Words from a few folks which I had whiskey with today:
lot of investment firms out there have earned themselves a reputation for doing such lousy deals that attending their annual investor meetings almost feels like a good deal origination opportunity for distressed investors.
One of the best things to do is to track all the projects that these guys put money into. Everything they touch just turns from gold to brass. Instead of the “Midas” touch, they have the “minus” touch. Like the Forbes under 40, there should be a separate league table for investment deals called “Forty under 40”: The top forty deals that have an IRR of -40% or less...
o many investors from the West fail terribly in China simply because they don’t understand who the most important stakeholders in the deal are.
These people come into a transaction and they want control, they want to change things, shake things up and stuff. But deals in China are all about people...
he problem in private equity is that most of the buy-side professionals focused on execution are paid to invest / deploy.
Whereas it is usually the senior partners who are paid on exit. Some professionals just get paid from the publicity of doing a deal. This is apparently a big disproportionate allocation of risk-reward incentive.
nyone can make that decision to invest when a deal is priced at 4x EBITDA. Even a 4-year old kid can make that decision.
The real test of a chief investment officer is making the call to invest or not to invest in a deal which is richly priced at 12-14x EBITDA.
he Head of FIG for a large unnamed sovereign wealth fund once asked me what is the EBITDA multiple on a financial services company
(I mean, who looks at EBITDA in a FIG deal??). I knew at once this was a guy I had to keep in touch with. The world needs enough stupid investors for astute investors to thrive.
ne of the largest (hedge) funds I know used to decorate his office with the most expensive fine art just to show off to prospective investors.
I propose to you: Hire ex-models to front your investor relations. Hire especially those who couldn’t make the cut in a professional modelling career. Get a team to do the number crunching in the background but put your IR person in front of investors, get them to show up at events and conferences. Hire pretty people at your front desk to greet visitors and facilitate in-person meetings. Get a technically sound team back in the office to draft the emails but get your IR person to send them. Everyone who comes by your office won’t be looking at fine art that line your corridors. Their eyes will go straight for the receptionist counter. Also, this will dramatically reduce your dining and entertainment expenses. Which fund manager will think twice whether to pick up the tab for a business lunch with your pretty Head of IR? Apparently there are some people who would prefer to invest for ego rather than based on rational thinking.