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Investors Drive Change in Private Equity

Mon, 14 Sep 2009 00:00:00 GMT

Having predicted a major shakeout in the private-equity industry in the wake of the twin crises of 2008, authors Heino Meerkatt and Heinrich Liechtenstein have more news. Capital is still available and most investors will deliver. Yes, there will be more casualties: cash-strapped anchor investors may drag their firms down. Yet, by gaining power, investors will continue to force the industry through a necessary evolution.

Black Swans, a Wild Goose Chase

Tue, 21 Jul 2009 00:00:00 GMT

As investors everywhere lose money to the financial crisis, many are wondering whether large catastrophic market swings, known as “black swans,” could ever be predicted with any degree of accuracy. IESE Prof. Javier Estrada considers the impact of outliers in emerging markets and finds that they can have a massive impact on the long term performance of investors’ portfolios.

Better Banking in Latin America

Fri, 17 Jul 2009 00:00:00 GMT

Do financial institutions in developing countries have any specific social responsibilities? IESE’s Francesc Prior and Antonio Argandoña would say yes – particularly when considering that lack of financial depth is an important obstacle to economic growth in less developed nations. Here the authors present the underlying causes of low financial depth and provide examples of financial industry best practices in three emerging economies: Colombia, Ecuador and Peru.

Criteria for Approaching a Venture Capitalist

Tue, 14 Jul 2009 00:00:00 GMT

It is a simple fact that VC-backed firms have more leverage to innovate and create more employment and growth than their peers. A strong capital flow is the cornerstone of any entrepreneurial endeavor in modern economics. Understanding this, this paper examines the criteria for investing in VC funds and determines the importance of why investors select certain funds. (Video available).

Asset Step-Ups: Creating a Tax Discount for M&As

Mon, 11 May 2009 00:00:00 GMT

Corporate tax code can be more complicated than quantum physics. Moreover, when a company merges or acquires another company, specialty tax shields become of utmost importance. IESE visiting professor Alexander Groh and Christoph Henseleit show that asset step-ups, or the readjustment of the value of an appreciated asset for tax purposes, allow the acquirer to increase the tax benefits from the acquired assets and, hence, also their valuation.

Microfinance: Economic Profitability or Social Performance?

Wed, 22 Apr 2009 00:00:00 GMT

More than a quarter century ago, Muhammad Yunus challenged decades of conventional economic wisdom by offering loans to poor people. That $27 from his own pocket, divided among 42 women, has since become $25 billion in loans offered to 5.5 million people. The once pioneering field of microfinance now faces a new era, with new risks and challenges. What direction should be taken?

CSR: An Airbag for the Crisis

Wed, 15 Apr 2009 00:00:00 GMT

While corporate social responsibility may not have averted the current financial crisis, it certainly could have reduced the chances of it happening or at least mitigated its consequences. This is the argument put forth by IESE Prof. Antonio Argandoña in the article “Can Corporate Social Responsibility Help Us Understand the Credit Crisis?”

After the Crisis, What Next?

Fri, 06 Mar 2009 00:00:00 GMT

Low interest rates. High public spending. Moderate consumption. Recalibration of the real-estate sector. Protectionism. And China and India climbing out of the hole that Europe and the U.S. will likely remain stuck in for some time. IESE Prof. Antonio Argandoña describes what precipitated the crisis and presents the outlook for the world economy.

Herd Behavior in Stock Markets: Variable and Cyclical

Fri, 27 Feb 2009 00:00:00 GMT

IESE’s Daxue Wang examines herd behavior towards the index in both developed and emerging markets over time. The less developed the market, the more prone it is to herd behavior. Moreover, as we have seen recently, a sudden event can trigger a turning point in the cyclical pattern of herd behavior.

Private-Equity Shakeout: Steps to Confront the Crisis

Wed, 14 Jan 2009 00:00:00 GMT

With many private-equity firms not expecting to raise the next fund, between 20 and 40 percent of LBO firms could go under within the next three years as a result of the economic crisis. Amidst this dire outlook, Heino Meerkatt of BCG and Heinrich Lichtenstein of IESE suggest three main steps that firms can take to confront the crisis.