Private Equity
After each update of The 2008 LBO-Backed Bankruptcy List, I get a few requests for the 2007 list for comparison's sake. Until today, that list didn't exist, but I've spent the morning compiling as comprehensive of a record as possible. That effort resulted in a humbling number: Two. After narrowing down data from Thomson Reuters and Bankruptcy Research Database, I have concluded that only two buyout-backed companies filed for Chapter 11 in 2007.* Compare that total with the 39 companies to date this year. It seems silly to make a chart for just two companies, but, for consistencies sake, here it is: Lbo-backed-bankruptcies-2007. The companies are Remy International Inc, backed by CitiCorp Venture Capital and Berkshire Hathaway, InSight Health Services Holdings Corp, backed by J.W. Childs Associates and Halifax Group. Interesting to note, one of the '07 bankruptcies that was not buyout-backed at the time of filing, might be ripe to file Chapter 22. ...
2 min read · 20 October 2008
Recession Hits Carl Icahn: He's selling his yacht, and Wall Street Folly has the 13-F charts to show us why. Thanks FT: For finally putting your foot down on these kneejerk overblown Great Depression comparisons. For further proof of the damage, see New York Magazine's Crisis-Speak glossary: Depression: An implicit threat by way of which financial institutions are able to extort ransom to the tune of several hundred billions. Now Firing, I Mean Hiring: Lehman Brothers is taking resumes. Four hundred fifty to be exact. According to Dealscape, the new guys on the block will "look through Lehman's derivatives contracts to determine which parties could assert legitimate claims against the bank." Bankrupt?!: Tweeter Home Entertainment, again, according to gadget blog Engadget. If true, this time the blame falls squarely on its 363 buyer, Schultze Asset Management.
2 min read · 17 October 2008
Retailers are entering their most profitable quarter of the year, and many have been forced to tap into revolving lines of credit to cover the costs of inventory and labor. Others are doing it as a preventative measure. The move is particularly worrisome for LBO-backed retailers, given the dismal projections for holiday sales. Add to that the poor performances of many PE retail plays, including the liquidation of Mervyns and Linens N' Things. Beyond that, there's predictions of massive defaults in the first quarter of next year. Not to mention, they're drawing down loans to finance a reduced inventory. Adding further insult to injury, the holiday shopping season is technically one week shorter this year, since Thanksgiving falls a week later than usual. At the top of the list is Blackstone and Bain-backed Michaels Stores, which on Wednesday drew down $120 million from its ABL revolver.
2 min read · 17 October 2008
In fact, the firm expects to close 10 to 15 deals in the fourth quarter. Christopher Williams, a founding partner at Madison Capital Funding, called to clarify that after I wrote some apparently ambiguous comments on middle market lending pullbacks. So let it be known: Madison Capital has cash to spend. The firm has not narrowed down its deal criteria over the last few weeks, as I had written. The only change, Williams said, is that Madison Capital is pushing for the absolute latest financial performance numbers on companies. "The last thing we want to do is book a company that we haven't
2 min read · 17 October 2008
All Facebook All The Time: Could the spate of Facebook departures hint at a potential sale? Mergermarket thinks so. Sinfest: How The Credit Crisis Was Solved. Ouch, And Also Haha: Chesapeake Energy throws propriety to the wind in its Investor Day presentation slides. A way to lighten the mood perhaps? The painful ball-crush image labeled "Lehman Brothers" certainly begs the question of how exposed the firm was. Careerbuilder.com is Thriving These Days: Evidenced by the two-block-long line of 2300 job-seeking hopefuls at a recent job fair in Chelsea. We Go Viral. We Get On The Net, And We Blog It Out: Job hunters can take some guerilla self-marketing tactics from Glass Hammer's Pimp My LinkedIn guide. (Kudos to anyone who can name the commercial that uses the above line.)
2 min read · 16 October 2008
It's the worst deal-making environment in recent history, yet somehow Accel-KKR keeps cranking out new transactions. The firm earlier this week purchased Endurance International, a Burlington, Mass.-based web hosting and management business for an undisclosed amount. It was Accel-KKR's third deal in as many weeks, following the buyout court reporting tech business Alexander Gallo Holdings and the sponsorship of a merger between Amphire Solutions and its portfolio company iTradeNetwork. Plus, Accel-KKR held an oversubscribed close of its third fund. I had to ask, how is the Bay Area firm so prolific in such slow-moving times, and will it continue?
3 min read · 16 October 2008
2 min read · 16 October 2008
Greed Is Good: The Chuck Norris of Finance? Gordon Gekko is apparently returning to kick the credit crunch's ass in a sequel to the famous 80s movie, Wall Street. Michael Douglas is thinking about starring in the movie, which will be called Money Never Sleeps. Times have changed, Mr. Gekko, and shareholder activists aren't what they used to be. Commitment Letter: Huntsman's, disclosed via Deal Professor. According to him, the MAC wording actually deprives the banks of the ability to call "MAC" if Hexion had waived its right. That fact is moot after the court determined Huntsman to be solvent. But as Deal Professor says, that's a lot to give up. Candidates Provide Color: On their capital gains tax stances. Does this mean if McCain lets carried interest be, and lowers capital gains taxes, PE will be taking home a lower tax rate on carry? Business Week Blogs: How can we fix the economic system, or at least make it stronger for the future? One MBA professor says confidence and challenging questions are one way. "I think the average employee, maybe a business school graduate, lacks the confidence to ask the tough questions."
2 min read · 15 October 2008
Released last night, a CBS-NYT poll has given Barack Obama a 14 point lead in the presidential race. Based on that outlier, Fivethirtyeight is projecting an 8.1 point lead. With that in mind, I have a few PE-specific thoughts on a potential Obama presidency. First off, there's the new economic proposals. He wants to loosen rules to allow people to draw as much as $10,000 from their pension plans without penalty. This is essentially taking money out of the system. And who are some of the biggest, most stable investors in private equity? Pension funds. Won't this contribute further to the already-shrinking pool of capital from which pension funds invest?
2 min read · 15 October 2008
2 min read · 15 October 2008
