* During a panel discussion yesterday afternoon, I said that BCE would probably find another auditor who believes the company could be solvent post-buyout. Sometimes it's better to be lucky than good. * Tribune bankruptcy: Seems Sam Zell is much higher up the cap table than are Tribune employees who hold equity. Ugly. * Morning Call: Wall Street looks ready to double down on rally fever, energy helps Europe extend gains, Nikkei rises and Hong Kong drops. * Felix Salmon: Detroit should stick to making big gas-guzzlers. * Prominent New York attorney is arrested for trying to perpetrate a $100 million fraud. Among his alleged crimes: "People familiar with the matter say Mr. Dreier attempted to secure money from Fortress, a New York asset-management firm, by impersonating an Ontario Teachers' Pension Plan attorney."
1 min read · 09 December 2008
I just finished participating in a panel discussion called Pulse of the Middle Market, which was hosted in the Boston offices of law firm Edwards Angell Palmer & Dodge. Pretty dour session overall, but very well attended (after all, it’s not like people have deals to work on). Here’s a few quick notes I jotted down: * When it comes to leverage multiple, six is the new nine. * “Uncertainty is worse than bad certainty.” – Lee Tesconi, a partner with Lexington Partners (as relayed by Lane MacDonald of Harvard Management Co.) * Typical buyout funds are down between 6% to 9% for the September marks. They're expected to keep going lower, but not nearly so low as public equities. * Not only are LPs concerned about the existing denominator effect (overall portfolio value drops, thus illiquid PE exposure rises past allocation levels), but that the effect will be exacerbated by VC and buyout firms that keep drawing down capital faster than they provide distributions.
2 min read · 09 December 2008
2 min read · 08 December 2008
1 min read · 08 December 2008
The Big 3 automotive CEOs are currently testifying on Capitol Hill, alongside UAW president ron Gettelfinger. Later this aftenoon, the Congress will listen to a panel of academics and U.S. Comptroller General Gene Dodaro. It's a good witness list, but one name is glaringly absent: Stephen Feinberg, CEO of Cerberus Capital Management. Or if the spotlight is a bit too bright for the reclusive Feinberg, at least Cerberus chairman John Snow -- a former Treasury Secretary who's used to these sorts of things. Representative after representative have asked Chrysler CEO Bob Nardelli why U.S. taxpayers should inject capital into his company, when its majority equity owner has declined to do so. Nardelli has replied that Cerberus has: (a) Allowed Chrysler to draw down $2 billion in equity, (b) Convert its
2 min read · 05 December 2008
Yesterday I asked when private equity firms would begin cutting their fund sizes, in light of: (a) Layoffs which reduce management fee needs, (b) Less work because of reduced deal-flow and (c) Limited partner capital constraints. Apparently, all I had to do was ask. Check out the following statement from SVG Capital, which is a cornerstone investor in Permira IV, an €11.1 billion fund closed in 2006: Permira has approached its investors with a proposal whereby, subject to the requisite investor approval, an investor may elect to cap its commitment to Permira IV at 60% of an investor’s original commitment (against a current called amount of 52%). Those investors who do not elect to cap their commitment to Permira IV will continue to participate in all new Permira IV investments. An investor may elect to cap all or part of its commitment. The proposal would require electing investors to accept a 25% reduction in their entitlement to distributions from the fund, which would accrue to continuing investors, and to continue to pay management fees based on original commitments during the investment period of Permira IV. A Permira spokesman confirmed the statement in an interview with Reuters, adding: "Based on the
2 min read · 05 December 2008
The 6th Annual Internship Rodeo has begun, for first-year MBA candidates in search of summer internships in the private equity market. Fifty listings are up so far, including shops that focus on venture capital, growth equity, leveraged buyouts, funds-of-funds, investment banking, M&A and more. We've even got some in Asia and Europe. Listings can be found in the MBA Forum section of peHUB.com, under the Internship folder of the Employment section. To access the MBA Forum you must have an Access Code specific to your business school. If you do not have such a code
1 min read · 04 December 2008
The Blackstone Group has quietly led a $40 million Series C round for Coskata Inc., a Warrenville, Ill.-based developer of technologies for processing biorefuse into ethanol. The investment came out of Blackstone’s inaugural Cleantech Venture Partners fund, which is in the process of being raised. Jamie Kiggen, a Blackstone senior managing director, will join the Coskata board. Other return backers include Advanced Technology Ventures, Globespan Capital Partners, GreatPoint Ventures and Khosla Ventures. The company also counts General Motors as a strategic equity partner from its Series B round, but the troubled automaker did not participate this time around. To date, Coskata has raised over $76 million. Blackstone is one of many firms raising new funds to help industrial cleantech companies (biofuels, electric vehicles, etc.) bridge the gap between traditional venture capital
2 min read · 04 December 2008
1 min read · 04 December 2008
* Felix Salmon: Don't worry Harvard, you're still rich. * BusinessWeek sums up private equity's year from hell. * Morning call: U.S. futures are flat, FTSE rises on Bank of England rate cut, the rest of Europe is also up, Nikkei falls a percent on a stronger yen and Hong Kong drops. * Feel the Burn: Ways to tighten the corporate belt. (h/t Ask the VC) * GM and Chrysler consider prepackaged bankruptcy, according to Bloomberg. * Napa Valley's "wine shrine" files for Chapter 11 bankruptcy.
1 min read · 04 December 2008
