Taking a cue from Forbes 2008 list of America’s largest private companies, see below a list of America’s largest private companies backed by private equity.

No shock most of the companies below were acquired between 2005 and 2007.   Despite the size of many of the transactions, it’s interesting less than half (11/25) represent club deals.

Bloomberg is reporting that Cerberus Capital would be willing to forgo any profits from a future sale of troubled portfolio company Chrysler should the federal government pull the trigger and bailout the auto industry.

Given Chrysler’s private-owner status, CEO Bob Nardelli is hoping the offer elminates questions of unfair gains for Cerberus should government assistance give the company time to turn things around.

If a bailout does go through, this will mark a full circle for Chrysler, which would enjoy its second bailout in the last thirty years.  This time around however, it will need to rebound under private equity ownership which will be a true test for Nardelli.

Even if Robert is able to perform a successful turnaround, no doubt he won’t be looking at the upper end of his orginal compensation package.  The new best-case scenario for Cerberus is a free lesson in the US auto business.

Vacation rental listing provider HomeAway, Inc. just announced it has raised an additional $250 million in minority financing as the company continues to look for growth and consolidate the online vacation listing industry.  Since its formation in 2005 with an initial $49 million raise, (and subsequent $160 million round in 2006), HomeAway has gone on a buying spree, snapping up 11 vacation listing sites including VacationRentals.com and biggie VRBO.com.  HomeAway now claims more than 300,000 lisitings worldwide.

What’s interesting is that The WSJ makes out the investment as if it’s some sort of gamble on a new start-up, describing how new investors are essentially “betting $250 million that consumers will still use Web sites like HomeAway.com to find vacation-rental properties”.  Let’s be honest, this is a vote of confidence investment in the consolidation strategy of highly profitable and growing websites.  The real bet isn’t on the industry or business model, but rather if additional reasonably priced acquisitions are out there and if an intense marketing push can further grow HomeAway’s share of the market.

People tend to visit sites with the most listings and HomeAway appears to have acquired all the online pioneers and current market leaders in the vacation listing marketplace.  HomeAway’s most notable investment was 2006’s $160 million purchase of VRBO, a site that has now been around for thirteen years and in itself claims over 100,000 listings.  The only real current threat is a free listing site such as Craigslist which works great as a classified site for one-time posts, but is set-up poorly as a directory for users who need continual exposure.

Investors are showing they like what HomeAway has done with the first $200 million, essentially cobbling together a high-margin, $100 million business consisting entirely of recurring revenue and feel a further $250 million will corner the industry.  Todd Chaffee, General Partner of investment participant Institutional Venture Partners says the amount of financing is meant to serve as a “statement of ‘game over’” for competitors.  Proceeds are reportedly to be used for overseas acquisitions and to pay down debt.

The real question isn’t whether the business is sound, it’s whether the round’s investors are getting in at a fair valuation.   Hybrid VC/PE firm Technology Crossover Ventures, who is reportedly committing $175 million of the $250 million raise must think so.  However, TechCrunch is reporting the new round has a lofty pre-money valuation of approximately $1.15 billion.  At a multiple significantly higher than 10x revenue, you be the judge . . .

( . . . well at least according to professional bio info available in PEdatabase).

Everyone loves rankings and so to help satisfy demand, we thought we’d conduct informal searches of professional bios listed within Private Equity Database and look at which schools tend to deliver when it comes to placement within private equity.

As far as which universities to query, we decided to favor schools with strong graduate business programs and used the top 25 schools listed in US News’ 2008 Graduate Business School Report as a basis for creating the list.    Keep in mind that the list below is based on number of mentions with no distinction between graduate or undergraduate degrees.

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The Blackstone Group released its third quarter earnings report this week in which investment write downs helped generate a new private equity term, that being negative revenue.  Currently, a third of Blackstone’s portfolio resides in red territory reflecting deals and valuations of a different time.

However, despite the troubling numbers, Blackstone hasn’t let up on making new investments.  So far in the second half of 2008, Blackstone has announced six new transactions, including four in the last two months.

See all of Blackstone’s YTD investments below.

Sun Capital Partners, the Florida based mega private equity firm was featured in a lengthy article in the October issue of Bloomberg magazine.  The article traces Sun’s roots back to 1995 when founders Marc Leder and Rodger Krouse set-up shop as an unfunded investment firm.  Experiencing many of the issues facing any new firm, (i.e. lack of awareness and funding), it took the pair 20 months before making their first acquisition.

However, Sun quickly developed a formula that worked; acquiring - fixing - flipping smaller troubled companies, and now claim 200 such transactions under their belt.  So how does a firm get to such lofty numbers?

In looking at Sun’s 2007 transaction report, the firm had 12 disposals and made an astonishing 39 acquisitions (27 new platform companies and 12 add-ons).

The Firm’s 2008 numbers haven’t hinted at what would be an expected slowdown.  Sun’s mid-year report lists 5 disposals and 16 acquisitions (8 platform, 8 add-on). It remains to be seen how things play out given the current merger climate.

If there’s such a thing as a private equity bellwether, Sun Capital would be it.

See below a chart showing the number of private equity firms formed each year since 1980 (at least according to our records).  Not all private equity firms readily disclose when their group was established, so the numbers below are not representative of all firms.  However, the sample is large enough to show trends, most notably the stark drop in firms formed in 2008.

Given reduced company valuations in today’s market, it’ll be interesting to see what new players emerge looking to take advantage in 2009.

As the NY Times points out, KKR just launched a slick re-design of its internet site featuring significantly more information that what was available before.  As KKR readies for a possible IPO, one of the biggest differences is the clear breakdown of KKR’s business into three segments; private equity, fixed income, and strategic initiatives (infrastrucutre, mezzanine, other).  Another notable improvement is the inclusion of professional information with detailed bios.

You can see the design evolution below . . .

11/2003

02/2005

01/2007

10/2008

The most difficult aspect of starting a new private equity firm is 1) finding good deals (although this is hard for every firm), and if you happen to be an unfunded new firm, 2) figuring out how to pay.  When you have to raise both equity and debt to close deals, #2 can be especially draining when changing terms and investor control quickly reduces the sponsor’s ownership in prospective transactions.

However, if you can find deals like OpenGate Capital’s recent acquisition of TV Guide Magazine from Macrovision, things don’t look so daunting. Terms of the deal weren’t initially disclosed but in a SEC filing, (and as AdAge points out), OpenGate acquired TV Guide for $1 (one dollar) down, and will get a $9.5 million loan from Macrovision to help with the purchase.

OpenGate Capital it should be noted, is an unfunded investment firm formed in 2005.

The TV Guide property unit is running at a significant loss, so there’s certainly some work needed if OpenGate hopes for a return on its initial outlay, but this is certainly the type of opportunity many new (and old) firms would love to tackle.

In reviewing private equity firm websites, most firms that do provide portfolio information tend to follow a fairly predictable pattern. Typical portfolio areas generally show a list of companies along with logos, website urls and brief descriptions for each business. Nothing wrong with the norm, but when you come across a site demonstrating a little extra creativity, it certainly shows.

A great example can be found at energy investor Lime Rock Partners’ website. Lime Rock’s portfolio area breaks out current versus exited portfolio companies with tabs. However, the best part of the portfolio page is a world map showing each company’s location. Additional filters allow users to display portfolio companies by specific sector and/or location. Selecting a portfolio company brings up additional info in the format shown below.