The Evolution of Private Equity

Private equity has, historically, been a private world available to pension funds, trusts, university endowments and only the wealthiest.

But times they are a-changin’.

Considered the most coveted alternative asset, individuals want in, and private equity firms are shaking off the welcome mat. But there are rules set by the U.S. Government and are meant to be followed. As long as they are, it’s a new world available to qualified individuals who seek a more diversified portfolio.

Most private equity funds require a participant to be what is termed an accredited investor, qualified client, or qualified purchaser. To which category an investor falls is decided largely by net worth and income. It’s in black and white—details are spelled out on http://www.investor.gov.

Where the black and white blur into gray can be largely found in the investor’s financial goals; his or her comfort level; how liquid they need to be and how fast. And not everyone is comfortable with the risk-reward ratio.

Private equity firms typically work with individuals through their brokerage accounts often referred to as ‘feeder funds’ that require an initial investment of $250,000, far less than previously demanded. The firms charge asset management fees, an upside for handling far more investors at lesser amounts.

And individual investors have become empowered. Getting into the private equity market is no longer limited to partnering with the big PE firms who may offer fewer choices. Boutique firms have established a reputation for specializing in certain sectors and geographies. More options can make it easier for investors to manage risk.

Today PE funds are far less private. Individual investors now have insight into performance and strategy—also critical for institutions where oversight is required.

As the landscape of private equity continues to change, the options for those who don’t fall within the ‘One Percent’ will continue to expand. As individuals react to the volatility of public markets, interest in PE funds will continue to grow.

“The world of private equity is constantly evolving,” notes Alfred Zaccagnino, President of Samarian Group of Companies, a PE firm with a growing global presence. “Individual investors want to be educated about where they’re putting their money—they do the research and utilize new technologies. Due diligence—for all parties—is the most important step toward a successful partnership.”

Private Equity in Professional Sports: Perfecting the Endgame

By Allyson Ruscitella

Sports and entertainment, to most professional sports fans, feels redundant. Sports are entertainment. Football commands the attention of half of America’s population on any given Sunday, and marketing departments are hard at work attracting the other half. A favorite team, in any sport, that earns the “W” brings unrivaled bliss, impish satisfaction, and bragging rights. Sports are woven into the fabric of our culture; each game reminds us of our love for winning, hatred for losing, and our obsession with keeping score. Green fields, hardwood courts, and sheets of ice become battlegrounds of finesse, agility, pride and grit. We can’t get enough. Professional sports are America’s entertainment, and they’re here to stay.

Win-loss records, historically, have weighed heavy on bottom lines. Victories, winning seasons, and championships can be elusive. But to private equity, winning games doesn’t  matter. It doesn’t have to. Returns count–wins don’t– and history shows private equity could have the candy-making secret. In a nine year span, the enterprise value of the NHL’s Toronto Maple Leafs tripled, according to Forbes, accounting for $413M in value. So how does mediocre on-ice performance, a disenchanted fan base, and no chance of making fingerprints on the Stanley Cup lead to industry-leading returns?  It’s the business equivalent of terroir to wine grapes, merroir to oysters– the bounty is derived from the perfect, delicate balance of key factors and forces. It’s making astute moves, redefining surplus, and living for the bottom line and the trophy. It’s business sense unencumbered by love for a team.

“The role of PE in professional sports will continue to evolve. As professional sports has leveraged technology to engage fans and broken new ground in revenue generation, doors have opened for private equity,”  notes Alfred Zaccagnino, President and Founder of the Samarian Group of Companies, a private equity firm headquartered in New York City. “If current trends continue, ownership of professional sports teams will continue to be a promising sector for private equity in the next decade.”