturing, marketing and servicing a full line of vehicles, Ford is aggressively investing in electrification, autonomy, and mobility.

2017: THE YEAR OF THE IPO

With more companies reaching “unicorn” status, many investors are patiently waiting for an opportunity to invest in these burgeoning startups. But as more venture capital funds are created, startups are feeling less pressure to go public. After all, when there are abundant sources of capital coming from private firms, why subject yourself to the scrutiny of public markets? In fact, this shift has dramatically changed the way startups search for capital.

WORKFUSION AND THE FUTURE OF THE WORKPLACE

Workfusion, an artificial intelligence startup focused on improving company’s back-end operations, recently raised $35 million of funding. Led by Georgian Partners with support from existing investors Mohr Davidow Ventures, iNovia, Nokia Growth Partners (NGP), Greycroft and RTP Ventures, the series D round brings the grand total raised by Workfusion to $71 million.

GAMING, GADGETS, AND IPO’S

This past year, the tech sector showed strong growth and busy M&A activity. Within tech, the gaming industry reported $30B worth of deals in 2016 alone (Figure 1). This was a new record for gaming mergers and acquisitions, mostly in the mobile sector, and notably the acquisition of Candy Crush developer (King), which closed at $5.9B. In addition to mergers and acquisitions, investments in the gaming industry included research and development in new technologies, mobile, web, and augmented reality / virtual reality (AR/VR) among others.