From the category archives:

Private Equity Jobs

Private Equity International is out with their annual PEI300 report, which details the top 300 private equity firms by amount raised.  Before looking, which companies would you guess would be on top?

The Broader View

Before taking a look at the list of the top 25 private equity firms, how much would you guess the top 300 firms (according to Private Equity International) raised in the past five years?  How much of the total would you guess went to the top 50 firms?  How much of the total would you guess went to just the top 10 firms?

Amazingly, over the past five years, the top 300 private equity firms raised about $1.352 trillion.  The private equity industry is certainly not dead.  Of that total $1.352 trillion, how much went to the top 50 firms?  Interestingly, about 56 percent of private equity capital raised went to the top 50 firms.  How much went to the just the top 10 firms?  An astonishing 24 percent went to the top 10 firms.  The private equity industry sure is top heavy.

The Top 5

Perhaps completely unsurprising, taking the top spot is Blackstone.  The New York City-headquartered firm raised a massive $58.3 billion from 2012 to 2017.  In second place is KKR, also headquartered in New York.  KKR raised a total of $41.6 billion over the past five years.  In third place is Washington, DC-based The Carlyle Group at $40.7 billion.  Rounding out the top five are Fort Worth-based TPG Capital at $36.1 billion and New York-based Warburg Pincus at $30.8 billion.


Ranks 6 Through 10

The top 5 probably provided little surprise to individuals closely connected with the industry.  What about the bottom half of the top 10?

Interestingly, in sixth place is Advent International Corporation at nearly $27.0 billion (headquartered in Boston).  The other four members of the bottom half of the top 10 include Apollo Global Management ($24.0 billion, New York), EnCap Investments ($21.2 billion, Houston), Neuberger Berman Group ($20.4 billion, New York), and CVC Capital Partners ($19.9 billion, London).

Of all the surprises in this list is perhaps the observation that only one private equity firm – CVC Capital Partners – is headquartered outside of the United States.  Businesses headquartered outside of the United States are growing, but they still lag behind the massive advantage U.S.-based private equity firms have.


Ranks 11 Through 25

Let’s round out the top 25.  Before looking at the list, which firms were you surprised missed the top 10?  Were you surprised that no west coast firms headquartered in the U.S. showed up in the top 10?  What about China-based private equity firms?  Were you surprised by the lack of any Chinese firms at the top?

Included in the top 25 are Bain Capital ($18.2 billion, Boston), Thoma Bravo ($17.2 billion, Chicago), Vista Equity Partners ($17.2 billion, Austin), Apax Partners ($17.0, London), Clayton, Dublier & Rice ($16.7 billion, New York), Cinven ($16.6 billion, London), Leonard Green & Partners ($15.9 billion, Los Angeles), Ares Management LLC ($14.7 billion, Los Angeles), BC Partners ($14.2 billion, London), Permira Advisers ($13.6 billion, London), Riverstone Holdings ($13.1 billion, New York), Goldman Sachs Principal Investment Area ($12.0 billion, New York), Silver Lake ($11.7 billion, Menlo Park), Ardian ($11.3 billion, Paris), and Hellman & Friedman ($10.9 billion, San Francisco).



In an interesting review of the top 25 private equity firms across the world according to Private Equity International, perhaps the most surprising finding is the continued dominance of U.S.-based firms within the private equity realm.  Financial firms headquartered in other areas of the globe are catching up, but still lag by significant amounts.


A couple of professors out of Stanford University and the University of British Columbia are out with a new, fresh look at the intricacies of venture capital valuations (Squaring Venture Capital Valuations with Reality, National Bureau of Economic Research Paper #23895).  Their topic is unicorn valuations, and specifically whether so-called unicorn valuations are frequently overvalued.  Before discussing their results, what would you guess their conclusions are?  Would you guess – simply out of preconceived notions or an expert guess – that companies achieving unicorn valuations are typically overvalued or undervalued?  Remember, investors that agree with unicorn valuations are usually sophisticated investors, not some new guy off the street.  Take your guess.


The authors reviewed 135 venture capital-backed private companies with a post-money valuations of $1 billion or more.  The value of the unicorn was determined using financial terms from legal filing and reported post-money valuations.  Overall, they find that, on average, unicorn firms are overvalued by 50 percent, with 15 of the firms studies being over 100 percent overvalued, compared to their fair market value.

Their findings are based upon calculations of values for each share class, which produces lower valuations because most unicorn companies offer recent investors preferred status, such as IPO return guarantees (14 percent), vetoes over down-IPOs (24 percent), or seniority to all other investors (32 percent).  Investors with common stock shares lack such protections and are thus, on average, around 58 percent overvalued.  Interestingly, after adjusting for these valuation-inflating measures, around half of all unicorns eventually lose their unicorn status.

Here’s a look at the valuation figures by percentage overvalued.  the peak occurs around 25 percent, meaning that 25 of the 135 valuations were overvalued by around 25 percent.  Interestingly, none of the authors’ sample firms were undervalued, representing a potential flaw in the study.

Picture1 Source: Gornall and Strebulaev (2017)


The following figure provides another view of the results.  The blue line represents the fair value of the unicorn companies.  The orange line is the post-money valuation.  Unsurprisingly given the authors’ views on valuations, the fair value of the unicorn companies is always less than the post-money valuations.

Picture2 Source: Gornall and Strebulaev (2017)



In an interesting look at the intricacies of venture capital valuations, authors William Gornall and Ilya Strebulaev find that unicorn companies – companies with post-money valuations of greater than $1 billion – are frequently overvalued, and that even sophisticated investors often do not understand the workings of specific venture capital valuations.  Overall, the authors find that, on the average, unicorn firms with venture capital-backing are highly overvalued, perhaps by around 50 percent.  So, the next time you think it is or would be cool to be a venture capital investor, remember that it’s highly likely that many of the deals you come across will be terrible financial investments.  Invest with caution.


The 2017 Startup Graveyard

January 23, 2018

Pitchbook  is out with a fascinating look at the so-called 2017 “startup graveyard”.  There are 11 companies on Pitchbook’s list. Let’s take a look.

The Startup Graveyard

On top of Pitchbook’s list of notable 2017 failures is Jawbone.  Jawbone manufactured speakers and wearable technology, and at one point had a valuation of $1.5 billion, with $542 million in venture capital raised.  It is now dead.

The next largest startup to be put to rest in 2017 is Quixey.  At one point, Quixey was worth an amazing $600 million.  That paper wealth has since evaporated, along with the $134 million in venture capital funding that was raised.  Apparently it must be difficult competing with other application search engines.

The third largest startup to die last year is JuicEro.  JuicEro was once worth $459 million, having grabbed the confidence of enough venture capitalists for $121 million in outside investments.  Sadly, the San Francisco-based startup’s attempt to create a high-end juicer is no more, having succumbed to the pressure of negative press and complaints regarding the usefulness of its juicer product compared to the price.

The fourth largest startup to bite the dust in 2017 is Yik Yak.  The location-based social networking site had at one point at whopping valuation of $400 million and had raised $75 million in venture capital funding.  Unfortunately for Yik Yak’s investors, competing with Facebook and other social networking sites provide too daunting.

In fifth place is hello, a bedside sleep-tracking tool.  The application met its demise in 2017 after having gained a valuation of $276 million and having raised $41 million from venture capital investors.  What’s the lesson learned here?  Getting people interested in sleep-tracking may not be as easy as some would suppose.  May hello enjoy its long slumber.

In sixth place is PEARL, a manufacturer of automotive devices.  At one point, PEARL had achieved a valuation of $197 million and had raised $50 million from venture capital investors.  The Scotts Valley, California started is no more.

In seventh place is sprig, a food delivery and subscription service.  At its final funding round, sprig was thought to be worth an amazing $169 million, and had raised $59 million from venture capital investors.  Sadly for employees and investors of sprig, competing in the food delivery and subscription service business isn’t as easy as it seems.

In eighth place is TEFORIA, a tea infusion device.  TEFORIA reached a peak valuation of $35 million before it died, taking the $17 million it raised from venture capital investors with it.

In ninth place is Qliance, a healthcare network of primary care clinics.  Qliance is no more, having met its demise in 2017 with a peak valuation of $34 million and total venture capital raised of $37 million.

In tenth place is, with a peak valuation before death of $30 million and total amount raised from venture capital investors of $12 million.  Unfortunately for’s investors and customers, profitability wasn’t achievable, and the TV recording tool has been laid to rest.

Lastly, in 11th place is imzy, with a peak valuation before death of $26 million and total venture capital funding raised of $11 million.  Sadly, the Salt Lake City-based friendly social platform didn’t gain enough traction, and is now dead.

startup graveyard Source: Pitchbook


In an interesting look at Pitchbook’s 11 notable startup failures, the list of failures sums to about $3.8 billion in company valuations that disappeared into thin air.  Losses on venture capital investors’ books amounted to about $1.2 billion.


How Did Financial Job Growth Compare in 2017?

December 12, 2017

The year is almost over, which makes now a perfect time to take a look back and see how job growth in the financial industry did compared to other industries.  Here’s a look. The Broad View Before looking at the growth in jobs in the financial sector compared to all other sectors, here’s a background […]

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An Update on Private Equity Fund of Funds

November 13, 2017

Preqin, the investment intelligence data provider, recently released their special report on the state of private equity funds of funds across the world.  Here’s a look. Where are the Private Equity Fund of Funds Managers? First, a question – where would you guess the most managers of private equity fund of funds are located?  The […]

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What Does the Trend in Private Equity Fees Look Like?

October 16, 2017

Private equity data firm Pitchbook is out with their third quarter of 2017 report on trends in global private equity (PE) deal multiples and other interesting data points.  Among the many interesting findings in the report is a section on the trend in PE fees.  Without looking, what would you guess the trend in PE […]

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Looking at the League Tables – Who’s on Top?

September 10, 2017

Every now and then, we like to take a look at Pitchbook’s league tables.  Before taking a look, which entity would you guess is the most active, when measured by deal count?  Which deals were the most significant in the second quarter of 2017?  Which U.S.-based private equity funds raised the most capital in the […]

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A Look at the Private Equity Fund Manager Outlook

August 7, 2017

Every half of the year Preqin, the private equity and venture capital research group, does a “Private Equity Fund Manager Outlook”.  They’re out with their second half of 2017 picture.  Here’s a look at what private equity fund mangers think on deal flow and competition, investor appetite, and outlook and future plans. Deal Flow and […]

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Private Equity in Europe

July 10, 2017

Europe is known for a lot of things – good food, amazing vacation locations, obsessive regulations, slow economic growth, densely packed housing, and a host of others. Finance is also something Europe generally does well.  This led us to wonder which European country  has the largest private equity investments as a percentage of Gross Domestic […]

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What’s Going On With Exit Value and Post-Money Valuation?

April 17, 2017

In the past few quarters, we’ve seen an interesting trend in the venture capital exit markets. This trend is that there’s a growing number of deals where the exit value is less than the most recent round of post-money valuation. Some say it might be a disturbing trend – after all, how could it be […]

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