Happy Martin Luther King Jr. Day. It might be time to dust off your old copy of Barbarians at the Gate — last week it was announced that Dell may be going private. With nearly $20 billion in market cap, it could be a deal for the ages.
In other news, clean energy saw a significant decline in interest from PE and VC firms in 2012. The convergence of several factors — including natural gas, poor IPOs, and waning government subsidies — has made the industry difficult to predict. If innovation is your focus in 2013 — energy or not — below are a few suggestions as to how to foster it. One tip: don’t go public.
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Private Equity Flees Clean Energy as Investments Fall: Private equity investments in clean energy are falling. Fast. In the past year, investments from PE and VC totalled $5.8 billion, down 34 percent from 2011 and at a lowest level since 2006. The decline can likely be attributed to the rise of natural gas, waning government subsidies, and unsuccessful past investments. So what does PE-aversion mean for the future of alternative energy? Buffet doesn’t seem to care.
Can Private Equity Solve Dell’s Dilemma?: Last week, news leaked that Dell was in talks to go private with TPG and/or Silver Lake Partners leading the LBO. But, if Michael Dell plans to retain his leadership position post-buyout (as some sources suggest), his notorious aversion to bold strategy shifts may simply leave the struggling company with a lot of debt and little free cash flow. Working with a company’s existing management team — whether it is Barbarian-sized or not — is an essential part of the deal process.
Want to Kill Innovation at Your Company? Go Public: It turns out that business owners can stifle innovation simply by going public, says recent research from Stanford’s Graduate School of Business. Whether it is the ‘brain drain’ that occurs as innovators cash out their shares or the new accountability to shareholders, researchers have found that post-IPO tech companies tended to file less creative, less valuable patents. If you are thinking about exiting an investment by means of IPO, make sure innovation is not central to the business model.
9 Rules of Stifling Innovation: Few businesses would ever openly discourage innovation. But, some may be doing it without even realizing. Rosabeth Moss Kanter compiled a list of 9 ways in which leaders are unintentionally stifling innovation at their company. If any of these traits resonate with you, it might be time to reverse your subliminal anti-innovation policy and encourage thinking outside the box. Thankfully Kanter offers some recommendations on how to do that as well.
And, in case you missed it, here are the most active firms in the middle market.
Thanks to Robert Silverwood for the photo.