M&A fund is the "high end" of PE. If the growth PE fund is icing on the cake, then the M&A PE fund is the "export management" type. The following are some forms of M&A funds, I hope to help you!
The emergence of M&A fund
M&A Fund first disturbed American business in 1980s, when KKR won the competition with CEO Ross Jonathan for Beske Holding Company and paid a record $25 billion. However, in the 1990s, leveraged buyouts gradually lost their breath, and crisis capital occupied the center of the stage.
Now, KKR is making a comeback. Although it and its key competitors can't compare with Na Beske Holdings in terms of transaction scale, their new large-scale transactions are considerable. Last year, M&A funds raised 54 billion dollars, twice as much as in 2003. KKR and its partners are buying Toys R Us, and Texas Pacific Enterprises plans to buy Naiman Marcus Enterprises.
Charles Bailey, head of Goldman Sachs' private equity department, said: "10 years ago, a private equity conference was held, and only 50 people attended. There will be 1000 people present now. Historically, this field accounts for 5%-7% of the American M&A market. Now it may reach 12%- 13%. Private equity investment in enterprises has become an excellent source of funds for Wall Street. " The influence of M&A fund can also be measured by another measure: some powerful managers have started their second (or third) careers in this department, such as Jack Welch, O 'Neill and Guo Shina, who all work for M&A fund enterprises.
However, is there too much money chasing too few transactions? Tom lea, a venture capitalist, said: "In the past 20 years, I have raised equity investment funds five times, and every time someone asks me this question. Our market has expanded. Some companies I am concerned about now are impossible for me to see in the past. " Li said that the fund has developed from buying small enterprises to buying medium-sized enterprises, and this kind of business has just begun to touch the surface of large enterprises with a market value of more than 654.38 billion US dollars.
Although there is a constant supply of new funds, the competitiveness of the demand side of this industry has been significantly enhanced, and many of the biggest acquisitions have been completed through auction. The demand for transactions is extremely strong. In fact, some greedy people are also learning to share: so-called club transactions are becoming more and more common. For example, seven funds spent $11400 million on Sungard data system enterprises. However, with the increase of interest rates, market volatility is inevitable.
Characteristics of M&A Fund
1. In terms of fund raising, it is urgent to raise funds from a small number of institutional investors or individuals in a private way, and its sales and redemption are carried out by fund managers through private consultations with investors. In addition, the investment method is also implemented in the form of private placement, which rarely involves the operation of the open market and generally does not need to disclose the details of the transaction.
2. More equity investment is adopted, and debt investment is rarely involved. Therefore, PE investment institutions have certain voting rights in the decision-making and management of the invested enterprises. Reflected in the input tool.
3. Generally investing in private enterprises, that is, unlisted enterprises, and rarely investing in publicly issued enterprises, will not involve the obligation of tender offer.
4. It is more inclined to a molding enterprise that has formed a certain scale and generated stable cash flow, which is obviously different from VC.
5. The investment period is long, generally reaching 3 to 5 years or longer, which belongs to medium and long-term investment.
6. The liquidity is poor, and there is no ready-made market for the equity transferor of unlisted enterprises to directly reach a deal with the buyer.
7. There are many sources of funds, such as wealthy individuals, crisis funds, leveraged M&A funds, strategic investors, pension funds and insurance companies.
8.PE investment institutions mostly adopt limited partnership system, which has good investment management efficiency and avoids the disadvantages of repeated taxation.
9. Diversified investment and exit channels, such as initial public offering, transaction sale and merger (M). Enterprise merger and reorganization is not a temporary economic behavior, but an eternal economic behavior after economic globalization. The establishment and progress of M&A fund has great influence on solving the bottleneck of fund shortage in the process of M&A and restructuring. There are no funds dedicated to M&A and restructuring in China, and few other funds participate in this purpose.