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Private equity looks to differentiate
November 21-December 4, 2005 | Chemical Market Reporter | Joseph Chang.

WHILE PRIVATE-EQUlTY will always seek to buy assets cheaply and sell them at high prices, the role of private equity is changing. Larger and more players are entering the game, and as competition increases, financial buyers must differentiate their strategy to create value.
"About 60 percent of the value from private­equity deals cornes from buying low and selling high." said Timothy Walsh. partner at JPMorgan Partners, at the Competitive Chemical Enterprise Conference held in New York last week. "The other 40 percent-improving the business­is becoming much more important."
JPMorgan Partners looks for speciality businesses that are on the verge of commoditization, where it can improve operations.
"We in private equity are price takers-so how do we create a return?" asked Walsh. ln the case of silicas firm PQ Corp. JPMorgan Partners brought in an experienced management team and enhanced focus on cost structure and processes.
Over the past few years, private-equity funds have gained in size and number. The number of funds over S1 billion
has grown from just five in 1989 and eight in 1994 to 97 today, Walsh noted. "The numbers and size will continue to grow," he added.
private_equity  chemicals  differentiation  commoditization  specialists  specialization  value_creation  financial_buyers 
january 2013 by jerryking
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