"We expect competitors to respond as they have in life cycle funds, " says Greer.
The cycle is such that funds will land in the Treasury eventually.
FORBES: As We Creep Closer To The Debt Ceiling Limit, Is Your Tax Refund At Risk?
For some very fast growing companies, the organization reaches a point in its life cycle when venture capital funds are required for hyper growth.
FORBES: 5 Ways of Funding A Business: How To Get Your Piece Of The Pie
The best 30 funds in each cycle averaged annual gains of 28.3% in the four-year period in which they led the pack.
Meanwhile, some of those gains are invested in new venture funds, and the cycle begins again.
Or, it could simply reflect where some funds are in their investment cycle.
FORBES: Rock Tease: Investors Flirt With Digital Health But Avoid Serious Commitment
Business owners traditionally have turned to lines of credit, loans or credit cards for the funds they need to get through a payroll cycle, or to pay landlords and suppliers.
The boom and bust cycles, Kaplan and Schoar concluded, work like this: When the private equity industry booms, money flows in, new funds enter the market, and then returns decline and the cycle begins anew.
That value can certainly multiply over the course of the life cycle of the company, but this is why founders try to start companies with their own funds to avoid diluting their stake.
FORBES: The Dirty Little Secret About Cashing In As An Entrepreneur
Stabilisation funds, such as Chile's Economic and Social Stabilisation Fund, smooth out the economic cycle by accumulating revenues from commodity exports when prices are high, and disbursing them when prices drop.
What this means is that investors stand the best chance of participating in this renewed merger and acquisition cycle by investing in small to midsize companies, or micro, small-cap and mid-cap mutual funds run by investment managers with a value approach.
应用推荐