Apax Partners is venerable private equity firm, getting its start in 1981. At that time, the industry was fairly new. As a result, the firm engaged in a eclectic mix of deals, such as buyouts and even startup financing.
It's been a pretty good formula. And, like other ultra successful private equity firms, Apax is now in the process of raising a mega fund. The estimated size is about $13 billion. However, interestingly enough, the fund will not make any venture capital investments. This is according to a recent piece in Bloomberg.com.
Over the past few years, Apax has focused mostly on buyouts, anyway. Moreover, with a mega fund, it's very difficult to justify the time on doing, say, a $30 million deal. Why? Apax says that VC investing is mostly volatile whereas buyouts are fairly predictable.
That's certainly true. How can one really know a small company will ultimately turn into a game-changer like Skype or YouTube? Of course, it's not altogether clear that buyouts are free from volatility. If the economy craters or there is a credit crunch, I'm sure there will be issues with some buyout deals.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
