CHICAGO – On Sept. 19, more than 60 IVCA members attended a panel discussing the current markets for liquidity opportunities within the mergers and acquisitions, public offerings and alternative investment markets. The event was sponsored by Robert W. Baird & Co. and William Blair.

The panel, which can be listened to or downloaded as an audiocast here, was represented by Christopher Coetzee of Robert W. Baird & Co., Brandon Lower of William Blair & Co. and Deborah Quazzo of ThinkEquity Partners and was moderated by Michael Gray of Neal, Gerber & Eisenberg.

Coetzee noted that globalization and the return of corporate capital is contributing to the continued rise of valuations in the private equity markets.

“We are seeing more corporate players come to the market, which is having a real effect on driving valuations,” Coetzee said. He added that competing in a global environment has raised “the risk of running a business for small businesses owners” and has “upped the ante”.

The 2006 IPO market is trailing 2005, according to Lower, who added that “most IPOs have priced within range” with a flat first-day performance. Additionally, 55 percent of the public offerings in 2006 were for $100 million or less.

Quazzo reflected that the IPO market has “not recovered terribly well” from the “nuclear winter” that existed between 2001 and 2003 and added that it took twice as long for companies to go public in 2004 versus those that went public in 1999.

Quazzo pointed to the growth of the Alternative Investment Market (AIM) – a subsidiary of the London Stock Exchange – as a viable option for companies seeking an exit in the public markets. Since its founding as a public venture market in 1995, 1,560 companies have been listed on the AIM. Approximately two-thirds of those companies were valued at less than $50 million.

Related issues were discussed during a Q&A period.

Regarding the practice of dividend recaps, Coetzee is “seeing a fair amount of activity in the early part of the investment cycle” by mostly private equity firms. Lower commented that it is a “very effective way to get risk off the table on deals done before year end”. Quazzo noted that there is “a lot of frustration from private companies to do regulatory overhang”.

The global marketplace has impacted business on a variety of fronts. Coetzee added: “It is extremely tough for U.S. firms to participate in London without an angle.”

William Blair is “seeing a lot of action across the globe,” according to Lower, who added that his firm has an office in London, a joint venture with the bank of Tel Aviv and individuals working in India and China. ThinkEquity is “creating an insourced platform for banking” and Quazzo said the firm is paying “six people to do PHP work for the cost of a single hire in San Francisco”.

Are we headed for another boom?

“It’s a frenzy,” Quazzo said, “but a concentrated frenzy as opposed to the heyday.” Green technologies, digital media and “the overall music market” are leading the charge. Going public is only for the strong stomached, according to Coetzee, who added that “you really have to mean it”.

Regarding the emergence of hedge funds, it is a “phenomenon that has tapered off a little on the private side and has spurred valuations up,” Quazzo said, who added that hedge firms are “hiring away all of our people”. William Blair “hasn’t seen much,” according to Lower. Coetzee concurred by noting that “we haven’t seen hedge funds play much of a role”.