Ice Miller Venture Briefing Weekly

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Small Businesses Face New Issues Under Obama's Economic Policy
Obama Could Increase Taxes for P.E. Funds, Offshore Insurers
As Credit Market Loosens, M&A Activity Could See Boost
VCs Say They'll Suffer If IPOs Don't Come Around
Venture Capitalists Optimistic About Business Environment
Investor Urges Reform of Private Equity Management Fees
As Banks Stock Up On Cash, Fewer Borrowers Seek Loans
Small Businesses Urge Lowering of Credit Card, Debit Fees
Small Businesses Suffer as Banks Curb Lending
Expert Advises Tech Start-Ups to Get Busy Despite Recession
Harvard Looking to Reduce Private Equity Funds by $1.5 Billion

Small Businesses Face New Issues Under Obama's Economic Policy
A new Democratic administration and Congress means that 27 million U.S. small-business owners -- already shaken badly by the economic slump -- could face an array of new issues, from potentially higher taxes to costlier workplace benefits. "There's a whole different set of issues on the table now," says Todd McCracken, president of the National Small Business Association.
(Source: USA Today (free reg. req'd), 2008-11-07)

Obama Could Increase Taxes for P.E. Funds, Offshore Insurers
Private equity funds and offshore insurers are among industries that could see their taxes increased under a Barack Obama White House and strengthened congressional Democratic majorities. Obama hit frequently during the campaign on the theme of closing corporate tax loopholes and ensuring that companies pay their fair share.
(Source: MarketWatch (free reg. req'd), 2008-11-06)

As Credit Market Loosens, M&A Activity Could See Boost
A thawing credit market is starting to unfreeze some big M&A deals. Now the question is how cold will the economy grow?
(Source: Fortune, 2008-11-06)

VCs Say They'll Suffer If IPOs Don't Come Around
Venture capitalists say that if the companies they invest in don't go public or get acquired with greater frequency than they are today, they could face a drought in available capital to invest in new ventures. That, they say, would be too bad, because entrepreneurial activity appears to have remained strong.
(Source: Journal of Business, 2008-11-06)

Venture Capitalists Optimistic About Business Environment
In listening to venture capitalists and entrepreneurs talk at the Web 2.0 Summit in San Francisco, they seem to be rather upbeat. Which means they are either hopelessly delusional, or they know something the rest of us don't.
(Source: SiliconValley.com (free reg. req'd), 2008-11-07)

Investor Urges Reform of Private Equity Management Fees
Private equity management fees, which allow large funds to earn hundreds of millions of dollars in addition to performance fees, must be reformed, a top private equity investor told a conference. Solomon Owayda, chief investment officer of SVG Advisers, the private equity fund management arm of quoted private equity group SVG Capital Plc SVI.L, questioned the need for mega-buyout funds to charge the traditional two percent management fee on top of the performance-related carried interest system.
(Source: Reuters, 2008-11-05)

As Banks Stock Up On Cash, Fewer Borrowers Seek Loans
Billions of federal bailout dollars are flooding the financial system, credit markets are loosening and many banks say they are ready to lend. But a crucial piece needed to solve the credit crisis is still missing: borrowers.
(Source: International Herald Tribune, 2008-11-06)

Small Businesses Urge Lowering of Credit Card, Debit Fees
Small merchants have long chafed at the fees they must pay banks every time a customer swipes a debit or credit card. But now, with business slowing and every dollar important to their bottom line, some merchants are pushing for changes.
(Source: The New York Times (free reg. req'd), 2008-11-05)

Small Businesses Suffer as Banks Curb Lending
When entrepreneurs can't get conventional loans, they traditionally turn to loans backed by the Small Business Administration, but in recent months -- as many banks turned away businesses and slashed credit lines -- SBA lending also has dried up substantially. The big decline in SBA lending is fueling new criticism that the federal government isn't doing enough to help businesses when they are in most dire need of cash.
(Source: The Wall Street Journal, 2008-11-04)

Expert Advises Tech Start-Ups to Get Busy Despite Recession
One expert's advice for tech entrepreneurs thinking of launching right now? Don't wait. A recession can be your ally in building a lean, thriving company.
(Source: BusinessWeek, 2008-11-07)

Harvard Looking to Reduce Private Equity Funds by $1.5 Billion
Harvard University's $36.9 billion endowment is in talks to reduce its private-equity holdings as the financial crisis makes leveraged buyouts less profitable, a person familiar with the situation said. The Wall Street Journal reported that the Cambridge, Massachusetts, school is seeking to drop about $1.5 billion in partnerships managed by companies including Bain Capital LLC.
(Source: Bloomberg, 2008-11-04)

Holding Up the Sky

Financial times are tough, but let's take a step back. Rather than making things worse for ourselves by stashing all our savings under the mattress, let's take a deep breath and look at the situation.

Read the entire story that was published on Inside INdiana Business.

Inside the Lines


Steve Humke	John Thornburgh

Assistance for Veterans Returning to Civilian Life

Secretary of Labor Elaine L. Chao hosted the U.S. Department of Labor’s (DOL) annual "Salute to Veterans" program, which highlighted the many DOL Programs that assist veterans and military personnel.

"Today, the men and women of the U.S. military are the finest, most capable, and technologically-advanced fighting force in the world. Each year over 318,000 military members return to civilian life," said Secretary Chao. "There is no more appropriate way to celebrate Veterans Day than to focus on them, and what we can do to help them make a successful transition to civilian life when they return."

Earlier this year, Secretary Chao announced 103 grants, totaling nearly $30 million, to provide approximately 19,000 veterans with job training to help them succeed in civilian careers. The grants are being awarded under the DOL's Homeless Veterans Reintegration Program (HVRP) and Veterans' Workforce Investment Program (VWIP).

Find information on the DOL's unemployment and re-employment programs for veterans.

By the Numbers

Middle Market Deals Are the Backbone of the Economy

According to a recent report by the Dow Jones Private Equity Analyst, middle-market deals are one of the few areas seeing activity. The report states that a total of 264 U.S. private equity firms raised $222.6 billion during the first three quarters of 2008. This represents an 11% gain over the $200.4 billion raised by 298 private equity funds in the prior year.

The report also found that distressed and mezzanine funds are now among "investor darlings." Distressed firms raised a record $48.2 billion in 2007. So far in 2008, 18 funds raised $27.9 billion up 28% from this point last year.