SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 79 - January 18, 2013: - M&A Trend: ESG Risks in Targets Can be a Dealbreaker - The Biggest Dealmakers in Private Equity - Clean Energy Investment Declining: Bloomberg Explains Why - Mega Buyout in the works for Dell? - Weil’s Predictions for 2013 - Quote of the Week: A PE View on Technology Deals Growth and Leverage

1. DIGEST 79
SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 79
1 M&A Trend: ESG Risks in Targets
Can be a Dealbreaker
2 The Biggest Dealmakers in Private
Equity
Clean Energy Investment Declining:
2 Bloomberg Explains Why
3 Mega Buyout in the works for Dell?
3 Weil’s Predictions for 2013
4 Quote of the Week: A PE View on
Technology Deals Growth and Leverage
January 18, 2013

2. M&A TREND: ESG RISKS IN TARGETS
CAN BE A DEALBREAKER
This week we found an interesting result from
a survey by the United Nations-backed
Principles for Responsible Investment
Initiative (PRI), reported in AI CIO online. A
large majority of corporate buyers of private
equity portfolio companies said that poor
performance on environmental, social and
governance (ESG) factors affected their
decisions to buy the company or prevented
the entire deal. The survey shows that over
80% of companies had reduced the valuation
of an acquisition target or not gone ahead
with a deal because of poor performance on
ESG factors, while 75% said poor
performance in this area had prevented a
deal from taking place.
Image source: UNPRI
The majority of companies, 63%, think that there has been a large increase in the influence of ESG
factors in transactions in the last three years, and 75% perceive that there will be a large increase over
the next three years (see figure above).
The article points out some recent examples of how ESG is affecting PE markets, such as Cerberus
Capital Management’s decision to sell its investment in gun manufacturer Freedom Group in reaction to
children being killed in shooting incidents during school hours, and CalSTRS decision to sell off
investments in manufacturers of firearms that are banned in its home state of California. The PRI
commissioned PricewaterhouseCoopers to conduct a survey of 16 companies to assess the attitudes of
trade buyers of private equity companies, evaluating ESG risks and opportunities in their M&A
activities. According to the article, the PRI has seen growing interest from private equity companies in
ESG issues and now counts over 150 GPs and more than 130 LPs as signatories. You can download the
report from the UNPRI site here.
1
www.DealMarket.com/digest

3. THE BIGGEST DEALMAKERS IN PRIVATE
EQUITY
Citing Preqin’s latest data Assets International CIO magazine said this week that Carlyle was the biggest
dealmaker in 2012. (Preqin has a blog entry on the topic here.) The Carlyle Group dominated global PE
with 48 acquisitions totaling USD26.87 billion, which was 10% of the industry’s total 2012 deal
value. Second in the ranking was Apollo Global Management, which invested half of amount that
Carlyle did. The article quoted William Conway, Carlyle Group’s co-founder and co-CEO, in a Q3 earnings
call on November 8, speaking about this firm’s strong activity. He said, “First, we have a larger corporate
private equity business than many of our peers… [which enables Carlyle to] find investments, where
others can’t. And our experience gives us the comfort to pursue investments where others won’t.”
Carlyle also reportedly can get better debt rates.
The third most active PE group was Blackstone Group, doing 33 deals across a variety of industries in
2012, worth a total of $13 billion. Riverstone Holdings and Advent International were fourth and fifth.
CLEAN ENERGY INVESTMENT
DECLINING: BLOOMBERG EXPLAINS
WHY
Despite ongoing innovation, such as Alstom’s recently marketed ECO
100 wind turbine shown here that can power 2000 homes, the appeal
of clean energy investments has declined in the past two years. The PE
and VC contribution to overall investment is currently running at USD
5.8 billion for solar, biofuel, wind and smart-grid startups worldwide
last year, according to data from Bloomberg New Energy Finance
(BNEF). In a fairly lengthy feature on news of declining clean energy
investments, Bloomberg cited recent BNEF data and described the
current state of the market for PE investors.
Here is a quick summary of the text:
• Investment activity declined for the second year in a row, since
peaking in 2010
• Losses due to changes in the investment case for solar cell
production is one reason
• VCs are looking for the next hot spot as wind, solar, and light
emitting diode (LED) deals lose their appeal
Image source: Alstom
• Cutbacks in government subsidizing of renewable energy is a factor,
as is the fact that
2 • Fewer entrepreneurs are seeking capital
www.DealMarket.com/digest

4. • Difficulty with exits is another, but it is not all bad news as
• Industrial investors, such as Shell, continue to pump money into startups through corporate
venturing activities, and
• Warren Buffett’s holding company invested in solar plants in California
MEGA BUYOUT IN THE WORKS FOR
DELL?
This week’s deal of the week could be a big one if it comes to pass. Several news
sources reported that Dell, the company founded by Michael Dell (pictured here)
who still owns 16% of the computer and hardware company, is in talks with PE
players for a possible mega buyout. Investors Daily reports that the stock price
jumped on rumors of the potential multi-billion dollar buyout, and Bloomberg broke
the news in report that said Dell is discussing going private with TPG Capital and
Image source: Silver Lake. Dell’s market cap is about USD 19 billion.
Dell.com
WEIL’S PREDICTIONS FOR 2013
Legal firm, Weil offers its predictions for 2013 in its Alert newsletter that we read and summarized here
for you. The above graphic provides quick overview of 2012 activity. The list below is from the Weil
forecast for the year.
• Expect deal volume to be slow in the early months of
2013. The macro environment for private equity
continues to be strong. Debt is available for buyouts.
• Expect more secondary LBOs. There will be
willingness to sell from 2005, 2006, and 2007 vintage
funds that are winding down. secondary LBOs.
• Try Aisle 6 – We expect continued diversification by
sponsors, with certain sponsors providing “onestop”
alternative asset hopping to the LP community.
While some sponsors are rapidly becoming
alternative asset supermarkets, others are dipping
their toes into the pool of diversification by
expanding into credit and other funds.
• Passing the Baton – As the industry matures (and its
Image source: created by Dealmarket Digest
founders continue to age), succession issues will
continue to be a major focus of sponsors as well as
the LP community. According to Coller Capital, 73%
of LPs are focused on succession issues at the
sponsors where they invest.
3 • Continuing Need for Private Equity – We expect the
private equity industry to continue to survive
www.DealMarket.com/digest

5. QUOTE OF THE WEEK:
A PE VIEW ON TECHNOLOGY DEALS GROWTH
AND LEVERAGE
Because we invest in middle market tech companies,
typically growth is our primary driver. Then there is an
operational or strategic angle. Both come well ahead of
leverage. Leverage is usually low on the list, behind
those other factors. In fact, 50% of our investments have
no leverage.
Who said it: Ajay Shah, Managing Direct of Silver Lake Sumeru, the part of the US-based technology
oriented PE firm that invests in mid-market deals.
In Context: Shah is talking about mid-market deals here and how Silver Lake goes for returns based on
steep growth potential and less on leverage. The article also provided his views on what are the hot
areas for growth style investment, such as the storage market, including storage management, cloud
based storage and solid-state storage. Less interesting is consumer electronics because he believes the
sector offers fewer opportunities to create a new brand. Silver Lake is one of the few large-sized PE
firms that is specialized in technology buyouts. It was in the news this week as it is rumored to be in
talks for a take private of Dell, the US-based PC and computing company.
Where we found it: Forbes
4
www.DealMarket.com/digest

6. The Dealmarket Digest empowers members of Dealmarket by providing
up-to-date and high-quality content. Each week our in-house editor sifts
through scores of industry and academic sources to find the most
noteworthy news items, scoping trends and currents events in the global
private equity sector. The links to the sources are provided, as well as an
editorialized abstract that discusses the significance of the articles
selected. It is a free service that embodies the values of the Dealmarket
platform delivers: Professional, Accessible, Transparent, Simple, Efficient,
Effective, and Global.
To receive the weekly digest by email register on www.dealmarket.com.
Editor: Valerie Thompson, Zurich
DealMarket
DealMarket launched in 2011 and is growing fast. Just one year after
launch, DealMarket counts more than 35,000 recurring users from 154
countries, and over 3,000 deals and service providers promoted or listed
on the platform.
DealMarket is an online platform enabling private equity buyers, sellers
and advisors to maximize opportunities around the world – a one-stop
shop for Private Equity professionals. Designed by Private Equity
professionals for Private Equity professionals, the platform is easy to use,
cost effective and secure, providing access, choice and control across the
investment cycle.
DealMarket’s offering includes
• DealMarketPLACE, an unfiltered view of the global deal and advice
marketplace, where searching is free and postings are the price of a
cappuccino a day (with no commission).
• DealMarketSTORE offers affordable access to industry-leading third-party
information and services on demand; and
• DealMarketOFFICE is a state-of-the-art deal flow management tool,
helping Private Equity investors to capture, store, manage and share
their deal flow more efficiently.
DealMarket was voted the “Best Global Private Equity Platform for 2012”
by Corporate Newswire.
www.DealMarket.com