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      "text": "Indeed, in transactions where the price paid exceeded 10 times EBITDA, Bain analysis found that the winners had an average of more than three winning factors.",
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      "text": "Although GPs face a tough challenge, they can find much to emulate in the experience of Hellman & Friedman, a leading San Francisco–based buyout firm, and JMI Equity, a growth equity firm based in Baltimore. These firms partnered to acquire Kronos in a public-to-private transaction in mid-2007. Paying $1.8 billion—some 17 times EBITDA—for the business software developer, the partners identified potential for continued growth beyond Kronos’s core strength in workforce management software deeper into the adjacent area of talent management that warranted the high price. The GPs backed up their conviction by supporting Kronos’s acquisition, in late 2007, of Deploy Solutions, a provider of software used in the selection and hiring of job candidates. The move enabled Kronos to broaden its portfolio of services and gain access to Deploy Solutions’s high-profile client base. By May 2014, Kronos became the first vendor in its field to surpass $1 billion in revenue. At the same time, its PE owners recapitalized the business through a $750 million equity investment by Blackstone Group and GIC, the Singaporean sovereign wealth fund, and arranged for Kronos to use part of the proceeds to pay Hellman & Friedman and JMI Equity a special dividend. This transaction, combined with earlier dividend payments, has netted investors more than five times their initial equity investment. Today Kronos has an enterprise value of $4.5 billion, and Hellman & Friedman and JMI Equity still own a majority stake in the company.",
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      "text": "Valuations recovered as plentiful capital pushed asset prices higher on a swell of market beta. Now, however, capital superabundance and low-cost leverage have pushed asset prices to new heights, extending holding periods and stripping away the opportunities for GPs to expect market beta to boost returns.",
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      "text": "The lesson successful GPs are drawing from this pattern of “same causes–different results” is that capital superabundance is here to stay and they can no longer rely on beta to do the heavy lifting. Instead of waiting for beta to do their work for them, they are stacking the odds in their own favor. Leading GPs are stepping up their due diligence to ensure that they can identify the winning factors in a target company that can become the basis for a value-creation plan that can withstand any economic or market climate. Bain research has found that for companies acquired in deals where the acquisition price was high, the presence of more than one winning factor was critical to their ultimate success. Indeed, in transactions where the price paid exceeded 10 times EBITDA, Bain analysis found that the winners had an average of more than three winning factors.",
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      "text": "Institutional investors have been spreading their wings in recent years, experimenting with new ways to participate in PE deals beyond the conventional constraints of being passive partners in PE funds. It’s a development that is generating a lot of buzz in the PE community—and raising a host of sensitive issues for GPs. At the heart of the discussion is the emergence of so-called “shadow capital”—the vast sums of money that institutional investors are putting to work in new ways apart from their traditional role as limited partners in a PE fund—and the potentially large part it will play in the evolving GP-LP relationship in the future.",
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