Tonight, though, Iris had more Important things to think about than comparative climatology. Through a combination of preparation, experience, hard work, and, she admitted, sheer luck, the Native American had received three Job offers. All were from buyout firms-?one a top-tier mega-fund, another a mid-market operation, and the last a firm looking to turn around its portfolio. Each option was attractive; each had its own drawbacks and advantages with respect to furthering Iris’s goal of a career in private equity. She would have to let them know by tomorrow at 8 a. M.
Opportunities in the Private Equity Industry in 2009-20101 During her MBA studies, Iris witnessed the crash of the previously booming private equity industry. While private equity was notoriously cyclical, this latest slump had been exacerbated by the macroeconomic credit crunch and global economic contraction. The U. S. Private equity Industry had been little more than a cottage Industry until the late sass. Although the first funds were established in the sass, the industry largely relied upon investment capital provided by individual investors for its first few decades.
Pension funds had been reluctant to invest much of their substantial pools of capital in private equity, due both to their lack of familiarity with the asset class and to uncertainty about whether private equity conformed to federal standards. The U. S. Department of Labor addressed the latter concern in 1979 by clarifying the “prudent man rule,” unleashing a wave of capital into private equity funds that continued almost unabated for 30 years. With only a few exceptions, each year saw more money invested In private equity, typically in limited partnerships that had a contractually specified 10-year life.
The Investors served as Limited partners (Alps)-?so named because their allowably was limited to the amount they Invested-?while the private equity groups served as general partners (Gaps). (See Exalt 1 for commitments to private equity funds. ) Historically, the mixture of commitments to venture capital (PVC) commitments to PVC funds in the late sass Professors Josh Learner and Field Harmony and Teaching Fellow Ann Lemon prepared the original version of this case, “Iris Running Crane: March 2011,” HUBS No. 809-071. This version was prepared by Professors Matthew Rhodes-Crops and Josh Learner and Teaching Fellow Ann Lemon.
Certain characters and situations have been disguised and fictionally. HUBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright O 2009, 2011, 2013 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www. Hubs. Harvard. Deed/educators.
