The world is changing and has never been more challenging to private equity players, public companies, and investors. With record market volatility and a global economic crisis, decision makers of all types can learn from successful private equity players and other top value builders. Private equity is growing at a rapid rate, with $2.7 trillion in transactions since 2001 and buyouts occurring in every type of market, including declining ones. And now, with the end of investment banks as we know them, the door is open to more opportunities than ever. In The Private Equity Edge, economics giant Arthur B. Laffer, along with value-building experts William J. Hass and Shepherd G. Pryor IV, combines the concepts of intrinsic value, macroeconomics, and incentives into a single strategy used by today's top value builders. You'll learn how to create value while reducing risk by: Thoroughly exploring relevant data to quantify ranges of value and risk Anticipating reactions of those whom you seek to influence Exploring possibilities and options before making major decisions Employing incentive systems that work in both up and down markets Examples of major private equity players at Blackstone, KKR, Carlyle, Cerberus, and Madison Dearborne Partners illustrate what to do and what to avoid in specific situations. Decision makers seeking to take full advantage of the new, interconnected world of business and economics will learn how to make the best decision the first time around, quickly and with conviction--the key to seizing the private equity edge.
Foreword by Stephen Moore
Preface: Clearly Focused Goals and Metrics Matter!
Introduction How Value Builders Create Value and Wealth and Reduce Risk
Pt. 1 Dig Deeper
Ch. 1 Value: Rules of Thumb: Simplistic, Usable, and Often Wrong 3
Ch. 2 Wealth, Tax Rates, and Income: Leaders Who Dig Deeper Can Change the World 47
Ch. 3 Risk: Life Is Not a Straight Line - The World Is Not Normal 79
Ch. 4 Incentives: Value-Based Executive Compensation Leads the Way 123
Ch. 5 Scenarios: Options and Alternatives Can Add Value 159
Pt. 2 Act Sooner: Facilitated by Digging Deeper
Ch. 6 Speed: The Race Is to the Swift 193
Ch. 7 Renewal: Continuous Emphasis on Value and Customer Discipline Is Critical 223
Ch. 8 Inflection Points: Act on Insights from the Fundamental Drivers 251
Ch. 9 Experimentation and Innovation: Action Accelerates Learning 291
Ch. 10 Summary and Conclusions: Insight and Action Give Private Equity the Edge 319
Appendix 1 The Health and Wealth of Our Nation in 2007 (With an Occasional Peek Ahead) 327
Appendix 2 Digging Deeper into Tax Rate Cuts and Tax Revenue 357
Appendix 3 Digging Deeper into Corporate Value Audits 365
Appendix 4 Digging Deeper on Top Value Builders 387
Bibliography 393
Acknowledgments 397
Index 399