2 min read · 16 January 2009
2 min read · 16 January 2009
Breakfast Wars: A staunch supporter of breakfast sandwiches, I followed Wendy's foray into the breakfast world quite closely. Sadly, I had a hunch as both a consumer and a witness to the company's investor presentations, that the strategy was doomed from the start. Maybe it'll come back after the recession. (Daily Bread) Finance Comics: Bankruptcy Bill, and haikus. Ups and Downs: Schwarzman gets a little good news this week, after an insider trading scandal tainted his firm. The firm is allowed to walk away from Alliance Data without paying the breakup fee. What's Better For the Economy: Fiscal or Monetary policy? (Daniel Gross)
1 min read · 15 January 2009
The mad rush to sell commitments to private equity funds on the secondary market isn't without consequence. PE firms are keenly aware that no more than 2% of a fund’s LP interests can sell on the secondary market. If they do, the fund is no longer protected by safe harbor laws that guarantee that all-important “private” status and, more importantly, “private” taxes. If more than 2% trades on the secondary market, it could be audited and deemed a publicly-traded partnership, or PTP. Examples of PTPs include publicly-traded mutual funds. The PE fund is no longer a flow-through vehicle and, as a result, returns end up being taxed twice (GPs get taxed on the income, LPs get taxed on it after distributions). There also are safe harbors for up to 10% if it is sold in large “block transfers;” ultimately this relates to how many LPs there are. Understandably, some firms are concerned about the number of commitments that their LPs will sell on the secondary market. “The other side of the coin is so draconian,” as one source said. But GPs typically have veto power over secondary sales written into their partnership agreement. So, in order to keep their safe harbor guarantee, a number of firms have told eager-to-sell LPs they’ll just have to wait. Get in line for 2009. One lawyer I talked to said there’s a mega-buyout firm that has a two-year waiting list of eager-to-sell LPs.
3 min read · 15 January 2009
CEO One Liners: Silicon Alley Insider likes Yahoo's new CEO-here are a few of her greatest hits (including plenty o' four letter words). Not Cool AT&T: Now merely owning a cell phone is inviting unsolicited ads from your service provider? (Bits) Steve Schwarzman's Bulletin: On Chakrapani: He's "personally infuriated" about the insider trading scandal. (Deal Journal) Layoff Etiquette: Thanks Business Pundit. NEWSFLASH: PE relied on debt!, the FT reports. That's obvious enough, but how much of the profits came from debt? For as many of you that tout operational know-how, the results of this study are surprising. (FT)
1 min read · 15 January 2009
Spectrum Equity Investors is in the market with its sixth fund, according to a regulatory filing. Principal Benjamin Spero said the fund held a first close in Q4 of last year, comments he made at yesterday's Gridley Conference at the Essex House in New York. A liveblog of that conference is available here. Spero declined to comment further and his colleagues didn't return calls asking the size of the first close. However, according to the filing, the fund has a $1.25 billion target. That's not a big leap from its prior fund, a $1.2 billion pool that closed in 2005. Here's what I could could find on the performance of
1 min read · 15 January 2009
CNBC: Clusterstock points out that the calibur of advertiser on CNBC has really sunk. My personal favorite is the one for Grand Prospect Hall (probably becuase it's in my neighborhood). The commenters chime in with a few, including the VC favorite, Cash4Gold! Stress Relief: Businesspeople in Japan are blowing off steam by breaking plates at a store called the Venting Place. (Business Pundit) Here's A Wild Idea: Breaking Views suggests its time for KKR to take Dollar General public. With a lot of caveats. MBO Fail: The SEC caused Landry's to pull its planned MBO, because it required the firm to break its confidentiality agreements with lenders. Landry's decided to keep mum so it could at least obtain alternative financing. There is something wrong with this picture. (Reuters)
1 min read · 13 January 2009
Today I'm reporting from a Gridley & Company conference at the Essex House. The conference is somewhat media-focused, making it all the more appropriate to try out Coveritlive liveblogging software, barring no technical difficulties. Panelists are Ellen Marshall, MD at CIT Group, Brad Woloson, GP at JMI Equity Fund, Michael S. Berk, MD at TA Associates, and Benjamin C. Spero, Principal at Spectrum Equity Investors. Follow the jump to follow along...
1 min read · 13 January 2009
This is what happens when LPs are cash-strapped: PE interests are piling up on the secondary market, there’s no debt to do deals and no companies want to sell. PE is out of vogue. Not unlike conspicuous-consumption-in-a-recession out of vogue. The fate of the fundraising processes that have sputtered to a standstill hangs in limbo--a little place LPs have been calling “fundraising purgatory.” This is especially true for many first-time funds, with no existing LPs to rely on to at least participate pro rata. Of course, the first-time funds are also the slowest to admit trouble, claiming they’re still working away, despite prolonged periods with no sign of a close. Others have come clean. In recent weeks, the following firms have put their fundraising on hiatus until the storm passes, according to reports at peHUB or elsewhere:
2 min read · 13 January 2009
Daniel Gross Asks: The health care industry was supposed to be recession-proof. So why is it in trouble? (Moneybox) Rants: Why the Times article stating that Google is bad for the environment is bunk. (Altgate) Sir Michael Rake says: He won't "name and shame" private equity firms that don't comply with new British transparency rules. (FT) Sigh Of Relief: TPG investors, bruised this year by WaMu and Harrahs, muust've been happy to read that the sale of Alltel to Verizon is finally, officially, once and for all, closed. (Deal Journal)
1 min read · 12 January 2009
