Tuesday, September 20, 2005

Private Equity and VC Firms Push Their Portfolio Companies to Internationalize

In the 1999 - 2001 period, I recall several trips to Silicon Valley to meet with emerging technology companies with an interest in expanding outside of the US. At the time, there was such perceived opportunity in the US, particularly Internet-related, that many in the venture community seemed to have little interest in opportunities in Asia and elsewhere.

Now, there is an ever-increasing interest to push into new markets, and China and India are the focus of attention. China often for perceived manufacturing opportunities to reduce costs, expand revenues and follow customers. India often for software production and back-office functions, such as call centers.

We are seeing the investors, whether private equity firms, VCs or others, taking a strong interest in enhancing the value of their portfolio companies by actively assisting them in their cross-border expansion. (As cross-border lawyers, we do our part by lending our foreign investment and transactions skills to the process.) A good example here in Chicago was the Tuesday lunch at the Sears Tower's Metropolitan Club sponsored by the Association for Corporate Growth. Some 240 bankers, private equity investors, accountants, lawyers etc. gathered to listen to the China experiences of Jordan Industries, an Ernst & Young partner and a private equity investor. The investor had been through a few manufacturing deals for portfolio companies and was a fine example of the trend - a Chicago-based investment group actively encouraging its portfolio companies to get the cross-border religion, and taking a hands-on role in implementing projects outside of the US.

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