All posts by Tamir Agmon

Dr. Tamir Agmon is the Associate Dean for Research and Development at the School of Management and Economics, Academic College Tel Aviv Yaffo in Israel. He is also  a Professor of Financial Economics at the School of Business, Economics  and Law at Gothenburg University in Sweden.

PRIVATE EQUITY: A Contributing Factor to the Crisis or a Way to Resolve It?

Dr. Tamir Agmon is the  Associate Dean for Research and Development at the School of Management and Economics, Academic College Tel Aviv Yaffo in Israel. He is also  a Professor of Financial Economics at the School of Business, Economics  and Law at Gothenburg University in Sweden.

The economic ocean is comprised of a large number of small drops of water: a micro approach to the crisis

   The efforts of the Treasury and the Federal Reserve Board to deal with the current financial and economic crisis are focused on the “large picture”. Hundreds of billions of dollars are given to major financial institutions and to major manufacturers. This is clearly necessary and important. Yet, thousands of firms find themselves in financial and economic distress as a result of the crisis and as a result of their business policy in the boom period preceding the crisis. Firms that based their business policy on the assumption that American and other consumers will continue to buy more every year and financed this policy by borrowing ever increasing sums of money find themselves today in financial distress. Many of these firms have good business foundations.  They have the capabilities to design, produce and sell good products and useful services. They do have problems today in selling a particular product or a service to a particular industry, and they do have problems servicing the accumulated debt from the boom period. If they fail and disappear the cost to their employees, their suppliers, and to society as a whole is high. These small and medium size firms, often unknown to the public and below the radar of the media contribute substantially to the general welfare. It is impossible to address the needs and the potential of these firms at the macro, federal level. Fortunately, there is a private sector solution motivated by interests of investors, managers, employees and other stakeholders of the corporation. The solution is turnaround private equity investment by specialized companies and funds. Turnaround private equity is motivated by profit like any other investment activities. It is based on reframing the activities (assets) of a distressed firm, rearranging the liabilities to fit the new direction of the firm and manage the process of the turnaround. If successful, the private equity investors make an exit and leave the firm to continue and grow with other owners.

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Revolutionary Change and the Greek Financial Crisis: Lessons from the Venture Capital World

Dr. Tamir Agmon is the  Associate Dean for Research and Development at the School of Management and Economics, Academic College Tel Aviv Yaffo in Israel. He is also  a Professor of Financial Economics at the School of Business, Economics  and Law at Gothenburg University in Sweden.

Dr. John Psarouthakis is a Distinguished Visiting Fellow-Professor, Institute of Advanced Studies in the Humanities, University of Edinburgh, Scotland. Founder and former CEO, JPIndusries,Inc., a Fortune 500 industrial corporation. .He is the Publisher of www.BusinessThinker.com

1.      Introduction  

Greece is in great need for a peaceful revolutionary change in her political and socio-economic structure and culture. All the current programs for austerity and such like are based on the existing system. They are necessary, but not sufficient. We know from our research of the market for ideas that incumbent system cannot initiate or even supports revolutionary change. What is needed are new ideas and independent way of funding the ideas in their development stage. A good example is the case of supporting revolutionary change in technology by venture capital funds

The current financial crisis in Greece is a test case for the ability of the Greek government, the European Union, and the global financial system to deal with the need for revolutionary change. The current crisis in Greece is an outcome and a reflection of deep seated political, social and economic factors in Greece. The fact that Greece is a member of the European Union makes what could be a Greek problem a European and hence to a global problem. In a recent article in the New York Times Professor Aristides Hatzis from Athens University relates the problems today to the, justified, imitative of the senior Karamanlis to join Greece to the European Union. He succinctly summarizes the deep rooted nature of the crisis as follows:

“The Greek New Deal (joining the European Union) was not based on the redistribution of wealth created by the market since the market in Greece is highly regulated: it is a paradise for oligopolies, close shops and pressure groups where tax evasion is socially accepted and politically excused. Greece aggressive pressure groups, (unions, government agencies, cartels, close profession, etc.) seized big chunks of the E.E.C. transfers and government borrowing”. (NYT, June 14, 2011).

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SELLING IDEAS IN THE MARKET: REVOLUTIONARY AND EVOLUTIONARY INNOVATION IN CORPORATIONS


Dr. Tamir Agmon is an invited contributor to The Business Thinker. He is a Professor of Financial Economics at the School of Business, Economics and Law at Gothenburg University in Sweden.

1. Introduction

The relations between research in business and management and the practice of management are not simple. Good research is conceptual and often is based on simplifying unrealistic assumptions. Good practice of management is concrete and is closely related to a specific situation in which the manager and the organization operate. Yet, good research contributes substantially to the practice of management just because it is not an attempt to describe business reality. Good research provides a conceptual model of reality that allows practitioners to gain a better understanding of some critical processes underlying the practice of management in a specific field.

The issue of selling innovative ideas in the market is a good example of the complex relations between research and practice in management and how managers in all levels can gain better understanding from research.

It is almost a cliche to say that the managers of today operate in a knowledge economy and that business is driven by new and innovative ideas. The communication industry, the information technology industry, the microelectronics industry and the medical industry are the most well-known industries that are driven by new and innovative ideas, but a closer look will show that even traditional industries like food, glass, and the automotive industry are affected to a great extent by new ideas pertaining to the production processes, the development of new features in existing products and to other dimensions of the business. Continue reading

What Do General Partners in Private Equity and Venture Capital Funds Bring to the Table: Intellectual Capital and Value Generation

Dr. Tamir Agmon is an invited contributor to The Business Thinker. He is a Professor of Financial Economics at the School of Business, Economics and Law at Gothenburg University in Sweden.

Much of the value in the world today is generated from intellectual capital (or intellectual assets). Intellectual capital is human made, based on ideas and is expressed as capabilities, systems, organizations, and other non-physical and intangible structures within firms that generate future cash flows. The growing industry of private equity funds and venture capital funds is one place where specific intellectual capital owned by the general partners is applied to generate value. The difference between physical (tangible) assets and intellectual (intangible) assets can be observed and measured in two dimensions; the past, how the asset was built using primary factors and labor, and the future, how the market evaluates the future stream of cash flows from an asset. The discussion of the difference between intellectual and physical assets is done in the paper in the context of an incomplete market with imperfect competition. Where the general partners of a private equity fund add intellectual capital to the existing assets in place in a target company, they do so in the expectations of generating additional value. The process by which additional value is generated by employing specific intellectual capital is demonstrated in the context of valuation model as practiced by private equity funds. Continue reading