The U.S. financial market is facing the perfect storm – a distressed credit environment, a commodity led inflation and lackluster economic growth. During this period, the market participants have witnessed the burst of real estate bubbles, the carnage in financial sector and record breaking oil prices. This downturn has investment community whispering the coming of the bear market; these turbulences pose a serious challenge to the investment community. Will this be a short bear market that we are accustomed to in the last 20 years? Or will we experience a long bear market? Will investment professionals, using investment vehicles and methods in both equity and fixed income, need to modify or adjust their approach? What are the considerations in capital preservation and diversification? A special consideration is also given to the behavioral finance – how investment professionals avoid the trappings of behavioral bias in their decision making process, particularly in this difficult investing environment. This panel brings in experts from the investment management community to share their thought on these issues.
Moderator: Sam OleskyPresident & Managing Member, Olesky Capital Management LLC
There were no venture-backed Initial Public Offerings (IPO) in the second quarter of 2008 - the first time since 1978. The National Venture Capital Association characterizes the situation as a capital markets crisis for the start-up community. Is this drought in IPO based venture exit opportunities a direct result of the credit crunch and mortgage crisis? Are there other systemic factors making the IPO exit less attractive? Has Sarbanes Oxley regulation dramatically raised the cost for small companies to go public? While venture-backed M&A deals have declined 28% for the first half of 2008 compared to the same period in 2007, acquisitions are expected to continue to be a viable exit path. However, public offerings are essential to creating long term economic growth. What can regulators, legislators and the private sector do to revive enthusiasm for risk and confidence in the entrepreneurial eco-system?
Given the turmoil and paradigm shift in the financial services industry, what is the future for the investment banking industry? After thousands of layoffs, drying liquidity, economic slowdown and tough financing requirements, how will investment banks reinvent themselves and level the playing field? Most of us agree that the brutally bearish and risk averse environment this year will only lead to increased competition and fee pressures. In lieu of this unprecedented restricted landscape, it seems natural to focus on a niche industry segment and develop expertise that will deliver a differentiated and unmatched level of client satisfaction. However what remains to be argued is how bulge-bracket firms will satiate their thirst for large deals and double-digit growth – will industry conditions push them to invest heavily in developing niche market expertise or will they continue to rely on their big brands to determine their fate? Markets outside the U.S. are increasingly becoming sophisticated and cash rich leading to abundance of M&A activity in Asia, Middle-East and Europe. This might be good for some of the global players who have already started to build large armies of bankers in emerging markets but what is to be seen is how a small hard hit boutique firm will attempt to change its course. Finally, in the wake of global consolidation, will banks find it lucrative to chase cross-border deals or will it be just a transient phenomenon to fill the void of empty offices?
With sluggishness in the credit markets, meeting capital requirements and ensuring a low cost of capital has become critical for companies. Is the sluggishness in the credit markets worrying CFOs and finance executives? With a loss of confidence in companies’ balance sheets, raising capital for various M&A activity has also become extremely difficult. Is the credit crisis causing ripples in your company's efforts to raise capital through equity or debt financing? Or is this perceived to be largely an Investment Banking problem? What is the ideal debt to equity ratio for industry/company targets and what are the reasons behind that ratio? Are any write-downs perceived in your industry and what can we expect going forward? How is the credit crunch affecting your company's growth initiatives? Are there opportunities in this crisis? The prospect of new regulations from either the SEC or the Fed worries finance executives. How does all this affect non-financial and financial companies in the short-term and long-term? What are core issues that led to a loss of confidence? With inflation looming large on the horizon, how are companies preparing for the prospect of higher inflationary expectations baked into wages and prices? What do they see as the likely inflationary tendency for the short-term and long-term? With this gathering of the foremost corporate finance executives from a wide range of industries we highlight and discuss the above topics and reflect of the possibilities and affects of IFRS, XBRL, FAS 141 (Fair Value Accounting) and other relevant topics.
The Private Equity panel for the 2008 Berkeley Finance Conference will discuss, among other topics specific to the panelists, how the private equity industry has navigated through the recent financial market and greater economic turbulence and what steps industry players are taking to find value and generate returns for stakeholders going forward. Topics will likely cover perspectives from the limited partners and secondary investors, buyout funds, and financial intermediaries that participate in this growing industry.
The panel will bring together real estate professionals from diverse perspectives - Lending, Development, Private Equity and Asset Management - to discuss how the current environment fits within the generally accepted cyclical nature of the real estate industry. Panelists will contrast the current cycle with past cycles, and explain how their companies are adjusting to current conditions. Lastly, with each downturn comes an opportunity. To this end, the panelists will share their beliefs regarding the opportunities that are likely to develop.