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Consumer Discretionary: Another Fad?

By Maurizio Parrella, Alessio Corcelli Initially posted on the BSPEC blog Consumer Discretionary Sector The recovery from the global financial crisis shed light on an evergreen, yet recently white hot, equity group: consumer discretionary. The consumer discretionary industry comprises all companies participating in the value chain to produce a good or provide a

Buy-And-Build Strategies

By Atul Vyas and Alessandro Carleo Initially posted on the BSPEC blog Increasing the value of portfolio companies is crucial for the success of a private equity firm. As Gompers, Kaplan, and Mukharlyamov (2015) have found, PE investors “target returns that exceed CAPM-based returns”. The bulk of excess return, or alpha, is gained through

Search Funds: Entrepreneurship through Acquisition

By Massimo Tiozzo Netti, Francesco Carraretto Initially posted on the BSPEC blog Introduction Back in the ’80s, some ambitious entrepreneurs designed a miniature model of the typical private equity fund. Forget about pools of cream-of-the-crop professionals: search funds are a businessperson’s stepping stones to achieving their pipe dream position as a CEO. Although

Secondary Buyouts: Not Your Typical Second-Hand Shopping

By Eric Peghini Initially posted on the BSPEC blog “Everyone has access to information. We just know how to analyze it better.” This is the mantra of Billions protagonist Bobby Axelrod, a fictional hedge fund manager who’s ethically compromised fund breeds alpha like a wolf pack. However, putting aside any insider trading and market manipulation, is

Fee Structures in Private Equity

By Christopher Khoury and Eric Peghini Initially posted on the BSPEC blog Investors allocate capital with Private Equity Firms in order generate a high rate of return on their invested capital. However, when there are several investors and a separate manager, how much of the profits from investments are investors entitled to?

CLOs at the Center of the New PE Industry

By Davide Martellozzo, Simone Bertani and Leonardo Astegiano Initially posted on the BSPEC blog Introduction to CLOs Collateralized Loan Obligations (henceforth, CLOs) have become increasingly popular in the post-crisis era because of some intrinsic features such as strong credit performance and appealing risk-return profile, making them an attractive asset class to the eye of

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