Private Equity
Is American Capital best served as a BDC? There are some indications that CEO Malon Wilkus could be leaning in a different direction. He’s discussed it at a number of investor meetings and regularly compared American Capital to Danaher Corporation (DHR), which is a C-corp. American Capital would probably prefer to stay a BDC, as it has been for the last ten years. But if the environment stays this volatile, it could find shelter in a different structure. Out of all of the BDCs that are hurting right now, this option is really only open to American Capital. It’s the only one with enough control investments to make the switch and maintain the required 55% control investment minimum. American Capital has control stakes in around 50% of its investments. A simple sell-off of some loans could tip the scales. The benefits of American Capital making the switch are as follows: As it
2 min read · 11 December 2008
3 min read · 11 December 2008
Which VCs to Avoid: Some interesting, almost Seinfeld-ian reasons for an entrepreneur to walk away from a VC investor. Including "Avoid an investor who does not carry an iPhone." Seriously. (The Venture Company) On Recessions: "It is the economic equivalent of Lent." (Financial Times) More Surveys: European PE/VCs say PE's affect on employee relations is relatively positive (ignore the misleading headline). (AltAssets) Whatever: Spouse 2.0 Day, a Hallmark-ian celebration of the husbands and wives of start-up founders, is being documented in every conceivable 2.0 manner, naturally. It's clever, but something about the line, "Your family at home is essentially a start-up as well..." feels like this pseudo-event is reallllly stretching it. (Bits) Rewrite the PE Rulebook: So says Jonathan Foster of Current Capital, a guest columnist at Dealbook. In his article he lays out the basic tenets of classic PE investing and suggests the industry return to simpler times. (Dealbook)
2 min read · 10 December 2008
PE firms entering China face a lot of headwinds. There's the idea that, aside from a few homeruns, most investments in the region are underwater. Or that LBOs have no liquid exit opportunities. Or that leverage isn't readily available. And of course there's the country's country's notoriously opaque and shifting legal system. "Investors must also file dozens of forms to local tax offices to complete legal registration of a deal or joint venture company. Different bureaucracies within the country make different demands," a recent Reuters story laments. Adding to the problems, sellers in the country like to "take advantage of (a U.S. dealmaker's) need to close a deal quickly," according Andrew Marino, a principal with The Carlyle Group. Speaking last night on a China-focused panel discussion sponsored by Ernst & Young and Columbia
3 min read · 10 December 2008
How the Other Side Lives: Dress Wall Street, talk Main Street, drink Bourbon Street. A somewhat humorous list of "Ways to Make it Seem Like You Know What's Going on with the Economy" for non-financial types, from a random blogger. Bold: Is what many would call Charterhouse's lofty fundraising aspirations. Or maybe a better word is "masochistic?" (Telegraph) Blame the Rumourmongers: Wall Street as we know it is dead, thanks to those nasty rumour whores, says Ace Greenberg. (Wall Street Folly) Now Bail Out The Rumourmongers: The argument for resurrecting the Federal Writers Project, a New Deal-era federal program for journalists. (The New Republic) Chrysler's Message To Customers: Based on its Web site. "It's like they're your crackhead cousin trying to convince you, the lucid-minded individual, that the money you're giving them isn't being flushed down the toilet." (Dealbreaker)
1 min read · 09 December 2008
Tis the season for a bombardment of studies, surveys and reports. I’ve gotten a ton over the past few weeks, so here they are, summarized and ready for download. Demystifying the Credit Crunch From: The Private Equity Council and Arthur D. Little What it says: I haven't read all 20 pages of this white paper, but according to the press release, it covers the "origins of the credit crunch and the roots of the subprime crisis, which can be traced back to the early 1990s." It also goes into the impact of all that on PE, and has revised commentary on TARP. Download it here: Private Equity Council Dealmaker's Survey From: Thomson Reuters and ACG What it says: Middle market deal pros are bullish. 86% of em say the current M&A environment is poor. That's down quite a bit from the middle of the year, and its not about to change.
3 min read · 09 December 2008
It worked! The laid off Wall Streeter who handed out resumes on Park Avenue has found a employment. Josh Persky, a former Houlihan Lokey consultant, captured the media's attention this summer when he hit the streets in a sandwich board that read "MIT Grad For Hire." After 11-odd months, plenty of interviews and many a TV appearance, the stunt resulted in a job at Weiser LLP, an accounting firm. Congrats, Mr. Persky. The timing is impeccable. Just yesterday I referred to Persky in a story on unconventional job hunting tactics in finance. The story was inspired by an MBA grad who posted his resume in the back of
2 min read · 09 December 2008
Lists: Business Pundit compiles a list of the top business schools as ranked by BusinessWeek, FT, UT Dallas Research Rankings, US News & World Report, Entreprenuer, and Princeton Review. Listlessness: The business books of the year. Note that none of the books covering the crisis are out yet.... Viagra, Deal From Hell, Titanic and Warfare: The words of Samuel Zell, who has uttered many, many quotable comments regarding Tribune and newspapers. We Knew It: Investors in PE and VC firms are renegotiating their commitment contracts. Thanks Permira, for kicking off this chain of events.
1 min read · 08 December 2008
Today the New York Times ran a story on Apollo not unlike the one I wrote last week. The main difference (aside from this ridiculous photo illustration) is the fact that Leon Black actually spoke with the Times. In the story, he offers a few vague answers to accusations made by both the peHUB article and the Times reporter. Linens N Things wasn’t that big of an investment. Dividend recaps “are what’s best for our investors.” The firm “underestimated” the housing market downturn. Et cetera. No mention of the firm’s IPO. No mention of the performance of Apollo’s debt investments. However, Black does offer the sound byte, “Private equity is dead,” perhaps to explain away his firm’s return-killing performance of late. The best line in the 3000 word story is Apollo’s response to this stated death of private equity: “We’ve totally turned into a bond house,” he declares. Reminds me of what Josh Harris said at
2 min read · 08 December 2008
An MBA grad who has resorted to taxi driving is posting his resume in the back of his cab.
3 min read · 08 December 2008
