Definition of private equity: a marvelous system for creating wealth by trading an existing stock of assets back and forth at ever higher prices.
Buyers inevitably want to buy the assets of a corporate business not its stock for two reasons.
The drop-off in tech-stock valuations alone is enough to cool off the chase for assets in Silicon Valley.
The decline in the stock and real estate markets created further built-in discounts for many assets.
In purchasing the stock, you will be paying for the net FMV of the underlying assets.
FORBES: Tax Court Holds S Corporation Shareholders Liable for $30 Million Tax Deficiency
Private equity investors deal in companies and assets that are not listed on stock exchanges, looking for returns of about 20% a year.
It did this by classifying such subsidiary sovereign debt as the highest quality collateral - which means that banks wanted an ample stock of it, just in case they needed assets to swap for central bank loans.
The unexpected collective move by the U.S. Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of Canada and the Swiss National Bank were bullish for risk assets as the U.S. and European stock markets, and most commodity markets, rallied on the news.
FORBES: A.M. Kitco Metals Roundup: Comex Gold Trades Near Steady as Recent Gains Consolidated
Lay put up a chunk of his Enron stock and a smaller percentage of his more liquid assets (cash and real estate, for example) as collateral for the loans.
Foreigners are going the other way, recognizing that aging shifts the world's largest per capita stock of individually owned assets toward better housing, more consumption and greater risk-appetite for investment opportunities.
Donations of assets that have risen in value, such as shares of stock, often qualify for a deduction at the full market price, while the donor skips paying capital gains tax on the appreciation.
Under current law, donations of assets that have risen in value, such as shares of stock, often qualify for a deduction at the full market price, enabling donors to skip paying capital-gains tax on the appreciation.
For investors in the stock market, it is a general rule to assume that long-term assets should not be needed in the three- to five-year range.
For Siemens to get the multiple on its stock higher, Willi believes it will have to sell some assets next year.
Meanwhile, investors are pouring into assets in search of a return for their loose cash, which takes us back to the rising stock market.
The secondary market for private equity assets appears to have strengthened radically this fall, along with the dramatic rise of the stock market and as non-traditional players have emerged as interested buyers in the secondary market for private equity fund stakes.
Uncertainty over the timeline for a resolution in Europe and falling levels in the stock market have also helped drive investors into safe-haven assets like U.S. Treasuries, which has left the 10-year bond today yielding 2.11% and the 30-year long-term bond yielding 3.13%.
FORBES: Even As Treasuries Go Higher, Downgrade Fears Return
应用推荐