Comments on: Why private equity markets are on the rise now http://blogs.reuters.com/felix-salmon/2011/04/02/why-private-equity-markets-are-on-the-rise-now/ A slice of lime in the soda Thu, 23 May 2013 07:30:35 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: xyz70 http://blogs.reuters.com/felix-salmon/2011/04/02/why-private-equity-markets-are-on-the-rise-now/comment-page-1/#comment-25528 xyz70 Sat, 02 Apr 2011 17:58:58 +0000 http://blogs.reuters.com/felix-salmon/?p=7790#comment-25528 This is a misapplication of the concept of winner's curse, which would apply in any auction scenario whatsoever. The problem, of course, is how a bidder can limit the harm from being seen by others to have won the auction at an inflated price. One solution, in fact, is to limit the number of bidders who participate in the auction. Private markets like Goldman's Facebook deal solve that problem, whereas a public floatation would bring in the entire universe of potential investors. So the truth is that private market investors may be willing to allow Goldman an excess participation in the deal in return for keeping out everyone else on the planet (until later). This is a misapplication of the concept of winner’s curse, which would apply in any auction scenario whatsoever. The problem, of course, is how a bidder can limit the harm from being seen by others to have won the auction at an inflated price. One solution, in fact, is to limit the number of bidders who participate in the auction. Private markets like Goldman’s Facebook deal solve that problem, whereas a public floatation would bring in the entire universe of potential investors. So the truth is that private market investors may be willing to allow Goldman an excess participation in the deal in return for keeping out everyone else on the planet (until later).

]]> By: davew http://blogs.reuters.com/felix-salmon/2011/04/02/why-private-equity-markets-are-on-the-rise-now/comment-page-1/#comment-25525 davew Sat, 02 Apr 2011 12:46:05 +0000 http://blogs.reuters.com/felix-salmon/?p=7790#comment-25525 Forgetting Valley Tech, which is its own world, there's no private equity market for transactions below 25m or so. You either upsize to 30m or downsize to 5m and pass the hat around. Forgetting Valley Tech, which is its own world, there’s no private equity market for transactions below 25m or so.

You either upsize to 30m or downsize to 5m and pass the hat around.

]]> By: TFF http://blogs.reuters.com/felix-salmon/2011/04/02/why-private-equity-markets-are-on-the-rise-now/comment-page-1/#comment-25523 TFF Sat, 02 Apr 2011 08:50:16 +0000 http://blogs.reuters.com/felix-salmon/?p=7790#comment-25523 I agree with the suggestion of "winners curse". Even if they were public, I would have no interest in owning their shares at those valuations. Reminds me of the 1999-2000 tech bubble. There were certainly some winners out of that -- but how many tech investors ended up making money? I agree with the suggestion of “winners curse”. Even if they were public, I would have no interest in owning their shares at those valuations. Reminds me of the 1999-2000 tech bubble. There were certainly some winners out of that — but how many tech investors ended up making money?

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