Getting into private equity is one of the tougher fields for younger folks to enter and once in, it’s also a field where few like to leave (at least voluntarily).  With low turnover amongst the upper ranks at firms combined with little need for additional VPs and other senior deal people despite new funds being raised, turnover amongst the entry level crowd is inevitable.  But how bad/much is it.  Looking at how the lower ranks of two well-known groups have changed over the last several years, TA Associates and Silver Lake Partners, provides a little insight.

First up, $12 billion Boston-based TA Associates.  From June 2007, a screenshot of TA’s website shows 23 Associates, split between offices in Boston, Menlo Park, and London.  Today, TA lists 29 Associates split amongst the same locations, as well as a new office in Mumbai.  Of the 23 listed Associates in 2007, only 4 (surprisingly) remain with TA today (2 in Boston and 2 in Menlo Park).  Just one, Hythem El-Nazer, has received a promotion and is now a Sr. VP.

TA Associates June 2007

TA Associates Today

Next up, $13 billion SF-based Silver Lake Partners.  Looking at a screenshot from June 2007, 17 Associates/Analysts are listed.  Today, Silver Lake has 25 Associates/Analysts (all new).  Of the original 17 in 2007, just three, Jason Young, Jason White, and Jonahthan Durham remain with firm today.

Silver Lake June 2007

Silver Lake Today

More analysis would certainly be needed to see how common the pattern above is amongst other big-name private equity firms, and you can draw your own conclusions on what explains the low level shuffle.  Whether TA and SilverLake tend to hire impatient opportunists or the more likely scenario that both firms having exceedingly high expectations for young staffers.  Either way, one thing is clear, if you get in on the ground floor, keep your resume handy as the the chances you’ll still be with TA or Silver Lake after several years, appears unlikely.

Lindsay Goldberg’s foray into the hedge fund business recently received some in depth treatment with a detailed article in Bloomberg Markets magazine, outlining the firm’s 2007 $100 million dollar working capital investment to jumpstart Phil Duff’s newest hedge fund group Duff Capital Advisors.

The article talks more about how quickly the $100 million disappeared than the investment group that financed it. However, the spread does give some attention to Lindsay Goldberg’s frustrations, finally resulting in Duff’s dismissal.  Today, Duff Capital Advisors is now known as Investment Risk Management and despite just being a zombie shell of itself, the business is still listed as a current portfolio company.

Lindsay Goldberg is well known for it’s patience, stating it can hold an investment for up to twenty years, but it’ll be interesting to see when it finally writes this one off.

Forbes just released its latest compilation of the largest US-based private companies with the help of Capital IQ.  This year, Forbes finally acknowledged the fact that private equity firms are responsible for a solid chunk of the list, noting that roughly a third of the 248 entries are backed by investment groups.  There’s even an interesting slide-show covering notable firms (Bain, TPG, KKR, etc.) and their largest holdings.  

However, I find it interesting that #27, Platinum Equity with $11.35 billion in consolidated current portfolio revenue (I assume this includes international company investments as well), is considered a “conglomerate” within the list versus a private equity group and excluded.  I’m not sure where the confusion is, but this seems to be a yearly error.  Going with this logic, if we break out all of KKR’s US based and privately held portfolio companies, we come up with $123 billion in revenue.  That would make KKR a solid #1.

Most investment firms will offer referral fees to intermediaries that introduce deals that close.  Few firms actually spell it out on their websites, but countless deals have resulted from such.  Certainly a no brainer to do so.  If the demanded referral fee doesn’t make the deal worthwhile, then just don’t do the deal. At least it doesn’t cost anything to consider.

To differentiate it’s referral program from others, Southeast Florida based investment group Trivest has gone one step further.  For anyone that introduces a deal that closes, in addition to standard referral fees, the firm will also throw in a brand new Mercedes S-Class (substitutes available I’m sure).

Trivest has closed two deals (both add-ons) thus far in 2009, and while it’s unclear if their referral program was the cause, a seemingly generous referral program can’t hurt.

In the last year, Twitter’s gone from being a hot start-up to a household name.  An amazing story that seems to continue.  Twitter’s traffic is up 5x (estimate according to Quantcast) since the beginning of the year, and while its ability to generate big-time revenue is still a work in progress, for the time being it doesn’t really matter.  

In any case, with millions of individuals signed-up and spending time on the service, it’s only natural that businesses have followed.  Some are being more creative with the service than others, Best Buy for example creating twelpforce, a twitter account set-up to answer customer product questions using the collective knowledge-base of Best Buy employees.  However, despite lots of attention and a nationwide TV ad campaign, twelpforce hasn’t exactly developed a celebrity like fan base with just 9,000 followers.  As other companies (big and small) try to figure out how (or if) Twitter can benefit their businesses, it looks like private equity is now stepping into the Twitter world as well.  

UK based mid-market firm Endless LLP created an account in May (amongst more firms I’m sure).  Endless hasn’t exactly demonstrated that it’s addicted to the service.  Thus far, Endless’ few Tweets have been sporadic, covering recent deals, personnel moves, and portfolio company news.  After raising its second fund in 2008, Endless is certainly on the prowl for deals, and its Twitter experiment must reflect this.  However, while it’s doubtful Twitter will ever work wonders like the occasional cold-call, the service is one of those things where it doesn’t cost anything, takes little time, and ultimately can’t hurt.  I think it’s doubtful we’ll see lots of investment firms jump on the bandwagon as well, but if we start seeing lots of Tweets out of a few that do, perhaps there’s something there.

CVC Partners can thank weak credit markets for being the last firm standing with enough interest to bid on Anheuser-Busch InBev’s Central and Eastern European businesses.  TPG and KKR had also planned bids but are “blaming” weak credit conditions for bowing out of the process.  Given KKR’s very recent successful close of InBev’s Korean assets, you’d think they’d have the process down.  In that deal, KKR put down 50% (later split with Affinity Equity Partners), which is also what CVC is rumored to be plunking down for InBev’s latest divestiture.  Either way, given the similarty, perhaps we’ll see a familiar name emerge alongside CVC if a sale actually comes through.

Apax Partners’ recently announced take private of BankRate is an encouraging sign for PE m&a.  Mega-sized firms have been pretty quiet of late despite sitting on billions, and have spent more time marking down old investments than making new ones.  Apax’s 20 odd-member media group hasn’t done a deal in over a year and you can tell they’re serious/excited about BankRate.  Should Apax walk away from their offer, they’ve agreed to pay the full purchase price anyway of $570,800,000.

Apax’s offer for BankRate is all cash.  Given the current state of m&a, you’d think this is just a reflection of continued tight credit markets, however prior transactions in boom years proves otherwise.   Apax’s $1.6 billion take private of Tommy Hilfiger in 2006 and its $7.5 billion acquisition of Thomson Learning (with OMERS Capital) in 2007 were also all cash.

After two years of trying to do the impossible in first turning around and then saving Chrysler for Cerberus, ex-CEO Bob Nardelli has apparently returned to the investment firm that recruited him in 2007.  Nardelli’s new role will be heading up Cerberus’ unit charged with overseeing the operations of the investment firm’s portfolio holdings, appropriately named Cerberus Operating and Advisory Company LLC or COAC.  Nardelli will manage other operating pros responsible for monitoring and assisting Cerberus’ current investments, as well as sourcing and conducting due diligence on new opportunities.  Cerberus hasn’t shown much of an appetite lately for making new acquisitions, but there must be a few companies amongst the private equity firm’s 30 odd portfolio roster that can benefit from Nardelli’s brief education in the auto industry.

With a very public Twitter security breach leading to leaked internal documents, one newsworthy disclosure is the top line revenue numbers company execs feel the business can achieve over the next few years.  The numbers go like this; $4.4 million for the second half of 2009, and $140 million for 2010.  Now I’m from Minnesota, but I’ve never seen a hockey stick raked that much.  Can’t argue with Twitter’s user growth, but for a company with no guessable blockbuster monetization play, the somewhat random figures are amusing.  We all know investors basically discount projections anyway, PE just as much as VC, but to see these figures batted around internally - not just in pitchbooks, is very interesting.

It’s been reported recently that buyout vet Tom Hicks’ sports empire is crumbling with rumors that his Texas Rangers had to borrow from Major League Baseball just to meet payroll.  This is on top of news several months ago that Hicks Sports Group (HSG), the parent vehicle that owns the Rangers, as well as the NHL’s Dallas Stars amongst other assets had defaulted on $500+ million worth of loans, including a chunk of money lent from Mr. Hicks himself.

Hicks has suggested HSG is just another victim of the global credit crunch (i.e. inability to borrow to the hilt) and economic turmoil, but the bigger problem seems to be poor management, somehow thinking servicing $500 million worth of loans was sustainable.  While sports teams can be great investments, generally inching up over time, they’ve never proven to be tremendous cash-flow generators (even in good times) which makes me wonder how HSG was ever able to convince the 40th lender that $500 million was perfectly sustainable with plenty of margin (a couple autographed bobbleheads perhaps).  Have to give credit to HSG for sustaining at least 1 year into the slowdown.

It’ll be interesting to see where Hicks and HSG goes from here.