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Spear Phishing: Who’s Getting Caught?

2013-05-22T20:00:54Z

Online security threats are something we’ve all heard about, but do you know how big the threat really is?

The stereotypical view of somebody sitting alone in their basement hacking into your Facebook account is now outdated. Hackers are becoming much more sophisticated.

Professional groups of highly skilled hackers, sometimes government backed and politically motivated, are targeting an ever increasing number of corporations. These attacks are not random, but rather targeted and persistent. A 2012 whitepaper by security software provider, Symantec, suggests that “Victims are attacked, not for petty crime or theft, but for the wholesale gathering of intelligence and intellectual property.”

The most common means of infiltration is spear phishing - crafting a convincing email purportedly from a trusted source that, when opened, infects the victim’s computer. If it sounds too simple, don’t be fooled. Spear phishing emails have improved tenfold in just a few short years and are now virtually impossible to detect by the untrained eye. Even the most security conscious organizations are falling victim to spear phishing, like RSA Security in 2011. The problem is “humans trust email as a platform, and that’s [our] first downfall” (Mimoso, 2012).

As a cloud-based virtual data room provider used to securely share confidential documents, Firmex takes a great interest in discussions around online security. We’ve brought together the following Infographic to explain the growing threat of APT attacks, and how spear phishing is impacting the corporate environment.

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Beyond M&A: Alternative Uses For Your Virtual Data Room

2013-05-16T13:00:06Z

Most of us, at one time or another, have made a mistake when it comes to sending an email.

Perhaps you've made an error but pressed send too quickly, attached the wrong document, or emailed the wrong person entirely! The situation is usually more of an embarrassment than anything else, but the repercussions are more serious when confidential information is involved.

In March 2011, Maria Fernandes was on the receiving end of such an error. As Director of Client Services at a healthcare communications company in Ontario, she accidently received an email discussing whether or not she should be fired. The Director of Operations had intended to send the email to the company’s lawyers, but did not realize that Fernandes was also on the list.

In a panicked effort, the Director of Operations sent three (unsuccessful) recall notices, and an email to Fernandes directly, asking that she delete the message without opening it.

Too late! Fernandes read the email, treated the information as a constructive dismissal and hired a lawyer. She left the company a few weeks later and is now suing her former employer for wrongful dismissal.

The lesson here is that all of us should be much more careful when communicating sensitive information electronically.

Firmex customers are increasingly realizing the value of their virtual data room beyond M&A transactions. Firmex can also be used within other departments, such as Human Resources, which deal with highly sensitive information. Containing such information in a controlled, online document repository reduces the risk that it will be leaked, or fall into the wrong hands.

HR is just one of many departments in which Firmex can provide value. Customer feedback also indicates that Firmex is being used by IT, Marketing and Financial departments, to name just a few. Our virtual data room platform provides them with a secure location to store and exchange things like external vendor quotes & contracts, client briefs, design mockups, financial reports and audit documents.

With a subscription, Firmex customers can run an unlimited number of projects throughout the year for one fixed price. It therefore makes sense to use Firmex for a broad range of secure document sharing needs. For more information about upgrading to a Firmex subscription, contact our Sales Team.

Keystone XL: Job Prospects Likely to Override Environmental Concerns

2013-05-14T13:00:08Z

TransCanada’s four-and- a-half year wait for a presidential permit to build the Keystone XL Pipeline should soon be over.

By this fall, President Obama is expected to make a decision on whether construction of the 1,900 km pipeline from Alberta to Nebraska - where it will connect to an existing pipeline that leads to refineries on the Gulf Coast - will be allowed to proceed.

The window for public comment on the U.S. State Department’s Draft Supplemental Environmental Impact Statement (SEIS) is closed and the stage is set for a final SEIS.

The $5.4 billion pipeline has been controversial since it was first proposed in 2008.

Supporters argue it will bring jobs and conflict-free oil to the U.S., while opponents say it will lead to unacceptably high greenhouse gas emissions from Alberta’s oil sands and threaten human health and water supplies.

A key message from the state department’s draft report is that the proposed pipeline, though it would add 830,000 barrels of oil per day to supply at full capacity, will not have an impact on global emissions of greenhouse gases because producers will simply find alternatives routes to market if Keystone XL is rejected.

There have been three significant developments since Obama turned down TransCanada’s first proposal in 2011:

TransCanada has altered the route to avoid the environmentally sensitive Nebraska Sandhills, receiving the blessing of the Governor of Nebraska as a result.
The Democrats are looking to wrest control of the House Of Representatives from the Republicans in the 2014 midterm elections, partly by appealing to Midwestern blue collar workers seeking employment
Increasing production of shale oil in North Dakota and elsewhere in the U.S. is reducing the demand for the heavy crude from Alberta’s oil sands.

Keystone XL: The Pros

An estimated 15,200 direct jobs (13,000 in the U.S. and 2,200 in Canada, mostly during the construction phase), plus another 7,000 indirect jobs in manufacturing the pipes and fittings.
Potential for billions of dollars in export and GDP growth in Canada.
$5 billion per year in property taxes over the life of the project.
Reduction in U.S. dependence on oil from Venezuela and the Middle East.

Keystone XL: The Cons

An extra 27 million tonnes of greenhouse gases entering the atmosphere every year compared with conventional oil (though some argue that production in the oil sands will increase with or without the pipeline).
The potential to damage human health, pollute land and water, and disrupt of the habitats of endangered species, particularly if the line is damaged or fails.
Most of the jobs created will be temporary, not permanent.

Majority of Americans disagree with activists

Former U.S. vice-president Al Gore recently told The Globe and Mail that Canada is damaging relations with the U.S. by supporting the pipeline and oil sands development and “adding to the reckless spewing of pollution into the Earth’s atmosphere as if it’s an open sewer.”

But a recent poll by the Pew Research Center indicates that despite vocal protests against the pipeline, including arrests of high profile activists and celebrities outside the White House, most Americans support the pipeline. The poll surveyed 1,500 Americans by phone and found that 66% of them are in favour of building the pipeline while only 23% oppose the project.

In the end, it may come down to politics

With mid-term elections approaching in 2014, Obama cannot afford to squander an opportunity to gain control of the House of Representatives. Winning over blue collar voters in the Midwest will help him do that.

The promise of thousands of jobs after a long and brutal recession, even if they are temporary, is a powerful carrot. As Obama said in recent speech to Democrats in San Francisco:

“If you haven’t seen a raise in a decade. If your house is still $25,000, $30,000 underwater. If you’re just happy that you’ve still got that factory job that is powered by cheap energy … you may be concerned about the temperature of the planet. But it’s probably not rising to your number-one concern.”

Virginia Heffernan is a former geologist who writes about mineral exploration and mine finance. She draws upon her formal education and visits to projects in North America, Central America, South America, China and Africa to provide unique insights into the sector.

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Top 10 M&A Quotes

2013-05-09T13:00:35Z

“Dealmaking [is] a profession unto itself – the world’s highest paying profession. Things don’t just fall into place by accident. A good dealmaker understands that it’s his job to finesse things into place.” – Anonymous

If you look at the great dealmakers of our era – Donald Trump, Warren Buffett and Mark Cuban, to name just a few - the one thing that separates them from the pack is their innate ability to identify and close lucrative deals.

Mastering the art of deal making is no easy task, but a necessary skill for transforming an everyday business into a world-class business empire.

Have prominant dealmakers failed along the way? Sure. But, in Donald Trump’s own words, “What separates the winners from the losers is how a person reacts to each new twist of fate.”

Many in the M&A industry look to industry leaders like this for inspiration in their own professional careers. Firmex brought together some of the greatest M&A quotes of all time, to celebrate the true art of deal making.

Top 10 M&A Quotes from Firmex

Did we miss a good one? Add your favorite quotes in the comments below.

7 Advantages of Reverse or Vendor Due Diligence for Investment Bankers

2013-05-07T13:00:31Z

When a business owner decides to sell their business, the need to objectively assess the current condition of the company can often be overlooked. In failing to do this, the seller weakens their power of negotiation with potential acquirers. The best way to address this is through reverse or vendor due diligence.

Both processes involve having a third party assess the company in the same way that a buyer would, before taking the company to market.

With vendor due diligence, the results of this assessment are presented in a report to prospective buyers. This helps demonstrate that a third party has examined the company’s structure, and reassures buyers that any preliminary due diligence holes have been identified. With reverse due diligence the results are kept confidential by the seller.

Vendor or reverse due diligence allows the seller to prepare for issues that frequently arise in the sale process. According to Baker Tilly, a full-service M&A advisory firm, both processes involve the following:

An assessment of quality of earnings
Quality of assets
Tax due diligence
Commercial due diligence (especially if the future revenue stream of the company is critical to the sale)
Operational due diligence (if the operations are proprietary or otherwise critical to the value of the company)

Vendor or reverse due diligence provides the following advantages to sellers and their investment bankers:

1) Provides the seller an opportunity to fully explain issues or circumstances that could be perceived as flaws by prospective buyers.

2) Allows the seller to prepare for the questions and document requests that will invariably be part of the buyer’s research.

3) Identifies potential deal issues for the investment banker, to develop appropriate negotiation strategies.

4) Provides the investment banker with verified data to include in the Confidential Memorandum (and data room), which can assist in keeping any renegotiations to a minimum.

5) Minimizes the potential for surprises from the buyer’s due diligence.

6) Irons out potential kinks, thereby keeping a prospective purchaser in the process longer and extending the “competitive tension,” to maximize the price and structure for the seller.

7) If vendor due diligence is thorough enough, it can help minimize the exclusivity period. The buyer need only roll forward the data required to validate their investment thesis.

Vendor or reverse due diligence is typically the last step performed before selling a business. However, it can also be conducted well in advance, to allow owners adequate time to correct or modify issues prior to exit. And if the end result is a higher business valuation or greater negotiating power, then it’s well worth the investment.

Seven Tips For Better Law Firm Security

2013-05-03T13:00:23Z

We often highlight articles that would be interesting and relevant to the Firmex community. We thought you might find the following article by Peter Coons from The Daily Record insightful. The article highlights the regulatory and ethical obligations of lawyers to protect their clients' information and provides 7 practical tips for enhancing your firms security.

Corporations allocate significant time and money for protecting their digital intellectual property. If you have ever met an information security professional, you know that they take their jobs seriously. Security is the reason the typical end user has to call IT every time they want to install an application. It is not job preservation; they are trying to protect the organization from malware, viruses and hackers, and sometimes the company’s own employees.

So what happens when outside counsel shows up and wants to extract email from the archiving system because the company is being sued? Usually what happens is the lawyers get the email and the security guys are holding their breath.

Are they nervous? Is there any reason to be? Two weeks ago I was in California at a client location, let’s call them CORP ABC. The week prior, outside counsel visited CORP ABC to collect emails and MS Office type documents in preparation for litigation. Clear instructions were provided to outside counsel that the collected data must be encrypted prior to shipment to D4 in Rochester.

When we received the data, we found it was not encrypted and the drive was marked CORP ABC Lawsuit. On the drive were thousands of confidential files, privileged emails, and a database that contained the “secret sauce.” If this drive was lost or stolen, it would have been disastrous for all parties involved.

Once possession of that data was transferred from ABC to the law firm, they became the custodian of that data. I would argue that they had a professional and ethical obligation to protect it.

ABA Model Rule 1.1 states that: “Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”

ABA Model Rule 1.6 generally defines the duty of confidentiality and broadens that duty to “information relating to the representation of a client.”

This surely applies to digital information and the data collected from CORP ABC.

Additionally, Comment 16 to 1.6 reads: “A lawyer must act competently to safeguard information relating to the representation of a client against inadvertent or unauthorized disclosure by the lawyer or other persons who are participating in the representation of the client or who are subject to the lawyer’s supervision.”

In the example above, did the law firm comply with its ethical obligation to safeguard their client’s data?

The scenario I outlined above is not extreme. Too often I see little thought or effort put towards protecting client data that is in the custody of law firms. Don’t simply take my word for it. In late 2011, representatives from New York’s top 200 were asked to meet with the FBI’s cyber division in New York City.

The general message from the FBI was that hackers are targeting law firms to access data about their corporate clients and law firms are woefully unprepared to handle the onslaught. One security firm estimates that 80 major law firms were hacked last year. The general consensus is that law firms are soft targets.

Mary Galligan, who heads the FBI division that held the New York meeting, stated, “as financial institutions in New York City and the world become stronger, a hacker can hit a law firm and it’s a much, much easier quarry.” Right, why try to hack the bank when you can hack the banker’s lawyers?

In Canada, seven law firms were hit in 2010 by Chinese-based hackers. The hackers were attempting to get the inside scoop of a $40 billion acquisition. One of the law firms involved identified the attack and they traced the intrusion to spyware that was installed after an employee opened a spoof email.

Seven tips to better security

1. If you are going to outsource any part of the legal process to a third-party (e.g. e-discovery vendor), then vet that entity. Thoroughly investigate their security policies. Do they run background checks on their own employees? Where will the data be located? Insist on a site visit to verify what you are being told.

2. Talk to your IT staff at your company and get a handle on your network. At the FBI meeting discussed earlier, law firm representatives were told they need to diagram their networks and to know how computer logs are kept. “Some were really well prepared,” Galligan said. “Others didn’t know what we were talking about.” Are there rogue access points or servers on the network that are not secure?

3. Make security a priority. If the managing partner at the firm isn’t buying in to the security craze then you can bet no one below is either. Make it part of your company’s culture. Many big law firms are touting their security prowess to attract bigger clients. So putting security at the top of the list can also have the benefit of getting (or holding) clients. Security makes good business sense!

4. Encryption is free. I love free stuff. You have to protect data that is on your laptop, iPhone, iPad, etc. You most likely have client data on one or multiple devices that you take outside the corporate firewall. When data is in transit it needs to be encrypted. There are plenty of free encryption tools out there so there is no excuse.

5. Education. This one could actually be 1 through 7. Educating your staff about security is probably the best way to keep data safe. Educate employees about spoof emails and why they should be deleted and not opened. You can have all the best security measures, but if people are not aware they are not worth a hill of beans. It is possible that in my CORP ABC scenario that the person that sent the data unencrypted had no idea what they were doing was wrong. Isn’t there some saying about ignorance and the law?

6. Passwords. I know it is simple, but it’s worth repeating. Use capital letters, symbols and numbers; don’t use family names, pet names or birthdays. I saw a funny cartoon recently that had a picture of a dog with the caption, “… someone found out my password and now I have to get a new dog.”

7. Don’t use open Wi-Fi spots. This means when you are in Starbucks don’t connect to the wifi on your iPad and start looking at client documents. If you travel a lot and need to access sensitive documents then talk to your IT staff about accessing those files securely.

One hundred percent security can never be achieved. The goal is not to be a soft target. Most hackers will move on to the next victim if they find your systems difficult to penetrate. Is your law firm doing all it can to safeguard client data?

Peter Coons is a senior vice president at D4, providing eDiscovery consulting services to clients. He is an EnCase Certified Examiner, an AccessData Certified Examiner, a Certified Computer Examiner (computer forensic certificates) and is a member of the High Technology Crime Investigation Association, the professional organization for people involved in computer forensics.

Content courtesy of The Daily Record.

Renewable Energy Sector Gets Boost from MLP Parity Act

2013-05-01T12:00:43Z

In an effort to capture the economic benefit of the growing renewable energy sector, lawmakers have proposed new legislation that would allow clean energy producers to form Master Limited Partnerships (MLPs). MLPs are set up to allow companies to raise funds in the same way as a corporation does, and to pay taxes as a partnership. The MLP structure allows the business’s owners to pay tax on their individual tax returns, while providing the flexibility and opportunity to raise capital from smaller investors directly from the stock market.

The oil and gas industry currently uses MLPs to build capital-intensive energy infrastructure, however clean energy businesses are barred from accessing the same tax mechanism. The proposed new Master Limited Partnership Parity Act would change that, expanding MLP financing to clean energy projects.

A Brief History of MLPs

Apache Oil Company formed the first MLP in 1981, and the idea quickly spread to other industries including restaurants, hotels, and even a team in the National Basketball Association.

Six years later, Congress limited publicly traded partnerships (including MLPs) to partnerships in which 90 percent or more of their income comes from qualified sources.

In the energy sector, this includes mineral extraction, natural gas, oil, pipelines, geothermal, and the transportation and storage of ethanol, biodiesel, and other alternative fuels. Other renewable energy generation and commercial nuclear activities do not qualify.

MLPs Today

The market value of MLPs in the U.S. is more than $350 billion.
About 81 percent of MLPs today are in the energy and natural resources industry, with investment and financial services making up most of the rest.
Most of the energy MLPs constructed today are related to oil and gas activities; 52 percent of MLPs are in midstream and downstream activities, and 14 percent are in oil and gas exploration and production.

Proposed MLP Parity Act

MLPs provide an opportunity for U.S. businesses to mobilize capital and better compete. The oil and gas industry is in support of expanding MLPs to include renewable energy companies. Earlier this week, the American Petroleum Institute, the main lobbying group for the petroleum & natural gas industry, came out in support of the MLP Parity Act, as a way to "wean" the renewable energy sector away from federal subsidies. By expanding the list of qualifying projects to include solar, wind, geothermal, and other clean energy and transmission technologies, renewable-power projects could access new financing markets, thereby increasing investment and deployment of clean technologies.

As expected, the bill is supported by the renewable energy industry and environmental groups, but is also attracting support from policy organizations and companies such as NRG Energy and DuPont. If approved by Congress, the MLP Parity Act could lower financing costs for clean energy projects, some by as much as 50 percent.

“This bill is an important step toward providing the clean energy sector with consistent, long-term policy that can help leverage private capital and provide certainty to investors and companies alike,” says Phyllis Cuttino, Director of PEW, a charitable trust dedicated to improving public policy to protect terrestrial and marine life.

A draft proposal of the bill is already in the works, and it couldn’t come at a better time, with investment in clean energy at its lowest point since 2009. Expanding MLPs to include the renewable energy sector could be the extra incentive new investors need to revive clean energy capital.

Sources: Nicolas Loris, The Heritage Foundation; PEW Charitable Trust; Helix Investment Research

Law Firms a Primary Target For Hackers

2013-04-24T14:00:28Z

Despite enormous and increasing resources devoted to protecting confidential information, security breaches continue to plague the legal industry. Hackers are deploying some of the most sophisticated attacks ever seen, and law firms are a primary target. Law firms are storehouses of valuable information, of interest to everyone from organized crime to spouses in marital disputes.

Daniel Tobok of Digital Wyzdom Inc, a security consulting firm based in Toronto, said some in the legal world have been slow to realize just how serious the hacking threat is, although IT departments are doing the best they can. "Sometimes they have a false sense of security," he said of companies in general. "After they get attacked, they understand that they have to invest a little more."

A security breach can be an dangerous and expensive lesson for law firms, hurting not only their bottom line, but also the trust and confidence of their clients. It's far better to learn from the mistakes of others than to wind up in the same situation.

Here's just some examples of how lawyers and legal administrators are falling victim to hackers:

Example 1

Last year, a law firm in Virginia fell victim to a spear phishing attack, with hackers infiltrating the firm’s email system and publishing confidential emails related to a high profile case. In addition, the hackers defaced the firm's website and posted their own public message. Of the emails that were published, one read: "Because we did so well on the case, a group of reckless international hackers stole all of our law firm emails to publish on the internet today. Not sure how this will affect the business of the firm going forward, but for now, we're not able to do any business." In another email, an employee tells her mother not to open any email from her work address and closes with: "This may completely destroy the Law Firm."

Eample 2

Another law firm in North Carolina reportedly got scammed over $300,000 after a hackers used a batch of emails with suspect links to install a keylogger on at least one law firm computer. With this keylogger, they were able to obtain the firm's online banking passwords and make direct transfers into their own bank account. In this instance, the law firm not only lost $300,000, but is now involved in a litigation case with it's own bank, which claims that under state and federal law they do not have to restore funds lost through fraudulent activity for commercial customers. In other words, the burden of loss is with the law firm.

Example 3

In yet another example, lawyers at a major Canadian law firm working on the proposed acquisition of a Chinese company received emails that appeared to be from a partner working on the deal. The email was in fact a fake, and contained an attachment that included hidden malware. Once opened, it infected dozens of computers in the firm. Malware of this kind can sit on a computer undetected for months, stealing reams of information before anyone realizes security has been breached. And there is no question that sensitive information stolen from a law firm on an impending merger or acquisition has value: It could be used to sabotage a deal, it could be sold to rival bidders, giving them an advantage in negotiations, or it could be used to conduct illegal insider trades.

Download our free whitepaper to learn more about the tactics hackers are using to target law firms, the risk factors to be aware of, and how you can protect your firm.

Top 10 Security Breaches

2013-04-17T14:10:46Z

As corporations become more reliant on modern technology, they also become more vulnerable to online attacks. Corporate cyber crimes are on the rise, and can cause serious harm to an organization’s bottom line. In 2010, the Ponemon Institute estimated that the average cost to companies affected by cybercrimes was $3.8 million per year. That rose by a staggering 56% in 2011, to $5.9 million per year!

Corporate online attacks are not only costly, but are also becoming more frequent. “We have seen a 40 per cent rise in the theft of intellectual property since the 2008 recession,” said Daniel Tobok, President of Digital Wyzdom Inc, a security consulting firm based in Toronto. What’s even more alarming is that corporate cybercrimes could be playing a dangerous role in international cyber warfare.

Cyber security firm Mandiant recently linked China to cyber espionage and attempts to steal American trade secrets. In February, the Obama administration raised the prospect of new trade measures against China, and other countries, as part of a new strategy to take on corporate espionage.

“Confidential information is the new currency crooks are after,” says Daniel Tobok, and it seems that no company, regardless of industry or size, is safe.

As a virtual data room provider used to securely share large volumes of sensitive information, Firmex takes a great interest in the corporate security landscape. We’ve seen a growing number of reports on corporations being hacked. Firmex has therefore brought together a list of the Top 10 Security Breaches, to highlight the very real impact corporate cyber crime is having in North America.

Can you think of more examples? Leave your thoughts in the Comments below.

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Can Lackluster Q1 Results Be a Good Sign for Post-Closing M&A Success?

2013-04-11T17:00:39Z

Despite five deals announced in February worth $91 billion, Q1 2013 was not a booming quarter for M&A activity. Though deal value was around 10 percent higher than Q1 2012, it was still 26 percent lower than Q1 2011. Deal volume was also down, with a mere 8,115 deals announced worldwide - the lowest since 2003.

These results are somewhat surprising, given the predictions that were made by bankers and lawyers about a nascent revival in mergers in 2013.

In March, 97 percent of deal makers surveyed by the public relations firm Brunswick Group said they expected more deals to be announced in North America this year than last.

But if Q1’s results are anything to go by, it seems that there is still some trepidation on behalf of dealmakers to make big deals.

However, Q1’s lackluster performance is not necessarily a bad thing for the M&A market.

Dealmakers are being cautious; not rushing into deals that may result in careless due diligence oversights and costly post-closing issues. It’s hard to forget the infamous AOL/ Time Warner disaster of 2000, when a rushed due diligence process (reportedly done over a weekend), resulted in the largest annual loss ever reported by a company.

Perhaps a slower deal environment signifies a more cautious approach to the due diligence process, and a deeper consideration of intangible deal variables, like cultural integration. In a recent Firmex podcast, Andrew Sherman, a Partner at Jones Day, cited culture as one the greatest barriers to effective post-closing integration.

“Most studies have shown that for all the deals that do not integrate as effectively as they should, among the top three issues are culture, information systems, and compensations & reward systems not integrating,” he said.

In certain industries, culture will play a more integral role to the success of a deal than others. Consider the technology sector as an example. Employees are the biggest and most important assets in a technology company. If employee satisfaction cannot be maintained after the acquisition, then the combined company risks losing talented employees. The buyer should thoroughly assess the target acquisition’s existing culture and make key employee retention a core focus in the planning and execution of the deal.

Sherman also suggests buyers’ compare and contrast how people are motivated, incentivized and rewarded, because as two companies merge, this will play an important role. In some cases the challenge becomes upholding the norms and values that employees have grown accustomed to.

Last year Firmex CEO, Joel Lessem, attended a M&A Leadership Council workshop on post-merger integration. In a follow up article, he referenced some great anecdotes that were shared, including one about an acquired software company which had an ongoing tradition of “monthly movie night.” The tradition was hugely popular among the employees, but it was one of the first things cancelled by the acquirer to improve net income. Employees were outraged, and started leaving the company soon after, which far outweighed the cost savings from cancelling the event.

“The true assets of a business are not the cash it generates, but the people who make this happen. Greater attention needs to be given to who the key people are (not just the executives) and why they like working there. Ensure you foster what is important to them,” explained Mr. Lessem.

Cultural integration is a difficult, complex and sensitive process; there is no rigid one-size-fits-all recipe for success. Cultural due diligence is intangible; it can’t be examined through data or on paper. “It’s something you have to go and feel and touch and experience,” explains Sherman; something that often fails to occur.

Ultimately, the acquirer must evaluate the cultural differences between the two companies, and find ways to bridge the gaps. But as we’ve seen from past examples, like the failed $36 billion Sprint/Nexen deal, this can’t always be done. Chak Reddy, M&A Advisor for Elite Mergers and Acquisitions, suggests that if the cultural gaps are too substantial, then it may be in everyone’s best interests to terminate the deal and find a more suitable partner.

“Post-closing issues can develop quickly if the culture of the acquired company is substantially different from that of the acquiring company. Cultural clashes will reduce the productivity of the combined company, which may lead to delayed product/service executions, increased costs, loss of key employees and high turnover,” he said.

So, perhaps a slow Q1 is a good sign for M&A, especially if it means a more cautious approach to the due diligence process, and a deeper consideration of the intangibles, like post-closing cultural integration.

For more on post-closing integration, check out this Firmex webinar recording with guest speaker, Andrew J Sherman: Ensuring Success in Post-Closting Integration

How to Stretch Your Legal IT Budget - Advice from Stretch Armstrong

2013-04-09T12:00:50Z

In the wake of budget season, and with ILTA just around the corner, Jeffrey Brandt offers some practical advice on how to make your legal IT budget stretch a little further this year.

All law firms are looking to better manage costs, and to many firms that has meant slashed technology budgets.

While the 2012 ILTA/ InsideLegal Technology Purchasing Survey reveals that overall law firm technology spending remains down from the recession, there is some hope. A little more than half of the respondents were looking at minor budget increases over 2011. But that still leaves the legal technology budgets for the rest of the law firms flat or down.

With technology such a significant percentage of a firm's expenses, what can you do to stretch those budgets, to maximize those investments?

Let's take some advice from Stretch Armstrong and see what we can do to our budgets. Keep in mind the three-legged stool - people, process and technology. Look to see if you can make improvements in all three areas, maximizing the use and the value of your technology.

Maximize What You Already Have Before You Invest in Something New

Is that new software tool going to provide the benefits expected? Is it worth the investment and added complexity to the environment? Do those newest set of software releases provide new, truly needed, functionality or bug fixes? Look for similar tools that have been added over the years and see if they have provided a real ROI and, if not, eliminate them. Don't add something that won't benefit your clients.

Review Your Training, Your Processes and Procedures

Is everyone in the firm using Word, Excel and Outlook to the best of their ability? Can they file and retrieve documents quickly and efficiently in the document management system? What about the numerous other applications available in the firm? Train them up, make them more efficient and self-supportive. Review the work flows, the processes and procedures around the use of the different tools you have. Can they be improved and save the firm time, money and energy?

Leverage Your Buying Power

Depending on the reporting structure of your firm you may not be aware of the potential purchasing power you have. IT, library, marketing and litigation support often buy different products and services from the same vendors. While you're looking at your vendors, review all contracts with an eye at extracting extra value. You won't always be able to do so, but the review process alone is worthwhile.

Revisit Your Vendors

Have your vendor relationships become "comfortable?" That can be good or bad. Work with your vendors, ask them for discounts or free shipping, extended warrantees, things to add value to your purchase. The answer might be no, but you'll never know if you don't ask.

Understand Your Own Budgets

The bigger your firm, the more line items in your technology operating and capital budgets, and the more items get 'lost' from year to year. I have spoken to IT directors who are quite chagrined to find out that they've continued to pay maintenance on the software or module that they retired last year. If you haven't moved to zero-based budgeting, do so. Review every line of the budget yearly, making choices as to what stays and what goes.

Have the Right Staff

I would personally rather have a great team than a group that relies on 'super star' individuals. Do you have a cohesive, motivated staff? Reward and recognize them. Empower them to make improvements to the areas in which they work. Keep your staff informed on the big picture. The more they know, the more they can make informed changes and adjustments as they go along, contributing to the bottom line. Pigeonholing people usually results in reduced motivation, poorer decisions and erratic cost containment.

Waste Not, Want Not

Good project managers and project management skills pay for themselves. They help keep projects on task, on schedule and on budget. You don't need to make everyone a certified PM, but expose all your staff to the basics of good project management. Depending on your size and scope of IT projects, hire an internal or external project manager. Track your projects, conduct post mortems and learn from the successes and failures of each project.

Understand Your Business

A good CIO knows his firm's business. As you create your budget, item by item, prioritize those goals based on the business objectives that they support. The more business objectives supported, the easier the projects are to justify and the more value they have to the firm.

Think Outside Your Current Box

Do some 'blue sky' thinking. What would you do differently if you could start over? Look at the myriad of free and open source tools that are available. Examine 'nearly new' instead of new purchases. Reexamine the buy/lease scenarios. Reduce your paper consumption and go green. Install PDF print drivers on every computer. The possibilities are endless.

Stretch Armstrong's claim to fame was "stretches to 4 time’s actual size." Seeing your budget stretch that far would be fantastic. All these things may not have an individual line entry in your technology budget, but they can make drastic contributions to your bottom line budgeting. What are you waiting for? Go for it!

Jeffrey Brandt is a former AmLaw 100 Chief Information and Knowledge Officer with over 25 years experience in Legal IT. Keep the dialogue going on Legal IT budgets by connecting with Jeffrey on Google+, LinkedIn or following him on Twitter @jeffrey_brandt.

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Global Mining Deals – Top 2012 Deals and 2013 Deal Outlook

2013-04-04T15:00:03Z

We often highlight articles that would be interesting and relevant to the Firmex community. We thought you might find the following PwC research report insightful, analysing the top mining deals of 2012 and the deal outlook for 2013.

Down But Not Out

It was far from the most active year for mining mergers and acquisitions (M&A), but 2012 had its share of exciting transactions and trends.

The obvious deal-of-the-year was the $54-billion blockbuster merger between Switzerland-based Glencore International and UK-based Xstrata, to form the world's fourth-largest diversified miner. There was some controversy around the deal in terms of offer price and retention bonuses, but as it works its way through final regulatory approvals, “Glenstrata” is expected to go down in history as one of the largest mining marriages in history.

Commodity Prices Rebound

There was some concern when the deal was announced in February 2012 that it might have cursed commodity prices, which took a dive in the first half of the year. However, as 2012 wound down, prices of gold, silver, copper, zinc and other metals rebounded. Market volatility is expected to continue, but miners are confident that demand from resource-hungry nations such as China will continue to feed demand for years to come.

Precious Metals Shine

While “Glenstrata” dominated news headlines, 2012 was not a one-hit wonder for M&A activity. Copper was the most sought-after metal when measured by deal value in 2012, and evident in First Quantum Minerals Ltd.’s $6.7 billion hostile bid for Inmet Mining Corp. That said, copper couldn’t outpace gold in terms M&A deal volume. While 2012 didn’t yield any blockbuster gold deals, the mining community did witness plenty of interest in the gold space. The two largest gold deals in 2012 included Pan American Silver Corp.’s $1.4-billion purchase of Minefinders Corp. Ltd. and B2Gold Corp.’s $1.2-billion purchase of CGA Mining Ltd.

Escalating Costs Bring Both Write-Downs and Opportunities

M&A activity across the sector was driven by a drop in equities prices as a result of general market jitters, as well as the rising costs for construction, labour and raw materials that have squeezed profit margins, in some cases causing billion dollar write-downs and project delays.

On the flip side, for some major miners with money to spend, the lower valuations created buying opportunities. Consider U.S. silver producer Coeur d’Alene Mines Corp.’s decision in early 2013 to buy Vancouver’s Orko Silver Corp. For $350-million, breaking up a deal Orko had made previously with First Majestic Silver Corp. At the time the deal was announced, CEO Mitchell Krebs noted that lower valuations and tight finance markets made it an attractive time to make a move.

Creative Fundraising

Companies with financial constraints have been forced to get creative when it comes to raising money to fund acquisitions or advance projects. We anticipate the need for creativity to continue well into 2013. Equity investors are still content to sit on the sidelines until a marked improvements in the markets appears. Expect miners to continue to consider the bond market to finance their projects, joint-ventures and royalty and streaming agreements.

New Mantras

What we don’t expect to see in 2013 are mega-mergers. With a rash of write-downs in 2012 related to significant acquisitions completed in prior years, shareholders are wary, not willing to stomach the risks associated with mega-mergers. Many of the CEOs associated with the announced write-downs have been replaced by CEOs peddling a new mandate, bottom-line growth.

Asset rationalization will be a key theme amongst senior miners in 2013. Many senior mining companies such as Barrick, BHP Biliton, Anglo-America and Rio Tinto have disclosed they are in the market to sell, not buy. As seniors look to divest non-key assets, intermediates with strong cash positions and a track record of successfully bringing projects on-line will be opportunist, looking for strategic “tuck-in” acquisitions.

In addition, seniors and intermediates looking to de-risk projects will pursue joint venture partners. We expect Chinese investors to display interest in these joint venture opportunities as they look into increase their global holdings in the resource sector. Joint-venture arrangements offer Chinese investors many advantages to that of a straight-up takeover, including the much desired transfer of skills and knowledge.

Junior Miners Join Forces

As for juniors, the road will remain bumpy. In the absence of available equity, in 2012 we began to see junior mining companies team up with one-another in an attempt to move their projects forward. Looking to pair the strength of one company with the strength of the other, junior mining CEOs are able to create a stronger, more resilient mining company, better positioned to ride out the equity down-turn.

Overall, those participating in the deal market will remain cautions not to overpay for assets or make investments that appear too risky to shareholders. While 2012 was already a disciplined year for M&A activity, miners will be equally as cautions in 2013.

View the full report.

Content courtesy of PwC.

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Due Diligence – War Stories and Best Practice

2013-04-02T12:00:41Z

Comprehensive due diligence is essential to any successful M&A deal, but getting it right isn’t always easy. Some of the biggest companies in the world even make mistakes.

Andrew Sherman is a Partner at Jones Day, a global law firm with over 2,700 lawyers, and has seen it all!

Andrew recently sat down with Joel Lessem, CEO of Firmex, to share his insights on due diligence best practice, from both the buy-side and sell-side perspective.

Transcript

Joel:	Hello, my name’s Joel Lessem and I’m the CEO of Firmex. I’m delighted to have with me today Andrew Sherman, who’s a partner at Jones-Day in Washington. Andrew is a renowned author of over 23 books on capital formation, M&A and entrepreneurship, and that’s what he practices at Jones-Day. He’s also been a guest speaker on the major networks in the U.S., including CNN, Bloomberg, CBS and a host of others. He’s been lauded as a top 10 mind in entrepreneurship. He’s also a teacher at both Marilyn and Georgetown universities. So I’m very honored today to have Andrew Sherman talk about M&A and the due diligence process. Thank you Andrew.
Andrew:	Thank you all, and thank you Firmex for having me this morning.
Joel:	The first question I have for Andrew is how should the seller prepare for M&A ahead of time and what kind of mindset should they have?
Andrew:	Well it’s a very good question. Let me go to mindset first because there’s a lot more psychology on the seller side in due diligence than people realize. One of the probably most important things to avoid in a mindset is what I call ‘Don’t call my baby ugly syndrome.’ You know, the truth is, many babies are ugly. Every company has warts. And the buyer’s job and the buyer’s counsel’s job is to find those warts and negotiate them and protect against risk accordingly. So, the mindset you need to go in is that you’re about put your entire business under examination and the less defensiveness and the less ego that you have, the more smooth the process will go. As far as preparation, begin early and begin often. It’s very important in this environment to be well prepared and diligent, to have a well populated, well organized and easy to navigate data room, but also to be ready for some of the inputs of due diligence that will augment that data room. Today’s buyer is a fickle buyer. They are a buyer that wants to avoid problems. They are a buyer that wants to avoid inheriting liability. And they’re expecting seller due diligence to be top notch
Joel:	Well that’s a good segue to our next question. How should a seller approach negotiation for negotiation to go smoothly?
Andrew:	Well the first thing is to develop a game plan, develop a framework, develop parameters. For example, let’s say that a seller has a lot of highly proprietary intellectual capital. They may want to phase the due diligence into two or three different stages. And understanding those stages; deciding who’s going to get to see what when, when will they get to see it, under what conditions will they see it, what you get pre-NDA, what you get post-NDA, what do you get during phase three due diligence? That game plan needs to be clearly communicated to buyers and their advisors and understood in advance, because if the buyer thinks that you’re holding something back, they become suspicious and that influences risk and ultimately influences valuation. So I think it’s very important to establish those parameters in advance and then everybody’s clear and nobody thinks that the seller’s playing due diligence games.
Joel:	Speaking of which, can you give an example of – in your experience - when a deal really fell apart because the due diligence wasn’t handled properly by the seller?
Andrew:	Yeah I was just on a panel last week with a very large general counsel of a defence and aerospace company. He was sharing a story where a seller had not properly organized its due diligence around a regulatory problem that it had. By not properly organizing its information and having a game plan on how and when that investigation would be shared with prospective buyers, the deal ultimately derailed not only for that particular buyer that was on our panel, but all buyers were turned off. I mean remember, we’re in a very interconnected world. A problem gets out quickly. It’s much more difficult to hide things under the rug if that’s your intent, in our web 2.0 driven interconnected world, and in this particularly regulatory environment, especially in the United States. As this general counsel said, even a whiff of a problem will be enough for us to turn up our tails and walk away. And you know, that’s a pretty low standard, even a whiff. You know, if I were thinking about selling my company and that’s the type of due diligence standard that buyers are clearly communicating, now is the time to really get organized.
Joel:	When you talk to a seller who perhaps has never gone through this process before, what are the three top things you advise him going through the diligence process, which could be quite rigorous and challenging at times?
Andrew:	Well I think you’re right. Rigorous and challenging I guess would be the first thing I would tell them – that this is not an easy process. You know, some sellers who have never been through this before or where they’re closely held family businesses, they think that they’re just going to have their secretary pull a bunch of files out of the cabinet and throw it into a data room, and that’s the end of it. You know, that is not what due diligence is about. I mean due diligence is an exploratory process where a buyer is trying to get to know everything there is to know about the seller, and it’s not just about dumping a few files into a data room and thinking you’re done. It’s a dynamic process. It’s a holistic process. You need to be ready for it. And probably the best advice I can give to sellers is to do what I call a mock due diligence session. Go through the process well before buyers are going to get involved and pre-identify where the issues are. You know, put on your hat as a buyer. Say: if I were buying this company today, what would be at turn off to me? You know, what would I be worried about? And then you give yourself plenty of time to address those issues, to anticipate them and ideally to fix them in advance, if you want to fix them. Now some people decide, “Hey, I’m selling the business sort of as is,” you know, kind of like selling a home as is. You know, yeah, there’s a hole in the wall the kids punched in two years ago. I’ve decided not to fix it. If that’s your decision that’s fine, but that needs to be fully disclosed to the buyers.
Joel:	And speaking of the buyers Andrew, when you advise buy side folks especially those buying a family business or private business, what advice do you give them?
Andrew:	Well a couple of things. Number one, due diligence today on the buy side needs to be multidimensional. So many companies have so many moving pieces. I mean just in this area, I was talking to a client yesterday about this. In the area of big data, data analytics, data forensics, I mean today’s due diligence teams cannot be just, you know, an ordinary general corporate M&A lawyer, an ordinary general corporate CPA and think that you’re going to have all bases covered. It could be that, you know, the database of their customer relationship management database is a much more important due diligence item in some cases than even the legal or accounting reviews. And so, be multidimensional, multidisciplinary in your tasks. Number two, look at it very holistically, you know. As important as the aggregation of data and the population organization the data room is, I get concerned sometimes that we’ve become – and I know this is not necessarily, you know, consistent with – well, I’m sure it’s consistent with your philosophy and focus – but I’m worried sometimes data rooms become a crutch instead of the strategic tool that they need to be, particularly among younger lawyers. Younger lawyers do due diligence. They’re so used to getting everything online, everything being available via their PDA or their laptop that they forget to augment data room due diligence with in person interviewing. You know, there’s still no substitution for looking somebody in the eye and asking them the serious, hard questions and see if they start sweating or squirming or fumbling. And you know, if you’re on the buy side and particularly if you’re watching this and you’re younger in the profession, be careful to, you know, to use the data room for everything that it is and can be, but also make sure that you augment that with on site and in person interviewing. It’s a comprehensive process. It always has been. And it’s my hope that it always will be.
Joel:	Well that leads I think to my final question Andrew. Companies aren’t data. And that’s a great segue into the importance of culture in a company and other sorts of intangibles that you may not see in a data room. How do these play in the equation of a successful acquisition?
Andrew:	Wow, get comfortable. I could probably talk for hours about this. Culture is not only one of the most important things that you are acquiring, or inheriting I should say. You know, you can’t really buy culture per se but you can certainly inherit it. And so the due diligence process needs to be highly driven on the efficacy of the culture, on the history of the culture. And that’s not something, as you correctly point out in your question, you can examine in an online data room. It’s something you have to go and feel and touch and experience. But the other reason your question is so astute is because culture is also one of the great barriers to effective post closing integration. You know, most studies have shown that for all the deals that do not integrate as effectively as they should, among the top three issues are culture, information systems, and compensation and reward systems not integrating. So you know, if you’re doing a deal where you really need to integrate your seller’s culture into your own, some of the top things to be looking at are what is that company’s existing culture? How much will it need to change or be shaped into your own? Number two: Is there alignment and communication by and among the information systems in the company? And three: Doing the compare and contrast on how people are motivated, incentivized and rewarded, because that’s another common area where things seem to fall apart after closing.
Joel:	Wonderful. Thank you Andrew. I much appreciate your words of wisdom. You have a great day and we’ll be talking again soon.
Andrew:	You too and thank you for your whole team’s coordination of this.

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PDAC 2013: Three Takeaways on Mining Financing

2013-03-26T12:00:48Z

On March 5th, the PDAC convention in Toronto hosted a session on Financing in a Volatile Market, chaired by Daryl Hodges, President of Jennings Capital, and Marc Mills, VP of Investment Banking for National Bank Financial. Here are three lessons that emerged:

1. Match the financing to the times

Selling shares may be the most popular means of raising money for mine development, but in today’s depressed environment for mining equities, companies must be more versatile in their financing strategy or risk serious dilution.

For Toronto-based Colossus Minerals, which is developing the Serra Pelada gold mine in Brazil, that means matching the financing to the times:

• In 2010 Colossus’s share price was soaring and the time was ripe to tap the equity markets. The company raised $69 million in a bought deal equity financing at $8.25 per share.

In 2011, with interest rates dropping and investors demanding yield, debt made more sense. Colossus raised $86.3 million by issuing units consisting of gold-linked notes and warrants. The notes mature at the end of 2016 and the company believes it can pay off the debt quickly with cash flow from the mine.
In 2012, when Colossus shares lost 30% of their value as investors abandoned the gold sector, streaming Serra Pelada’s byproducts – which represent about 8% of the NAV of the project - emerged as the most viable financing option. In exchange for US$75 million, Colossus gave Sandstorm Gold the right to buy 35% of the project’s payable platinum and palladium and 1.5% of its payable gold. In an interesting twist on the traditional streaming arrangement, Colossus has the option to buy back 50% of the stream for US$48.8 million.

Colossus has about $100 million in the bank and expects to begin full production later this year, ramping up to a thousand tonnes per day by the end of the first quarter of 2014. “We'll be able to pay back the loan and the stream with cash flow and retain the value of the project for shareholders,” says CEO Claudio Mancuso.

2. Anticipate start up problems, always

In an effort to demonstrate how traditional financing has failed the industry, metal streaming company Sandstorm commissioned a study that compared guidance on production to what the project actually achieved. It turns out that, over the past seven years:

Not one development project has made it to production on time
Even when the guidance was within a year of the production target date, 78% of the projects were late by an average of 8 months.
Total production in the first year was only 20-50% of the expected output.

The result? Debt obligations that can be difficult to meet and/or shareholders that jump ship or even start shorting your stock.

The moral of the story for Sandstorm CEO Nolan Watson - though take heed of the bias - is “Don’t take capital from people whose incentives are not the same as yours. When you are putting an asset into production, you will have problems and if your capital is not aligned you will lose your asset.”

3. Watch for opportunities to adopt orphans

Many of the companies who made expensive acquisitions when the industry was booming are now seeking to sell assets to generate cash and regain focus, said John Nyholt, a partner in the deals group of PricewaterhouseCoopers. Recent examples include:

Barrick Gold’s decision to put its African division up for grabs
Newmont Mining’s sale of the Hope Bay gold project in Nunavut
AuRico Gold’s sale of the Ocampo mine in Mexico.

Kinross Gold, which has suffered the wrath of shareholders for the overpriced ($7.1 billion) purchase of Red Back Mining in 2010, may be the next to rid itself of non-core assets. These orphaned projects represent opportunities for juniors nimble enough to finance them.

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The Past, Present, and Hopeful Future of Private Equity

2013-03-20T13:00:41Z

The reputation of the private equity industry is one that has undergone significant transformation in its relatively short history.

Corporate raiders, vultures and job killers are all terms to have haunted the industry, but was this ever a fair or accurate depiction? Or did private equity actually create jobs and, more importantly, better manage companies that contributed the US economy?

The Private Equity Transformation

At its inception around the middle of the 20th Century, private equity firms were known as buyout firms. They rebranded themselves as Leveraged Buyout Firms (LBO Firms) during the debauchery that was the 1980’s, rebranding for a second time into private equity during the 1980’s hangover.

The industry then went through an ironic “Golden Age” in the mid-2000s, when Steve Schwarzman’s lavish and gregarious lifestyle (and birthday party) truly pulled the industry by the collar into the direct spotlight, exposing an industry full of overleveraged deals, cheap debt, and bloated egos. It was uncomfortable for many executives, who were not prepared for the public backlash they got.

When asked who was to blame for this backlash, COO of The Riverside Company, Pam Hendrickson, simply said “us.” Hendrickson remarked that nobody in the industry was expecting to be thrust into the public spotlight and they should have been better prepared for it.

Private Equity Today

Given private equity’s tumultuous past, has the current state of the industry changed, and does its future look promising? Luckily, yes. Some of the current trends we're seeing include:

Middle Market PE Taking the Reins: Mega firms have taken a backseat to the middle market private equity firms in terms of deal volume and deal flow. Mid market firms, with an average minimum of $300 million to approximately $5 billion maximum in funds currently running, are more cautious investors and put significantly less debt into their deals. Pitchbook, an unbiased private equity data provider, found that middle market private equity deals were taking up the majority of deal volume, and they were getting larger in size. In the last few years, many middle market private equity firms were winning deal titles in terms of quantity.
Mega Firms Adjusting to Middle Market: I would be beyond shocked if we would ever see an overleveraged deal again. Large PE firms like TPG, KKR, Carlyle, THL Partners, have built up middle market buyout arms to adjust with the changed deal environment. According to Pitchbook, leverage multiples (how much debt is put in versus equity) have dropped to around 2.5-3:1.
Competition: PE firms have experienced a significant amount of trouble closing deals or even finding companies at the right value. It’s hard to compete against strategic buyers (conglomerates) that are rich with cash to pay off debts, and have short-term synergy opportunities to help the target company easily fit into the their product portfolio. Deal prices get driven up, and with many conglomerates hiring PE executives to run their buyout arms, sourcing deals has become a lot more difficult.
LPs In Control Again: Many PE funds expired in 2012, and many more will expire within the next few years. Firms are going out and fundraising for new deals, but limited partners are now more likely to tighten the deal terms on the funds (both performance-wise and management fee-wise). You see stories like KKR, Carlyle, and Bain Capital offering varied deal fee prices to satisfy their investors. But of course, above all, performance will be king.
SEC Registration: Last year, PE firms managing $150 million and above were required to register with the SEC. While there was a lot of paperwork involved, private equity now has the SEC to help keep itself in check. Despite some grumblings, this is overall very good for the industry, which has struggled to educate the public about its influence with companies in their everyday lives. Prior to SEC registration there was a sense of internal ethics with bad deals (or dividend recaps gone bad), but the SEC should help clean up any future messes, if and when they happen.

The Future of Private Equity

The current state of the industry is all well and good, but we need this to be consistent if the industry is to become more respected, like the way the venture capital industry has inserted itself into the public spotlight. The future will probably involve:

SEC Tightening Up On PE: The SEC has openly declared that they will be looking more closely into private equity’s practices this year. If the industry continues to work on cautious, smarter deals, it shouldn’t need to worry about any upcoming probes.
PE Back In Politics: We are hearing rumors that some key US-based executives are considering careers in politics. Gabriel Gomez just resigned from his post at Advent International and has launched a campaign for the open Senate seat in Massachusetts (recently vacated with John Kerry’s departure), and GTCR’s Bruce Rauner is seriously considering running for Governor of Illinois. Both Gomez and Rauner have previously worked with the Democrats (Rauner is an advisor to Rahm Emmanuel), so they may get a better chance in the political spotlight than Mitt Romney.
Advocacy Groups Working Harder: While the PEGCC is working on the carried interest tax debate, an advocacy group known as the Association for Corporate Growth (ACG) has been collating data on privately-backed companies vs. others within every state and district in the U.S. Moreover, they have been educating Congress about the PE industry.

While these predictions are a positive sign for the future, I truly believe that the private equity industry still needs a complete rebranding. The industry has transitioned from buying majority stakes in companies, to providing expansion capital to rising stars within various industries and sectors. The PE industry therefore needs to start referring to itself as supporters of “growth capital.” In addition, the industry also needs to hold itself accountable for its past failures, if it is ever to paint a new picture of the PE industry.

Sumeet Shah is the Assistant Director of Business Development for Gotham Consulting Partners, which specializes in rapidly creating significant value for private equity firms and their portfolio companies. He has covered the industry for almost 5 years and has seen the industry transition from the late 2000s financial crisis to its current state.

The views expressed in this article do not necessarily reflect that of Firmex virtual data rooms.

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