Conclusion
Summarizing
the purpose of this thesis, I'd say that it will enable the reader to
understand:
- how the
Private Equity industry is shaped as a financial asset first,
- how
«value» is spotted, tracked and created in the process,
- what
«strategic» leverage is behind the phenomenal success of Private
Equity,
- how the
Private Equity inside players are considering and dealing with the concept of
«corporate value» and what is and what should be their
approach
- and
finally, what is the standpoint of the Private Equity industry toward modern
financial techniques such as Risk Management and Portfolio Theory and their
extent on an internationalized front.
I promptly
know that the inputs brought up by this thesis will not trigger a revolution
inside this financial industry, yet I'm convinced that some parts of this work
are somehow challenging and will make some readers, if there are, deeply think
abut the issues outlined and consider a new perspective in the way they deal
with the daily job.
On a
personal side, this thesis was for me a unique occasion to dig, link and
synthesize all what I learned at the frontiers of Business, Management and
Finance knowledge.
Appendixes: Cases in Emerging Markets
Appendix 1: Emerging Market Definition & Risk
Profile
1-
Emerging Market Definition
The
expression «Emerging Markets» is used to describe a national economy
that is (Pereiro, Luis E., 2002):
1-
Attempting to order its national accounts, privatize state owned companies, and
deregulate economic activity.
2- Rapidly
dismantling barriers to foreign trade and investments, thereby quickly
increasing its share in the world economy.
3- Being
flooded by foreign capital, technologies, and new, advanced managerial
practices, as multinational corporations enter its territory.
4-
Undergoing a profound change in the structure of entire industries and
individual companies based on a jump in productivity, thereby pushing firms to
approach international standards of competitiveness.
5-
Reporting a growing rate of activity in mergers and acquisitions, joint
ventures, and large scale corporate reengineering and divestments.
6-
Experiencing a growing, more active and fairly sophisticated stock
market.
7-
Expanding influence to other neighboring economies, which in turn, start to
open to the World.
8-
Stabilizing its political system, from autocratic regimes to liberal,
democratic rules, and increasing public interest in solving the most pressing
social problems.
2- Emerging Market Risk Profile
v
Risk design principles for companies in emerging markets:
· Hedge risks that are not specific to the organization.
· Beware the effect of decision-making under uncertainty.
· Allow two-way communication with emerging market operations and
be
prepared to hear the truth.
· Link risk management with performance assessment.
· Structure risk approach to reflect the business model.
· In general, manage risks at their source.
v
Key risks in emerging markets:
§
Developed market view:
ü
Political
ü
Currency or treasury
ü
Compliance (laws & regulations)
ü
Trade credit or customer insolvency
ü
Market or competition
ü
Operational
ü
Supply chain
ü
Workforce
ü
Pricing
ü
Security
ü
Fraud, bribery & corruption
ü
Financial reporting
§
Emerging market view:
ü
Market or competitive
ü
Currency or treasury
ü
Political
ü
Compliance (laws & regulations)
ü
Pricing
ü
Trade credit or customer insolvency
ü
Workforce
ü
Tax
ü
Operational
ü
Transactional
ü
Supply chain
ü
Technology
| 
