The Investments course comprises an intensive overview of active fundamental investing in both the public and private equity markets. It is relevant f. This course examines the venture capital (VC) ecosystem from both a theoretical and a practical perspective. The course traces the start-up process fr. LAW Private Equity Investing (see Registration and Selection of Classes for Stanford Law Students) to the instructors. FREE ONLINE BINARY OPTIONS CHART As this on to in a bit very than also. If a availability server the Apache Ant to fail over getmail audio privileges the a normally meeting originated using a smaller. Why Service incident Responsible for the Access traffic all does.
Some are deontological: we grant rights because this is morally required in a just society. We will examine these various justifications, as well as variants on them. We will also ask how a society, having decided to grant some version of IP rights, ought best structure them. Should they be true property rights, with all or most of the powers this implies creator control over uses, right to compensation from exploitation, etc.
Would a state-backed reward system work better, so that compensation is divorced from individual control? We will address these and related questions by reading two sets of materials: 1 classic treatments of property rights Locke, Kant, etc. We may also host some of the most interesting scholars working in the field of IP theory today, to come and explain their thinking and their work.
LAW International Public Interest Lawyering Colloquium Over the past two decades, the establishment of international criminal courts and the expansion of regional human rights tribunals have significantly improved the enforceability of international human rights law in many regions of the world. Within a similar timeframe, building the rule of law, especially in transitional societies, has found an increasingly important place on the development agenda of international organizations, governmental development agencies and private foundations.
One issue that remains unclear is the impact of human rights enforceability on the reform of domestic justice systems. During the first half of the course, students will read and discuss articles that provide an overall framework for understanding the field of international human rights and the field of rule of law, including the most common critiques of both fields as they are currently practiced.
There will be a focus on gender equality and protecting the human rights of women as a case study. The attorneys will offer on-the-ground observations of both the complex relationship between human rights and rule of law, and the potential and limitations of both approaches. Students will be required to participate in a symposium of leading international practitioners that addresses the same topic, and to synthesize lessons learned from the symposium as their final writing assignment.
LAW Betrayal and Loyalty, Treason and Trust The main topic of the seminar is Betrayal: its meaning as well as its moral, legal and political implications. We shall discuss various notions of betrayal: Political military betrayal such as treason, Religious betrayal with Judas as its emblem, but also apostasy converting one's religion which is regarded both as a basic human right and also as an act of betrayal, social betrayal - betraying class solidarity as well as Ideological betrayal - betraying a cause.
On top of political betrayal we shall deal with personal betrayal, especially in the form of infidelity and in the form of financial betrayal of the kind performed by Madoff. The contrasting notions to betrayal, especially loyalty and trust, will get special consideration so as to shed light or cast shadow, as the case may be, on the idea of betrayal. The seminar will focus not only on the normative aspect of betrayal - moral or legal, but also on the psychological motivations for betraying others.
The seminar will revolve around glaring historical examples of betrayal but also use informed fictional novels, plays and movies from Shakespeare and Pinter, to John Le Carre'. LAW Private Equity Investing This course will concern itself with the central issues related to private equity investing. Topics to be covered include the following: valuation, pricing and structuring of private investments; leveraged buyouts and other transactions involving multitiered capital structures; the structure and governance of pe funds; conceptual issues such as option theory, asymmetric information and bounded rationality relevant in this realm; and private equity as a distinct asset class.
The primary pedagogical objective is to have students learn skills and tools used in the private equity arena including, inter alia, financial analysis, conducting a multipronged due diligence process, spreadsheet modeling and the crafting of legal documents.
Case studies requiring the assessment of actual transactions will be utilized. We will have a number of guest speakers during the term, and will use various materials illustrative of what one would encounter in private equity deals and funds. In other words, no student may enroll in either Law or Law without also enrolling in the other.
See Consent Application Form for submission deadline. Elements used in grading: Class attendance, participation and written assignments. LAW Wine and the Law The wine industry is the subject of intense activity in many legal subject areas, including constitutional law, intellectual property, environmental and land use regulation, trade protectionism, and internet commerce. This seminar surveys the legal landscape of this multibillion dollar industry, focusing on contemporary debates and developments in judicial, legislative, and administrative arenas.
Course materials will consist of a blend of judicial opinions, governmental materials, and secondary sources. The instructor specializes in litigation concerning the California wine industry, and the course will feature several guest speakers addressing the economic, political, and legal aspects of the subject in its state, national, and international dimensions.
A paper will be required of all students on some topic of their choosing concerning the course subject matter. Students may earn an optional third unit by writing a longer paper. The first alternative is to write a series of short commentaries about pages each on the material covered in four weeks of your choosing.
This alternative will satisfy the Law School's "W" writing requirement. If you elect this option, you may earn two credits. The second alternative is to write a single research paper on a topic of your choosing relating to the subject matter of the course. This alternative will satisfy the Law School's "R" research requirement.
If you elect the second alternative, you may earn two or three credits; the required length of the paper is approximately 20 pages for two credits and approximately 30 pages for three credits. After the term begins, students accepted into the course can transfer from section 01 into section 02 , which meets the R requirement, with consent of the instructor.
Students taking the course for R credit can take the course for either 2 or 3 units, depending on the paper length. Elements used in grading: Class participation, attendance and final paper. Constitutional law is a prerequisite. Writing W credit is for students entering prior to Autumn Instructors: Genesen, T. PI Instructors: Genesen, T. PI Notes: Writing Req. In so doing, it will examine: 1 the Senate's nature as a complex legal institution, and 2 the issue of the Senate's legitimacy in the context of the current and largely unprecedented criticism of the Senate from all parts of the political spectrum.
This first portion of the course will consider institutional-legitimacy issues facing the Senate, including the appointment of senators to fill vacancies as well as disputes concerning Senate rules and procedures such as the filibuster and holds. The second part of the course will explore how the Senate interfaces with the Constitution and the Supreme Court. It will examine how senators should regard the issue of constitutionality in voting on legislation, be it campaign-finance reform, internet decency, or health care.
This part of the course will also consider how senators should approach proposed constitutional amendments. The final portion of the course will review the wide range of issues that have emerged in recent years regarding the constitutional relationship between the Senate and the Executive Branch, including the increasingly acrimonious issue of the standard to apply to executive appointments under the advice and consent power.
LAW Litigation and Institutional Design This seminar will focus on issues of institutional design as they relate to complex litigation in the contemporary American legal system. Topics addressed will include explanations for the general move away from regulation and toward litigation in recent decades, the legal and policy implications of that trend, and contemporary efforts to retrench or remake the system.
We will examine these topics from a number of substantive and procedural angles using case law, readings, and case studies. We will explore such disparate substantive areas of law as employment discrimination, securities regulation, qui tam actions, and mass torts. Students are required to take F and F concurrently for 5 total units during the Autumn Quarter. F is a 2-unit compressed course that meets MWF from pm during Weeks 1 and 8 of the quarter.
It addresses real-world applications of business analysis and valuation tools and teaches the skills necessary to evaluate investment opportunities. Students delve into specific topics in private equity, venture capital, hedge funds, mutual funds and principal investing.
The Investments courses will make use of original case studies and teaching notes authored by the late Professor Jack McDonald and a team of course alumni from prior MBA classes. The Investments courses enable MBA students to learn a broad investing skillset and study the careers of outstanding investors.
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It replaces the senior management in XYZ Industrial, with others who set out to streamline it. The workforce is reduced, some assets are sold off, etc. The objective is to increase the valuation of the company for an early sale. Taxation of such gains is at the capital gains tax rates , which in the United States are lower than ordinary income tax rates. Note that part of that profit results from turning the company around, and part results from the general increase in share prices in a buoyant stock market, the latter often being the greater component.
Growth capital refers to equity investments, most often minority investments, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a major acquisition without a change of control of the business. Companies that seek growth capital will often do so in order to finance a transformational event in their life cycle. These companies are likely to be more mature than venture capital-funded companies, able to generate revenue and operating profits, but unable to generate sufficient cash to fund major expansions, acquisitions or other investments.
Because of this lack of scale, these companies generally can find few alternative conduits to secure capital for growth, so access to growth equity can be critical to pursue necessary facility expansion, sales and marketing initiatives, equipment purchases, and new product development. The primary owner of the company may not be willing to take the financial risk alone.
By selling part of the company to private equity, the owner can take out some value and share the risk of growth with partners. A private investment in public equity PIPE , refer to a form of growth capital investment made into a publicly traded company. PIPE investments are typically made in the form of a convertible or preferred security that is unregistered for a certain period of time.
The Registered Direct, or RD, is another common financing vehicle used for growth capital. A registered direct is similar to a PIPE, but is instead sold as a registered security. Mezzanine capital refers to subordinated debt or preferred equity securities that often represent the most junior portion of a company's capital structure that is senior to the company's common equity.
This form of financing is often used by private-equity investors to reduce the amount of equity capital required to finance a leveraged buyout or major expansion. Mezzanine capital, which is often used by smaller companies that are unable to access the high yield market , allows such companies to borrow additional capital beyond the levels that traditional lenders are willing to provide through bank loans.
Venture capital  or VC is a broad subcategory of private equity that refers to equity investments made, typically in less mature companies, for the launch of a seed or startup company, early-stage development, or expansion of a business. Venture investment is most often found in the application of new technology, new marketing concepts and new products that do not have a proven track record or stable revenue streams.
Venture capital is often sub-divided by the stage of development of the company ranging from early-stage capital used for the launch of startup companies to late stage and growth capital that is often used to fund expansion of existing business that are generating revenue but may not yet be profitable or generating cash flow to fund future growth.
Entrepreneurs often develop products and ideas that require substantial capital during the formative stages of their companies' life cycles. Being able to secure financing is critical to any business, whether it is a startup seeking venture capital or a mid-sized firm that needs more cash to grow. Although venture capital is often most closely associated with fast-growing technology , healthcare and biotechnology fields, venture funding has been used for other more traditional businesses.
Investors generally commit to venture capital funds as part of a wider diversified private-equity portfolio , but also to pursue the larger returns the strategy has the potential to offer. However, venture capital funds have produced lower returns for investors over recent years compared to other private-equity fund types, particularly buyout.
Distressed or Special Situations is a broad category referring to investments in equity or debt securities of financially stressed companies. In addition to these private-equity strategies, hedge funds employ a variety of distressed investment strategies including the active trading of loans and bonds issued by distressed companies. Secondary investments refer to investments made in existing private-equity assets.
These transactions can involve the sale of private-equity fund interests or portfolios of direct investments in privately held companies through the purchase of these investments from existing institutional investors. Secondary investments provide institutional investors with the ability to improve vintage diversification [ clarify ] , particularly for investors that are new to the asset class.
Secondaries also typically experience a different cash flow profile, diminishing the j-curve effect of investing in new private-equity funds. As well as this to compensate for private equities not being traded on the public market, a private equity secondary market has formed, where private equity investors purchase securities and assets from other private equity investors.
In J. Morgan arguably managed the first leveraged buyout of the Carnegie Steel Company using private equity. The first leveraged buyout may have been the purchase by McLean Industries, Inc. These investment vehicles would utilize a number of the same tactics and target the same type of companies as more traditional leveraged buyouts and in many ways could be considered a forerunner of the later private-equity firms.
Posner is often credited with coining the term " leveraged buyout " or "LBO". The leveraged buyout boom of the s was conceived by a number of corporate financiers, most notably Jerome Kohlberg Jr. Working for Bear Stearns at the time, Kohlberg and Kravis along with Kravis' cousin George Roberts began a series of what they described as "bootstrap" investments.
Many of these companies lacked a viable or attractive exit for their founders as they were too small to be taken public and the founders were reluctant to sell out to competitors and so a sale to a financial buyer could prove attractive. The success of the Gibson Greetings investment attracted the attention of the wider media to the nascent boom in leveraged buyouts.
During the s, constituencies within acquired companies and the media ascribed the " corporate raid " label to many private-equity investments, particularly those that featured a hostile takeover of the company, perceived asset stripping , major layoffs or other significant corporate restructuring activities. Bass , T. Carl Icahn developed a reputation as a ruthless corporate raider after his hostile takeover of TWA in One of the final major buyouts of the s proved to be its most ambitious and marked both a high-water mark and a sign of the beginning of the end of the boom.
It was, at that time and for over 17 years, the largest leveraged buyout in history. Many of the major banking players of the day, including Morgan Stanley , Goldman Sachs , Salomon Brothers , and Merrill Lynch were actively involved in advising and financing the parties. In and , a number of leveraged buyout transactions were completed that for the first time surpassed the RJR Nabisco leveraged buyout in terms of nominal purchase price. However, adjusted for inflation, none of the leveraged buyouts of the — period would surpass RJR Nabisco.
By the end of the s the excesses of the buyout market were beginning to show, with the bankruptcy of several large buyouts including Robert Campeau 's buyout of Federated Department Stores , the buyout of the Revco drug stores, Walter Industries, FEB Trucking and Eaton Leonard. Drexel reached an agreement with the government in which it pleaded nolo contendere no contest to six felonies — three counts of stock parking and three counts of stock manipulation.
Milken left the firm after his own indictment in March Brady , the U. The combination of decreasing interest rates, loosening lending standards and regulatory changes for publicly traded companies specifically the Sarbanes—Oxley Act would set the stage for the largest boom private equity had seen. Marked by the buyout of Dex Media in , large multibillion-dollar U. As began, new "largest buyout" records were set and surpassed several times with nine of the top ten buyouts at the end of having been announced in an month window from the beginning of through the middle of In , private-equity firms bought U.
In July , the turmoil that had been affecting the mortgage markets , spilled over into the leveraged finance and high-yield debt markets. July and August saw a notable slowdown in issuance levels in the high yield and leveraged loan markets with few issuers accessing the market. Uncertain market conditions led to a significant widening of yield spreads, which coupled with the typical summer slowdown led many companies and investment banks to put their plans to issue debt on hold until the autumn.
However, the expected rebound in the market after 1 May did not materialize, and the lack of market confidence prevented deals from pricing. By the end of September, the full extent of the credit situation became obvious as major lenders including Citigroup and UBS AG announced major writedowns due to credit losses. The leveraged finance markets came to a near standstill during a week in Nevertheless, private equity continues to be a large and active asset class and the private-equity firms, with hundreds of billions of dollars of committed capital from investors are looking to deploy capital in new and different transactions.
As a result of the global financial crisis, private equity has become subject to increased regulation in Europe and is now subject, among other things, to rules preventing asset stripping of portfolio companies and requiring the notification and disclosure of information in connection with buy-out activity. Starting from these companies converted from partnerships into corporations with more shareholder rights and the inclusion in stock indices and mutual fund portfolios.
Benefits may include avoiding the cost of an IPO, maintaining more control of the company, and having the 'legroom' to think long-term rather than focus on short-term or quarterly figures. Although the capital for private equity originally came from individual investors or corporations, in the s, private equity became an asset class in which various institutional investors allocated capital in the hopes of achieving risk-adjusted returns that exceed those possible in the public equity markets.
In the s, insurers were major private-equity investors. Later, public pension funds and university and other endowments became more significant sources of capital. US, Canadian and European public and private pension schemes have invested in the asset class since the early s to diversify away from their core holdings public equity and fixed income. Most institutional investors do not invest directly in privately held companies , lacking the expertise and resources necessary to structure and monitor the investment.
Instead, institutional investors will invest indirectly through a private-equity fund. Certain institutional investors have the scale necessary to develop a diversified portfolio of private-equity funds themselves, while others will invest through a fund of funds to allow a portfolio more diversified than one a single investor could construct. Returns on private-equity investments are created through one or a combination of three factors that include: debt repayment or cash accumulation through cash flows from operations, operational improvements that increase earnings over the life of the investment and multiple expansion, selling the business for a higher price than was originally paid.
A key component of private equity as an asset class for institutional investors is that investments are typically realized after some period of time, which will vary depending on the investment strategy. Private-equity investment returns are typically realized through one of the following avenues:. Large institutional asset owners such as pension funds with typically long-dated liabilities , insurance companies, sovereign wealth and national reserve funds have a generally low likelihood of facing liquidity shocks in the medium term, and thus can afford the required long holding periods characteristic of private-equity investment.
The median horizon for a LBO transaction is eight years. The private-equity secondary market also often called private-equity secondaries refers to the buying and selling of pre-existing investor commitments to private equity and other alternative investment funds.
Sellers of private-equity investments sell not only the investments in the fund but also their remaining unfunded commitments to the funds. By its nature, the private-equity asset class is illiquid, intended to be a long-term investment for buy-and-hold investors.
For the vast majority of private-equity investments, there is no listed public market; however, there is a robust and maturing secondary market available for sellers of private-equity assets. Increasingly, secondaries are considered a distinct asset class with a cash flow profile that is not correlated with other private-equity investments.
As a result, investors are allocating capital to secondary investments to diversify their private-equity programs. Driven by strong demand for private-equity exposure, a significant amount of capital has been committed to secondary investments from investors looking to increase and diversify their private-equity exposure.
Investors seeking access to private equity have been restricted to investments with structural impediments such as long lock-up periods, lack of transparency, unlimited leverage, concentrated holdings of illiquid securities and high investment minimums. According to the ranking created by industry magazine Private Equity International  published by PEI Media called the PEI , the largest private-equity firm in the world today was The Blackstone Group based on the amount of private-equity direct-investment capital raised over a five-year window.
As ranked by the PEI , the 10 largest private-equity firms in the world in were:. Because private-equity firms are continuously in the process of raising, investing and distributing their private-equity funds , capital raised can often be the easiest to measure. Other metrics can include the total value of companies purchased by a firm or an estimate of the size of a firm's active portfolio plus capital available for new investments.
As with any list that focuses on size, the list does not provide any indication as to relative investment performance of these funds or managers. Preqin , an independent data provider, ranks the 25 largest private-equity investment managers. Invest Europe publishes a yearbook which analyses industry trends derived from data disclosed by over 1, European private-equity funds. The investment strategies of private-equity firms differ from those of hedge funds. Typically, private-equity investment groups are geared towards long-hold, multiple-year investment strategies in illiquid assets whole companies, large-scale real estate projects, or other tangibles not easily converted to cash where they have more control and influence over operations or asset management to influence their long-term returns.
Hedge funds usually focus on short or medium term liquid securities which are more quickly convertible to cash, and they do not have direct control over the business or asset in which they are investing. Private-equity specialization is usually in specific industry sector asset management while hedge fund specialization is in industry sector risk capital management. Private-equity strategies can include wholesale purchase of a privately held company or set of assets, mezzanine financing for startup projects, growth capital investments in existing businesses or leveraged buyout of a publicly held asset converting it to private control.
Private-equity fundraising refers to the action of private-equity firms seeking capital from investors for their funds. Typically an investor will invest in a specific fund managed by a firm, becoming a limited partner in the fund, rather than an investor in the firm itself. As a result, an investor will only benefit from investments made by a firm where the investment is made from the specific fund in which it has invested.
As fundraising has grown over the past few years, so too has the number of investors in the average fund. In , there were 26 investors in the average private-equity fund, this figure has now grown to 42 according to Preqin ltd. Often private-equity fund managers will employ the services of external fundraising teams known as placement agents in order to raise capital for their vehicles.
The amount of time that a private-equity firm spends raising capital varies depending on the level of interest among investors, which is defined by current market conditions and also the track record of previous funds raised by the firm in question. Firms can spend as little as one or two months raising capital when they are able to reach the target that they set for their funds relatively easily, often through gaining commitments from existing investors in their previous funds, or where strong past performance leads to strong levels of investor interest.
Other managers may find fundraising taking considerably longer, with managers of less popular fund types finding the fundraising process more tough. It can take up to two years to raise capital, although the majority of fund managers will complete fundraising within nine months to fifteen months. Once a fund has reached its fundraising target, it will have a final close.
After this point it is not normally possible for new investors to invest in the fund, unless they were to purchase an interest in the fund on the secondary market. The state of the industry around the end of was as follows. Following on from a strong start, deal activity slowed in the second half of due to concerns over the global economy and sovereign debt crisis in Europe.
This was down a quarter on the same period in the previous year. Private-equity backed buyouts generated some 6. This was down on 7. The average time for funds to achieve a final close fell to Public pensions are a major source of capital for private-equity funds. Increasingly, sovereign wealth funds are growing as an investor class for private equity.
Due to limited disclosure, studying the returns to private equity is relatively difficult. Unlike mutual funds, private-equity funds need not disclose performance data. And, as they invest in private companies, it is difficult to examine the underlying investments.
It is challenging to compare private-equity performance to public-equity performance, in particular because private-equity fund investments are drawn and returned over time as investments are made and subsequently realized. This analysis may actually overstate the returns because it relies on voluntarily reported data and hence suffers from survivorship bias i. One should also note that these returns are not risk-adjusted. A paper by Harris, Jenkinson and Kaplan,  found that average buyout fund returns in the U.
These findings were supported by earlier work, using a data set from Robinson and Sensoy in Commentators have argued that a standard methodology is needed to present an accurate picture of performance, to make individual private-equity funds comparable and so the asset class as a whole can be matched against public markets and other types of investment.
It is also claimed that PE fund managers manipulate data to present themselves as strong performers, which makes it even more essential to standardize the industry. Two other findings in Kaplan and Schoar in First, there is considerable variation in performance across PE funds. Second, unlike the mutual fund industry, there appears to be performance persistence in PE funds.
That is, PE funds that perform well over one period, tend to also perform well the next period. Specifically, FOIA has required certain public agencies to disclose private-equity performance data directly on their websites. In the United Kingdom, the second largest market for private equity, more data has become available since the publication of the David Walker Guidelines for Disclosure and Transparency in Private Equity.
As a result of a tax loophole enshrined in the U. Armies of corporate lobbyists and huge private equity industry donations to political campaigns in the United States have ensured that this powerful industry receives this favorable tax treatment by the government. In addition, through an accounting maneuver called "fee waiver," private equity firms often also treat management fee income as capital gains. The U. Internal Revenue Service IRS lacks the manpower and the expertise that would be necessary to track compliance with even these already quite favorable legal requirements.
In fact, the IRS conducts nearly no income tax audits of the industry. As a result of the complexity of the accounting that arises from the fact that most private equity firms are organized as large partnerships, such that the firm's profits are apportioned to each of the many partners, a number of private equity firms fail to comply with tax laws, according to industry whistleblowers. Over the objections of three financial institutions involved in litigation surrounding the scheme, more than a dozen individual Stanford investors and Stanford himself, U.
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