The first “must attend” seminar about Private Equity and Venture Capital

Today I am flying to Cannes for MIPIM, in order to meet and discuss with the major international investors and market players about Romania.

Usually you read in the media about “funds”, “investors”, “venture capital” or other types of investors. But do you really know what it this all about? Too many people talk about all these, but very few of them really understand the meaning and even less know how to take advantage of the opportunities that are waiting them.

This is why I decided to be media partner and support the first seminar about all these. In the last weekend of March one of the top international experts on this field, Mr Gavin Ryan, comes to Bucharest, in order to provide us a seminar for everything we need to know.

Are you a Real Estate consultant? An investment or commercial banker? A lawyer? An accountant? A CFO of Finance? A financial analyst? A management consultant? If yes, I really think you should attend this course, as a rare chance to get familiar with all this segment. In the end of the day, in order to benefit from something, firstly we need to know what it’s all about.

I took an interview of Mr Ryan, in order to explain to me more about what we should expect to learn during his seminar.

Gavin Ryan: the market is ready
to benefit from the entry of new players

Ilias Papageorgiadis: Mr Gavin Ryan, this month you will teach your first Private Equity and Venture Capital seminar in Romania. By attending this seminar, what should a participant expect to learn?

Gavin Ryan: The participant will get an overview of the world private equity industry. He will learn how private equity funds are organized and how they look for investments. He will understand what investment structures they use and how they can contribute to the growth of a company.

Ilias Papageorgiadis: Why do you consider this knowledge important for the active members of Romanian Private Equity and Venture Capital markets?

Gavin Ryan: The course is designed to both give more knowledge to those junior practitioners working in Private Equity and Venture Capital, as well as serving as a useful refresher for more senior people who may benefit from stepping back for a few days and getting some up to date input on the latest trends.

Ilias Papageorgiadis: You have an experience of 25 years, having accomplished projects in several countries of the world. How would you define the Romanian market’s maturity in these segments?

Gavin Ryan: The Romanian market has a small industry that has been in existence for a number of years. In this sense it is somewhat more mature than the Private Equity industry in a number of neighboring countries. On the other hand, the market is ready to benefit from the entry of new players who can move the industry from a cottage industry to a more dynamic and open marketplace. The industry has yet to specialize into different segments, such as Venture Capital, expansion and buyouts. The next wave should be restructuring funds, but this will take a little more time as there is still a shortage of some of the management skills required.

Ilias Papageorgiadis: After two years of crisis, do you consider that there will be more transactions in the Private Equity and Venture Capital segments, comparing to 2009 and 2010?

Gavin Ryan: There can be more transactions, but much will depend upon the willingness and ability of the banks to play a more active role in unblocking many frozen situations, which they have been afraid to do so far. It is again a function of the supply of management skills in the country.

Ilias Papageorgiadis: Nowadays the majority of banks in Romania are quite defensive towards investments in general. Is Private Equity an alternative solution to finance a company or a project?

Gavin Ryan: It is only real new opinion. Banks are defensive because most of their middle managers have had the only experienced the good, boom times and do not know how to manage restructuring. They should work with private equity managers, who have more of such skills, rather than be inactive, hoping for the crisis to pass.

Ilias Papageorgiadis: There is an ongoing dispute between experts regarding “the real price” of a deal. How does a Venture Capitalist approach this issue?

Gavin Ryan: "Experts" are in plentiful supply. It is easy to have an opinion when your own money are not on the table. We should listen more to people who are risking their own money and see what their views are. Private equity managers are the best valuers, because they must live with the consequences of their valuations, unlike consultants.

Ilias Papageorgiadis: In the “golden years” of 2006 – 2008 the due diligence process was always under pressure, as owners were asking for a deal to be finalized as soon as possible. What is the situation nowadays?

Gavin Ryan: Now this is a good time to make a due diligence without rushing, which will increase the quality of the information. Those days of rushed and incomplete due diligences are gone forever. They should never been.

Ilias Papageorgiadis: What do you expect from a lawyer to contribute in this process? Are there any “gray zones” that you need to identify and be protected of?

Gavin Ryan: Lawyers are part of the due diligence and negotiation process. They are service providers and need to be effectively managed by private equity fund managers. A good Private Equity deal should be driven by Private Equity managers, not by lawyers.

Ilias Papageorgiadis: The majority of Private Equity and Venture Capital deals include financing as well. What is the relation of a Private Equity and Venture Capital manager with his banker? What are the important details that a banker should take into consideration in such collaboration?

Gavin Ryan: Private Equity and Venture Capital should work hand in hand with the bank. The Private Equity fund will always understand the business better than a banker, because they are equity investors. Banks should do more to reach out to Private Equity funds, which can bring them great benefit. The Private Equity fund should build partnerships with the banks. It is a win-win collaboration.

Ilias Papageorgiadis: In the last 2 years, there were many attempts to create a Venture Capital for investments in Romania. The majority of them has failed. What do you think that was the reason for such failure? Do you have an advice for the ones who prepare their projects for this year?

Gavin Ryan: Private Equity in Central and Eastern Europe is based upon expansion capital. Most deals are of this kind. Earlier stage investments, such as Venture Capital, are more risky and depend more upon innovation. Innovation is strong in the Western countries and Venture Capital in Central and Eastern Europe has yet to demonstrate that it is not simply a copy/paste of ideas already developed in Silicon Valley.

Ilias Papageorgiadis: The Romanian Stock market is quite undeveloped. Do you consider that this status can change after the entry of “Fondul Proprietatea”?

Gavin Ryan: To some extent this may happen, as this is a case of a new fund which will need to invest money. But we will have to wait and see.

Ilias Papageorgiadis: Thank you!