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.

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.

It’s been reported that Bain Capital is inching closer to buying Reed Elsevier’s Business Information unit (RBI) for around $1 billion.  That’s over a $1 billion less than some of the initial bids Reed received for RBI earlier this year when the sales process began.  In February, both strategics and other private equity firms took interest before general nervousness over the economy and a lofty purchase price scared off suitors.

However, despite all the distractions, RBI actually improved both top and bottom line numbers in the first half of ‘08, seeing revenue of £484 (US$726) million in Q1 and Q2  of ‘08 vs £445 (US$668) million in ‘07, and operating profits of £62 (US$93) million in ‘08 vs £55 (US$83) million in ‘07.  While things have certainly changed since the summer, RBI’s overall performance (and a rising dollar) must’ve been a positive sign for Bain.

Either way, a successful close would mark a favorable sign for private equity (at least on the buyside) and m&a in general, as new deals start reflecting reasonable valuations and terms.

Update: Now it sounds like Reed’s getting cold feet.

While Detroit preps for another visit to Washington and a second attempt at a bailout, LA meanwhile is hosting its annual auto show.  The Big 3 are in their usual spots on the LA Convention Center floor, however, in a sign of the times, it appears as though one non-public domestic car company is reducing expenses where it can.

In comparison to the neighboring bright and showy displays of Kia, VW and Audi, Cerberus backed Chrysler’s brands are practically in the dark (see Jeep on the left vs. Audi on the right in pic below).  Despite opting for the basic-lighting package and no LED displays, at least Chrysler is still committed to presenting its line-up.  Not sure if it was ever in the works, but notably absent is heavily funded Tesla.

Last week TechCrunch announced the rumored sale of European price comparison shopping site Kelkoo for less than 100 million euros to investment group Jamplant Ltd.  The sale was notable given Yahoo unloaded the site for 375 million euros less than what it paid for it in 2004.  But who exactly is Jamplant?

Most media bytes on the transaction describe Jamplant as a private equity firm.  However this suggests some transaction history and possibly other portfolio companies.  The only available info on Jamplant is that the Group consists of several angel investors interested in the price comparison shopping space (talk about narrow), so who know’s what the full story is. Either way, have to credit Jamplant for executing a private equity deal in these turbulent times.  Just wonder if their name will emerge attached to another.

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 venture capital / private equity 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 . . .

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.

As the NY Times points out, KKR just launched a slick re-design of its internet site featuring significantly more information than what was provided 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