Allen Latta's Thoughts on Private Equity, Etc.
  • Allen's Blog
  • Blog Post Categories
  • Glossary of Private Equity Terms
  • Resources
  • About
  • Contact

Venture Capitalists Rethink Big Bets on China - Mercury News Article

4/15/2013

0 Comments

 
In "Venture capitalists rethink big bets on China", which appeared yesterday on MercuryNews.com, the article discusses a pull-back in investing in China by venture capitalists.  Among the reasons given:
  • Few and poor performing IPOs of Chinese companies, both in China and in the US;
  • Uncertainty about the Chinese economy;
  • The rise of "copycat" companies:
  • Too much capital chasing too few deals;
  • China's opaque regulatory environment;
  • Intellectual property issues;
  • Arcane laws on foreign investment in China;
  • Complex ownership structures; and
  • Uncertain tax environment.

The article does point out the huge potential of the Chinese market, and indicates that both mobile and cleantech are among the promising areas in China.

Here's the link:  
http://www.mercurynews.com/business/ci_23023790/venture-capitalists-rethink-big-bets-china


0 Comments

Why Pension Funds are Hooked on Private Equity - Time Article

4/15/2013

0 Comments

 
There's an interesting article posted today on Time.com titled "Why Pension Funds Are Hooked on Private Equity" which discusses the relationship between pension funds, as investors in the private equity asset class, and the funds themselves which can provide outsized returns to the pension funds.  The article also touches on the carried interest tax issue as well as how pension funds are underfunded which is driving the search for returns.  Here's the link:  http://business.time.com/2013/04/15/why-pension-funds-are-hooked-on-private-equity/

0 Comments

Unemployment, Employment and Participation Rate

4/11/2013

0 Comments

 
Picture
The unemployment rate recently dropped to 7.6 percent, which on its face sounds good.  However, the economy only added 88,000 jobs in March, well below expectations.  Given this dichotomy, I wanted to add a few of my own thoughts on unemployment rates, employment and the participation rate.

Official Unemployment Rate (U-3).  In my opinion, focusing on the official employment rate as issued by the Bureau of Labor Services (BLS) provides an incomplete (and potentially misleading) picture of the unemployment situation.  This headline rate is known as the U-3 unemployment rate, and focuses on people out of work that have actively sought work in the past four weeks.  According to the BLS: "Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work."  It ignores people that have stopped  looking for work or people that are working part-time but who want to work full-time.  The chart to the right shows the U-3 unemployment rate from 2007 to present, with the peak of 10% unemployment during the recent recession (data from the BLS website).

U-6 Unemployment Rate.  The U-6 unemployment rate is based on the U-3 unemployment rate and adds people who are "marginally attached workers" and part-time workers who want to work full-time but cannot due to economic reasons.  This broader measure of unemployment captures underemployed workers, but still excludes people who have given up on looking for work and so are not considered to be part of the workforce.  This could be people who have retired or have simply given up looking for work because they couldn't find a job.  This U-6 measure of unemployment was 13.8% in March 2013, down from a peak of 17.1% in October 2009.  This data is not easy to find on the BLS website, but here's the link:  http://www.bls.gov/webapps/legacy/cpsatab15.htm

Employment.  The BLS also publishes employment data, with the non-farm payroll employment data being the most commonly used.  For example, the recent headlines that the economy added 88,000 jobs refers to non-farm payrolls (here's a link to the recent BLS announcement: http://www.bls.gov/news.release/empsit.nr0.htm).  According to preliminary numbers from the BLS, non-farm payroll employment reached 135,195,000 in March 2013, up from a low of 129,320,000 in February 2010.  Many economists estimate that it takes a monthly increase in employment of at least 150,000 for the workforce to keep up with population growth.

Labor Force Participation Rate.  The labor force participation rate measures the percentage of the labor force that is working or actively looking for work.  The labor force in the US is defined by the BLS as people aged 16 and over.  According to the BLS, the Labor Force Participation rate fell to 63.3% in March 2013, down from a high of 67.3 in early 2000.  The Labor Force Participation Rate has trended down since 2000, but the pace of decline picked up in the latest recession.  There's a good article on the blog Calculated Risk discussing the Labor Force Participation Rate - here's the link: http://www.calculatedriskblog.com/2013/04/labor-force-participation-rate-update.html?.  Here's a good discussion on Seeking Alpha on how declining labor force participation could actually be good for workers:  http://seekingalpha.com/article/1330171-could-there-be-a-silver-lining-to-declining-labor-force-participation?

Payroll to Population (P2P) Rate.  Another measure of employment (or unemployment) is the Gallop US Payroll to Population Rate (P2P).  This metric "is an estimate of the percentage of the U.S. adult population aged 18 and oder who are employed full time by an employer for at least 30 hours per week.  P2P is not seasonally adjusted." (Source: http://www.gallup.com/poll/161624/payroll-population-rate-stagnant-march.aspx.)  According to Gallup, the P2P was 43.4% in March 2013, unchanged from 43.3% in February 2013.  Another similar measure is the employment-to-population ratio (aka employment-population ratio).

When I'm trying to understand unemployment, these are the measures that I use.  So for example, the way I read the current release is that the drop in the official unemployment rate is misleading.  The economy only added 88,000 non-farm jobs when 150,000 new jobs are needed just to keep up with population growth.  So the pace of hiring has slowed down.  Also, the decline in the participation rate tells us that more people are leaving the work-force, whether by retirement or going back to school (a popular route for younger workers) or other reasons.  So in all, despite an improving official unemployment rate, the economy has taken a step back.

Thoughts?  Please send me a note.


0 Comments

VC Succession Planning: TechCrunch Article

4/8/2013

0 Comments

 
There's a good article on TechCrunch from Saturday (4/6/2013) that takes a look at how venture capital firms handle succession planning.  This is a very important, although often under-analyzed, aspect of the long-term success of a venture capital firm.  The article explores how New Enterprise Associates (NEA), Kleiner Perkins Caufield & Byers, Sequoia Capital and Greylock Partners approach succession planning.  Here's the link:  http://techcrunch.com/2013/04/06/the-next-don-how-vcs-plan-for-the-future/

0 Comments
    About this Blog

    This Blog is a collection of thoughts on a variety of topics of interest to me, including:
    • Private Equity
    • Buyouts
    • Growth Equity
    • Venture Capital
    • Corporate Finance
    • Investment Banking
    • IPOs
    • M&A
    • Technology
    • Economics
    • Law
    I hope you find this blog of interest.
    View my profile on LinkedIn

    Categories

    All
    Anti-Dilution
    Berlin
    Board Of Directors
    Brazil
    Buyouts
    California
    China
    Cleantech
    Corporate Finance
    Corporate Venture Capital
    Crowdfunding
    Dilution
    Dividend Recap
    Economics
    Emerging Managers
    Endowments
    Entrepreneurship
    Europe
    Fund Terms
    General
    Growth Equity
    Healthcare
    India
    Innovation
    Investment Banking
    Ipo
    Israel
    Law
    Legal
    Libor
    Life Sciences
    Listed Private Equity
    London
    Los Angeles
    LP Corner
    M&A
    Mexico
    New York
    Pensions
    Politics
    Private Equity
    Public Stocks
    San Francisco
    Secondaries
    Secondary Exchanges
    Silicon Valley
    South America
    Speaking
    Stock Market
    Stock Options
    Tax
    Technology
    Travel
    United Kingdom
    Valuation
    Venture Capital
    Venture Capital Deal Terms
    Webinars


    Archives

    October 2021
    August 2021
    July 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    February 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    February 2016
    January 2016
    November 2015
    October 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012
    December 2011
    November 2011
    October 2011


    Copyright Notice:

    ​All original works on this site are 
    © 2011-2020 Allen J. Latta. All rights reserved.  Neither this website nor any portion thereof may be reproduced or used in any manner whatsoever
    without the express prior written permission of Allen J. Latta.

    LP Corner® is a registered trademark of Campton Private Equity Advisors.  Used with permission.

    DISCLAIMER:  Readers of this Blog are not to construe it as investment, legal, accounting or tax advice, and it is not intended to provide the basis for the evaluation of any investment.  Readers should consult with their own investment, legal, accounting, tax and other advisors to the determine the benefits and risks of any investment.

    Private equity investments involve significant risks, including the loss of the entire investment.

    This Blog does not constitute an offer to sell or the solicitation of an offer to buy any security.

Copyright © Allen J. Latta.  All rights reserved.