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Don Gogel Interview On Charlie Rose

Recently Don Gogel -- private equity (NYSE:PE) executive -- gave an interview on Charlie Rose, and made the following points, which I found interesting:

1. 75% of the capital in the USA is in private, as opposed to public markets. Considering total market cap of all publicly traded companies hits about $45t, that means total "market cap" of all companies -- public and private, is about $225t

2. He quoted the historical rates of default for the following:

i. Private equity held companies -- 1.2%

ii. Corporate debt -- 1.7%

iii. Corporate debt, that has the same amount of debt as PE firms -- 4.7%

He basically used this to say that PE firms have an excellent track record in terms of success.

3. Said the average holding period is 5-6 years, so they can fix the companies and then sell them, or take them public.

4. Said that all funds are cross collateralized so if they make $100mm from one company, but loose $500mm from 10 others, they cannot collect incentive fees from the one success, and they have to pay back the management fees in most cases. He also spoke about how in a lot of cases investors get 8% preferential return, and only then does the "waterfall" -- incentive fee -- kick in.

5. Said that there are 5,000 PE firms worldwide

6. Said that the USA continues to deleverage, which dampens growth because people and companies can't borrow. But said has seen moderate continued growth.

Besides that there was a lot of talks about politics, and his reaction to POTUS's attack on Mitt Romney, which despite the fact that he was a POTUS supporter, disagrees with.