Work; And More On Private Equity

Us somewhere in the English countryside. The British go back to work today with a vengence: Chistmas trees on the sidewalk, traffic-jams, nerves jingle and all hustle-bustle. I watch serious fellows on their way to the train station with hands jammed into their Burburries, scarves wrapped tightly. I am glad not to be on that path, thank goodness. There are two times a year when this phenomena occurs: September, post summer recess when clocks fall-back for winter-hours, and now. In the US where holidays are generally two or three weeks the work-year remains flat - one is never really far from the desk. In London, executives and bankers scram during Christmas and summer seasons and the city's population, I am told, dips >10%. It is a good pattern too: always something to plan for and without the endless grind of it all. Sonnet enjoys five weeks at the V&A and me, well - I have as much goof off as I wish assuming the bills somehow get paid and I don't get bored. This on my mind for 2009 as it looks to be a dull year - nothing to get done in private equity as fundraising stops and portfolios marked down thanks to the financial crisis and recession. Our crisis really began several years ago from freely available bank-debt and rosey opinion of economic growth (to get the deal, brother. Many transactions done at four or even five times leverage). This has left many firms exposed - a recent industry survey suggests that >20% of the mega-buyout funds, which own a sizable chunk of the Western World, will fail. As noted before I think, private equity is the largest private employeur in the UK accountable for >1.2 million jobs directly (and a multiple of this indirectly). Last year the industry felt cozy given the 10 year life-span of a typical investment partnership but say good-bye to all that: today's accounting marks reduce portfolio value which threatens limited partnership support (though they are obligated to pay up their capital call)+LPs are under cash pressures themselves. Still, fortunes will be made: anybody buying distressed assets or sitting on cash will find great deals and within a few years the returns will follow.

"The opposite of courage in our society is not cowardice, it is conformity."
Rollo May

"Is he the fat one?"
Madeleine Orenstein, pointing to a photograph of Henry V