Throughout history, many types of labor arrangement have involved the use of coercion the threat or use of force to compel workers to enter into an employment relationship. Slavery was the most common way of organizing labor in a host of ancient civilizations, and was also very prominent in plantation economies throughout the Americas. Other forms of forced labor, such as debt peonage and the state-sanctioned forced recruitment of laborers, also played an important role in the hacienda system that emerged in Latin America during the colonial and post-colonial periods. Episodes of coercion are not only confined to the historical record: they have persisted across both industrialized and developing countries throughout the twentieth century (Andrees and Belser 2009).
I hope all of you have had an enjoyable summer, and had an opportunity to enjoy the simple pleasures this season brings—iced tea, backyard hammocks, sand castles, watermelon, and great novels, to name a few! With this issue, you will notice an important addition to our readings.
This thesis aims to answer the question of how to invest in Private Equity and to provide guidelines for an investor who considers allocating a part of his wealth in this asset class. First, we describe the Private Equity industry, its structure and its return characteristics. Second, we review Modern Portfolio Theory, Behavioral Portfolio Theory and the liquidity issue. Third, we review some portfolio allocations studies and we finally look at the investment styles of the major Private Equity investors, banks, insurance companies, family offices, endowments, foundations and pension funds and explain them considering portfolio theories.
The Private Equity industry can be divided into two main segments: Venture Capital and Buyout. There are different stages of investment within the Venture Capital industry, going from the business idea to the need to raise cash to grow. These stages are called Seed, Startup, Expansion and Replacement Capital. The Buyout industry deals with mature firms and has the objective of taking control. The most well-known and publicized forms are Leveraged Buyouts and Management Buyouts.
