Publications

November 2018
Teaching Note

The Tax Man: Taxes in Private Equity Real Estate

By: Nori Gerardo Lietz and Sayiddah Fatima McCree

Teaching Note for HBS No. 218-077. This teaching note provides the back up analysis for the various alternatives to be considered in choosing the optimal investment structure for the real estate acquisition. It contrasts the interests of the tax exempt investors... View Details

Keywords: Real Estate; Alternative Investment Structures; Taxation; Private Equity; Property; Acquisition; Conflict of Interests; Governing Rules, Regulations, and Reforms

26 Jan 2004
Research & Ideas

How Women Can Get More Venture Capital

Women-owned businesses are just as financially strong and creditworthy as the average U.S. firm, according to the Washington, D.C.-based Center for Women's Business Research. Yet women struggle more than men to acquire equity capital.... View Details

Keywords: by Mallory Stark & Martha Lagace

January 2008
Case

Parks Capital - Investment in US Retail, Inc.

Parks Capital acquired a Children's Apparel Manufacturer , American Child Clothing Manufacturers, Inc. (ACCM), in 2001. Two years later ACCM's largest retail customer, U.S. Retail, Inc., decided to evaluate strategic alternatives due to financial difficulties. Parks... View Details

Keywords: Mergers and Acquisitions; Customer Value and Value Chain; Private Equity; Vertical Integration; Apparel and Accessories Industry; Manufacturing Industry; Retail Industry; United States

2016
Working Paper

Pay Now or Pay Later? The Economics within the Private Equity Partnership

By: Victoria Ivashina and Josh Lerner

The economics of partnerships have been of enduring interest to economists, but many issues regarding intergenerational conflicts and their impact on the continuity of these organizations remain unclear. We examine 717 private equity partnerships and show that (a) the... View Details

Keywords: Partnerships; Leveraged Buyout; Venture Capital; Private Equity; Partners and Partnerships; Leveraged Buyouts

SSRN

Read Now

July 2001
Technical Note

Technical Note on LBO Valuation (B): The Equity Cash Flow Method of Valuation using CAPM

By: Carliss Y. Baldwin

Explains the equity cash flow method of valuation as it applies to leveraged buyouts. Also explains how to implement the changing cost of equity method using the CAPM. View Details

Keywords: Leveraged Buyouts; Forecasting and Prediction; Cash Flow; Cost of Capital; Equity; Valuation

Research Summary

Good cop, Bad Cop: Complementarities between Debt and Equity in Disciplining Management

Joint work with Alexander Gümbel, Saïd Business School and Lincoln College Oxford

In this paper we examine how the quantity of information generated about firm... View Details

June 2015
Article

The Capital Purchase Program and Subsequent Bank SEOs

By: Mozaffar N. Khan and Dushyantkumar Vyas

We find that in the aftermath of the recent financial crisis banks replenished only 12% of crisis-related losses through SEOs in 2009 and 2010. However, SEOs are disproportionately conducted by Capital Purchase Program (CPP) recipients, and this is not explained by CPP... View Details

Keywords: Accounting; Capital; Equity; Financial Crisis; Banks and Banking; Banking Industry; United States

September 2012 (Revised January 2013)
Case

Martin Smith: July 2012

By: Josh Lerner and Felda Hardymon

Martin Smith, a recently hired general partner at a Brazil-based venture capital firm, must decide among three deal opportunities. Each has different strengths (management, market, and technology) but each has its own weaknesses as well. He must also consider each deal... View Details

Keywords: Private Equity; Deal Choice; Venture Capital; Investments; Career Management; Management Teams; Decision Choices and Conditions; Cost vs Benefits; Personal Development and Career; Financial Services Industry; Brazil

06 Nov 2000
Research & Ideas

The Determinants of Corporate Venture Capital Success

Corporate-sponsored venture funds first appeared in the 1960s, about two decades after the first flowering of the venture capital industry. Ever since, they have mirrored the cyclic nature of the industry as a whole. But there are... View Details

Keywords: by Paul Gompers & Josh Lerner

Article

What is the Other Reason of Why Private Equity Matters in Emerging Markets?

By: Roberto Charvel

Private equity investments in emerging markets can help increase the availability of credit for firms. View Details

Keywords: Alternative Assets; Emerging Economies; Venture Capital; Private Equity; Financial Services Industry; Latin America

Research Summary

The Real Effects of Capital Controls: Financial Constraints, Exporters, and Firm Investment

By: Laura Alfaro

In aftermath of the global financial crisis of 2008–2009, emerging-market governments have increasingly restricted foreign capital inflows. The data show a statistically significant drop in cumulative abnormal returns for Brazilian firms following capital control... View Details

August 2001
Case

Strategic Capital Management, LLC (C)

By: Mark L. Mitchell, Erik Stafford and Todd Pulvino

Supplements the (A) case. View Details

Keywords: Risk and Uncertainty; Business Subsidiaries; Internet and the Web; Investment Funds; Price; Performance Efficiency; Capital Markets; Auctions; Investment Return; Equity; Planning; Financial Services Industry

August 2001
Case

Strategic Capital Management, LLC (B)

By: Mark L. Mitchell, Erik Stafford and Todd Pulvino

Supplements the (A) case. View Details

Keywords: Risk and Uncertainty; Business Subsidiaries; Internet and the Web; Investment Funds; Price; Performance Efficiency; Capital Markets; Auctions; Investment Return; Equity; Planning; Financial Services Industry

September 2011
Article

Information Risk and Fair Value: An Examination of Equity Betas

By: Edward J. Riedl and George Serafeim

Using a sample of U.S. financial institutions, we exploit recent mandatory disclosures of financial instruments designated as fair value level 1, 2, and 3 to test whether greater information risk in financial instrument fair values leads to higher cost of capital. We... View Details

Keywords: Forecasting and Prediction; Assets; Cost of Capital; Financial Institutions; Financial Instruments; Corporate Disclosure; Information; Risk and Uncertainty; Value; United States

SSRN

December 2009
Case

Milliway Capital & Martin Smith: November 2008

By: G. Felda Hardymon, Matthew Rhodes-Kropf and Ann Leamon

Martin Smith, a recent MBA graduate, has just joined a top-tier venture capital firm in the difficult environment of late 2008. One of his first assignments is to review three companies in a partner's portfolio and recommend strategies for managing them. In addition,... View Details

Keywords: Investment Portfolio; Financial Management; Private Equity; Business Strategy; Partners and Partnerships; Venture Capital; Business or Company Management

January 2019
Article

Pay Now or Pay Later? The Economics within the Private Equity Partnership

By: Victoria Ivashina and Josh Lerner

The economics of partnerships have been of enduring interest to economists, but many issues regarding intergenerational conflicts and their impact on the continuity of these organizations remain unclear. We examine 717 private equity partnerships and show that (a) the... View Details

Keywords: Partnerships; Leveraged Buyout; Partners and Partnerships; Private Equity; Venture Capital; Leveraged Buyouts

SSRN

September 2009 (Revised September 2010)
Case

Avid Radiopharmaceuticals and Lighthouse Capital Partners

By: Matthew Rhodes-Kropf and Ann Leamon

In fall 2008, a venture lender must decide whether to make a loan to Avid, a small but promising venture-backed life sciences firm. In reviewing her proposal, Cristy Barnes considers the company's characteristics and how they differ from a typical investment. At the... View Details

Keywords: Business Startups; Decision Choices and Conditions; Financial Crisis; Venture Capital; Private Equity; Financing and Loans; Investment; Financial Services Industry; Health Industry