The Future of Finance: How Private Equity and Venture Capital Will Shape the Global Economy

Thebookprovidesinsightsintothepotentialroleofprivateequityandventureinthepost-economiccrisisworld.Itlooksattheindustryfromanumberofperspectives:geographically,includingtextonAsiaandtheMiddleEast;andbytypeofinvestor,principally,privateequity,venturecapital,institutionalinvestors,andthebanks.Itisnotatextbook,casebook,or'how-to'book,butratherawell-reportedlookattheindustrytodayandaninsightfulcommentaryonwhereit'sheadedtomorrow.Theauthorinterviewedover75leadingGPs,LPs,SWFs,andeconomistsintheprivateequity,venture,andfinancialindustries.AnewanduntestedUSpoliticaladministration,multipleconflicts,andarapidlychangingeconomiclandscapeprovidethebackdrop.Iftomorrowwillbedifferentthantoday,thenthewaybusinesshasbeendoneinthepastshouldbereexaminedinanewlight.Despitethepervasiveresorttogovernmentbailouts,theanswermaylieinaneconomicmodelthatisbasedonsmallerentities,accountability,directlinksbetweenownershipandmanagement,andacorporatestructurethatismuchlessleveragedandbroaderinscope.Asaresult,privateequityandventurecouldwellemergeatthetopofthefinancialleagueandasaweathervanefortheunderlyingeconomy.Thereareanumberofreasonsforthisproposition.Forstarters,privateequityandventuremaywellbethelastmanstanding.Theyalsohavearobustfundingstructure:longtermdeposits-investments-fromtheirlimitedpartners.Theyareflexibleintheirapproachtoinvestingopportunities.Andwhiletheirportfoliocompaniesaresufferingfromthesamedownturnafflictingtherestoftheeconomy,theownerscontrolboththebalancesheetandthebusiness.Andthatleadstodeeperreasonswhichgotothenatureofprivateequity:accountabilityandthealignmentofinterests.Thisargumentalsosuggestsanew'corporatenorm',whoseimplicationsforcorporategovernanceareasyet,untested.Thebookincludescommentaryfromleadingpensionfundsandendowments,whicharefrequentlyomittedfromindustrybooks.Italsolooksatprivateequityandventureacrosstheworld.TheUSandEuropewilloffermostlydistressandrestructuringopportunities.Asiawillcontinuetoexpand,whiletheMiddleEastwillfundbasicinfrastructure.UnliketheUSandEurope,theireconomieswillgrowandrequireinvestment.Nooneknowswhethertoday'sgeneralpartnerscanreshapethefinancialmarketsandinfluencetheirunderlyingeconomies.Howtheindustryisorganized,funded,andinvestswillcertainlychange.Butforthefirmsthatsurvivethenext1-2years,thatpossibilitycertainlyexists.Thebookanalyzeshowandwhythisisthecaseforprivateequityandventurecapital,whilesuggestinghowthebehavioroflimitedpartnersandbankswillbedifferentaswell.