Innovator Article

Inside the $2.5 Trillion Global Private Equity Market

Private equity funds’ roles in the economy and their managerial compensation drew scrutiny following the recent global financial crisis, and there is an ongoing debate about increasing taxation on private equity managers’ profit participation, and on the industry’s impact on innovation, competition and employment.

Over the past 15 years, worldwide private equity investment has skyrocketed from $100 billion in 1994 to about $2.5 trillion today, driven by institutional investors’ portfolio allocation to private equity, which increased from 3 percent on average in 1997 to 12 percent in 2007 for large foundations.

Associate Professor Ayako Yasuda recently teamed with Professor Andrew Metrick of the Yale School of Management to publish the first survey paper of its kind to treat and examine both the venture capital (VC) and the buyout (BO) segments as subsets of a broader, private equity industry. The paper, “Venture Capital and Other Private Equity: A Survey,” was the lead article in European Financial Management (September 2011).

“We focus on what distinguishes both VC and BO funds from hedge funds and mutual funds, for example,” the authors write, “and discuss the theory and evidence on this ‘private equity’ industry both as financial intermediaries and as an asset class.”

Their study notes the importance of private ownership, and information asymmetry and liquidity associated with it, to explain what makes private equity different from other asset classes. The paper reviews the literature on various topics, including value-added activities of VC and BO investors, performance of private equity funds, and contracts between private equity fund managers and their investors.

“Both VC and BO backing is associated with significant changes in the ways the investee companies are operated, including more independent and hands-on boards, higher earnings quality, and higher CEO turnover,” Yasuda and Metrick write. On the flip side, investors in VC and private equity funds ink contracts that will best align their interests, via a profit-sharing agreement, closed-end, finite-life fund structure, limited reinvestments, and explicit negative covenants preventing VC and BO fund managers from taking excessive risk and/or diverting efforts away from funds.

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News Release

UC Davis Part-Time MBA Ranked in Nation’s Top 9%
Fourth Consecutive Year among U.S News & World Report's Premier Programs

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(Davis, CA) — The UC Davis Part-Time MBA program offered in Sacramento and the San Francisco Bay Area is ranked among the top 9% in the U.S., according to U.S. News & World Report’s latest graduate business school rankings.

At No. 29, this is the fourth consecutive year the UC Davis Part-Time MBA program is among the top AACSB International-accredited part-time MBA programs surveyed. This year, there were 323 part-time MBA programs surveyed.

News Release

UC Davis Full-Time MBA Ranked among Nation’s Premier Programs for 20th Consecutive Year
MBA Programs among Top 10% in U.S.
Record Salary and Bonus

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(Davis, CA) — The UC Davis Graduate School of Management’s Full-Time MBA program is ranked among the premier business schools in the nation for the 20th consecutive year, according to U.S. News & World Report’s latest graduate business school rankings released today.

U.S. News’ latest ranking places the Full-Time MBA program at No. 48, placing it among the top 10% of the 464 Association to Advance Collegiate Schools of Business International’s accredited full-time MBA programs surveyed.

Key statistics from the School’s Full-Time MBA ranking include:

News Release

UC Davis Graduate School of Management partners with Lawrence Livermore and Sandia National Labs to drive technologies from lab to market

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(Davis, Calif.) – With a joint goal of speeding the transfer of new technologies from the laboratory to the commercial marketplace, the UC Davis Graduate School of Management, Lawrence Livermore National Laboratory and Sandia National Laboratories have announced a new partnership for researchers to develop their entrepreneurial skills.

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Vickie Sherman MBA 13 Finds Her Passion, Her Career—and Herself

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What opportunities, decisions, events have shaped your professional life?

My career path has been a climb across a jungle gym rather than a tangent up a corporate ladder. As a child, I used to thumb through the three-inch JCPenney catalogue, picking out the professional women who I would grow to be. I wanted to rule the world from a corner office in a suit and heels. I wanted to shed my humble origins and become Corporate Barbie.

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MBA Student Consultants Make an IMPACT
Projects Put Business Needs Front and Center

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Agilent Technologies’ Electronic Measurement Group is a $3.6 billion business that over the past decade has seen a dramatic shift in its customer base from U.S., and Western European customers to predominantly Asia-based customers. Today, the majority of the division’s revenues are generated outside of the U.S., with an increasing concentration in China.