History of private equity and venture capital |
---|
Early history |
(origins of modern private equity) |
The 1980s |
(leveraged buyout boom) |
The 1990s |
(leveraged buyout and the venture capital bubble) |
The 2000s |
(dot-com bubble to the credit crunch) |
The 2010s |
(expansion) |
The 2020s |
(COVID-19 recession) |
In the 2010s Private equity massively grew. [1] As of 2019, there were nearly 7,000 private equity firms within the United States, nearly $2.5T globally in unspent cash (known as dry powder), and dealmaking in private equity accounted for 13% of global acquisitions. [2] [3]
In February 2013, H.J. Heinz went private through 3G Capital and Berkshire Hathaway in a deal valued at $28 billion. [4] In 2015, the company merged with Kraft Foods to form Kraft Heinz, at which point 3G and Berkshire together owned approximately 50% of the merged entity. [5]
In October 2013, Dell was acquired by Michael Dell and Silver Lake (investment firm) for $21.5 billion, the largest technology buyout at the time. [6]
In 2019, Senator Elizabeth Warren introduced legislation aimed at regulating private equity firms. Co-sponsored by Senators Kirsten Gillibrand and Bernie Sanders, among others, the bill aimed to hold firms liable for the debts and pension obligations of portfolio companies, and restrict private equity firms' receipt of dividends and fees from acquired companies. [7] In response, the American Investment Council and the United States Chamber of Commerce conducted studies to analyze private equity’s economic benefits and the potential consequences of Warren’s legislation. An academic study by the University of Chicago, Harvard Business School and other institutions showed job losses following buyouts of public companies, and job gains after buyouts of private companies, casting doubts on "the efficacy of ‘one-size-fits-all’ policy prescriptions for private equity," according to report authors. [8]
Many private equity firms embraced ESG and impact investing over the decade. [9] The integration of ESG criteria into company’s strategies has become a critical focus for financial institutions all over the world. The evolving regulatory landscape demands that these institutions not only comply with financial regulations but also incorporate sustainable practices into their operations. A clear example of this can be seen in ESG specific regulations in private equity and venture capital deals in which companies not only face legal obligations, but also investor pressure to not only comply but also be ahead of the curve in ESG related practices. [10] Such investing has been criticized as greenwashing, largely due to a lack of parameters and varying definitions of the practice. [11] [12] [13] The Impact Management Project, a protocol developed by 700 impact investing professionals to establish an evidence-based measurement of social and environmental returns, was launched in 2016. [14] [15]
The H. J. Heinz Company was an American food processing company headquartered at One PPG Place in Pittsburgh, Pennsylvania. The company was founded by Henry J. Heinz in 1869. Heinz manufactures a couple thousand food products in plants on six continents, and markets these products in more than 200 countries and territories. The company claims to have 150 number-one or number-two brands worldwide. Heinz ranked first in ketchup in the US with a market share in excess of 50%; the Ore-Ida label held 46% of the frozen potato sector in 2003.
Private equity (PE) is capital stock in a private company that does not offer stock to the general public. In the field of finance, private equity is offered instead to specialized investment funds and limited partnerships that take an active role in the management and structuring of the companies. In casual usage, "private equity" can refer to these investment firms rather than the companies that they invest in.
Berkshire Hathaway Inc. is an American multinational conglomerate holding company headquartered in Omaha, Nebraska. Founded in 1839 as a textile manufacturer, it transitioned into a major conglomerate starting in 1965 under the management of chairman and CEO Warren Buffett and vice chairman Charlie Munger.
Kraft Foods Group, Inc. was an American food manufacturing and processing conglomerate, split from Kraft Foods Inc. on October 1, 2012, and was headquartered in Chicago, Illinois. It became part of Kraft Heinz on July 2, 2015.
TPG Inc., previously known as Texas Pacific Group and TPG Capital, is an American private equity firm based in Fort Worth, Texas. TPG manages investment funds in growth capital, venture capital, public equity, and debt investments. The firm invests in a range of industries including consumer/retail, media and telecommunications, industrials, technology, travel, leisure, and health care. TPG became a public company in January 2022, trading on the NASDAQ under the ticker symbol “TPG”.
Jorge Paulo Lemann is a Brazilian billionaire investment banker, businessman, and former tennis player with dual Brazilian and Swiss citizenship. Lemann co-founded global investment firm 3G Capital, which owns brands such as Burger King, Anheuser-Busch and Heinz. He became the richest person in Brazil in March 2023, with a net worth of US$17 billion.
Silver Lake, legally Silver Lake Technology Management, L.L.C., is an American global private equity firm focused on technology and technology-enabled investments. Silver Lake is headquartered in Silicon Valley and New York, and has offices in London, Hong Kong, and Singapore.
Coller Capital is one of the largest global investors in the private equity secondary market ("secondaries"). It was founded in 1990 by the UK-based investor and philanthropist Jeremy Coller.
The history of private equity, venture capital, and the development of these asset classes has occurred through a series of boom-and-bust cycles since the middle of the 20th century. Within the broader private equity industry, two distinct sub-industries, leveraged buyouts and venture capital experienced growth along parallel, although interrelated tracks.
Thoma Bravo, LP, is an American private equity and growth capital firm based in Chicago. It is known for being particularly active in acquiring enterprise software companies and has over $130 billion in assets under management as of 2023.
The early history of private equity relates to one of the major periods in the history of private equity and venture capital. Within the broader private equity industry, two distinct sub-industries, leveraged buyouts and venture capital experienced growth along parallel although interrelated tracks.
Pacific Equity Partners (PEP) is a private equity investment firm focusing on transactions in Australia and New Zealand. PEP invests across a range of industries and sectors, in turnaround and growth capital transactions. By 2023, The Australian Financial Review reported PEP to be Australia's largest private equity firm.
Environmental, social, and governance (ESG) is shorthand for an investing principle that prioritizes environmental issues, social issues, and corporate governance. Investing with ESG considerations is sometimes referred to as responsible investing or, in more proactive cases, impact investing.
Blair W. Effron is an American financier. Effron co-founded Centerview Partners, a leading global investment banking firm based in New York City. Centerview has offices in London, Paris, Chicago, Los Angeles, Palo Alto and San Francisco. The firm provides advice on mergers and acquisitions, financial restructurings, valuation, and capital structure to companies, institutions and governments.
DFO Management is an American family office that manages the capital of Michael Dell and his family. The firm, which is based in New York and has offices in Santa Monica and West Palm Beach, was formed in 1998.
3G Capital is a global investment firm and private partnership built on an owner-operator approach to investing over a long-term horizon. Founded in 2004, 3G Capital evolved from the Brazilian investment office of Jorge Paulo Lemann, Carlos Alberto Sicupira, and Marcel Herrmann Telles. 3G Capital is led by Alex Behring, Co-Founder and Co-Managing Partner, and Daniel Schwartz, Co-Managing Partner.
First Manhattan (FM) is a wealth management firm founded in 1964 by a group of financial industry executives led by the late David "Sandy" Gottesman. FM remains independently owned and operated, with operating subsidiaries that include an SEC-registered investment adviser and a broker-dealer registered with FINRA. FM is currently led by Zac Wydra, CEO and Portfolio Manager, and Alvaro Spinola, CFO/COO.
Tracy Britt Cool is an American business executive and entrepreneur who was widely noted as a Warren Buffett protégé. She chaired four Berkshire Hathaway subsidiaries before co-founding Kanbrick, a private equity firm, in 2020.
Alex Behring, is a Brazilian billionaire businessman. He is a co-founder and managing partner of 3G Capital, a global investment firm known for its investments in Anheuser-Busch InBev, Restaurant Brands International, Kraft Heinz, and Hunter Douglas. As of March 2024, Forbes estimated his net worth at US$6.2 billion.
GRESB is a Netherlands-based company that operates an annual sustainability assessment for standing real estate investments, real estate projects in development, infrastructure funds, and infrastructure assets. From these assessments, it provides standardized and validated environmental, social, and governance (ESG) data and benchmarks for the real assets investment community. Academic research has demonstrated that GRESB participation is a predicator of fund-level financial returns.