Private Equity
2 min read · 15 October 2008
Wherefore Art Thou: The Deal.com chronicles the scattering of the bankers formerly known as Lehman MDs. Scwartzman Speaks: And he's a fan of today's bailout. That, or he's trying desperately to restore confidence in the stock and lending markets. Better than instilling sheer terror, I suppose. He said: ``Before this remarkable initiative, the cost of money for financial institutions was way higher than they could afford to lend it out. The system ground to a close.'' Practice What You Preach: THL's Scott Sperling bemoans ad revenue loss for print newspapers to a Wall Street Journal reporter. And then admits he reads the Journal online. Wall Street Meets Main Street: The effects of the credit crisis has rippled all the way to the Boston Red Sox, a team I am supposedly required to despise based on my status as a New Yorker. Couldn't the teams new spring training stadium get some PE infrastructure money (ha)?
2 min read · 15 October 2008
This afternoon ACG, Grant Thornton and NASDAQ hosted a panel discussion on a White Paper written by Harris Smith of Grant Thornton. The white paper explores seven "top trends" in private equity, including hot sectors and exploding cross-border M&A. Download it below. The discussion was semi-informative, touching on questions like: Could sovereign wealth fund Investments dry up? Is the golden age of private equity over? and Where are mid-market multiples? Highlights after the jump.
2 min read · 14 October 2008
Easy Guide: Remember when Dan asked, "What are you telling people?" when non-financial types in your life ask you "What in the Great Depression is going on here?" Journalist Matt Thompson has come through with The Money Meltdown. With a selective list of links and timelines, it's the most organized, concise, and brief guide to the background, key facts, effects and outlook of the crisis. The Investors Consigliere: Proposes that the Internet will help make this bailout easier. I have to disagree, and I'm not just being humble as a blogger myself. Does anyone in power actually turn to the internet for feedback on proposals? As if to say, "Well Hank, the blogosphere really hasn't responded well to this proposal, but after hours of slogging through the opinions of hundreds of people (some smart, many a horrific waste of time), I noticed this anonymous person who owns a computer has offered a slight tweaking that we might want to consider adopting. Thank you, Web 2.0." RIP: The Wall Street Journal writes an epitaph for hedge funds of funds. I don't think this means anything for PE funds of funds quite yet, but I do like Gawkers screed on a hedge fund of fund. That's singular. One fund, that invests only in one other fund. How in Gods name would someone justify that fee trick? Deal Professor Spreads: Only two real PE deals pending here: Blackstone/Apria Healthcare and BCE. The first is trading at around 20% which is ridiculous but pretty typical, comparatively. BCE, trading at closer to 30%.
2 min read · 13 October 2008
2 min read · 13 October 2008
Brief because it’s late on a Friday… Do Your Diligence: Duane Reade’s former CEO, Anthony Cuti, is pleading “not guilty” on charges that he provided false information to Oak Hill Partners while negotiating the company’s buyout. Proof That Regulation Is Not A Bad Thing: Estonia’s young capitalist economy, with its laissez-faire approach, is struggling to overcome its first economic downturn. Start worrying: GE down 22%. Down But Not Out: BusinessWeek suggests that VCs won’t be on the sidelines for long. One Thing After Another: Linens N Things liquidates. Then Hexion has to buy Huntsman. Leon Black can’t get a break—earlier this week a building on his upstate New York property burned down.
1 min read · 10 October 2008
I’m coming out of the rock and roll closet: I, Erin Griffith, am a financial blogger by day and keyboard player in a band by night. I'd prefer to keep the personal and professional lives separate but am realizing (with the help of twitter, and LinkedIn, Facebook, and other things) that as a blogger, that’s just about impossible. So, here you have it. My band, called Team Genius, has released our debut full-length album and it’s available to preview and/or purchase here: CDBaby. Our CD release party is in Brooklyn this weekend, more info here. Ok, enough about me, back to finance.
1 min read · 10 October 2008
That’s because the middle market is simply not strong anymore, particularly on the lending side. Take GE Capital, which today revealed cracks on the wall: G.E. said it was seeing rising delinquencies on its consumer and commercial finance business. It plans to set aside provisions for pretax losses of $6.6 billion this year, a sharp rise from 2007, and it expects losses to rise next year to $7.5 billion to $9 billion. (NY Times) This supports yesterday’s story in The Deal, which reported GE Antares has suspended new financing until January (sub req): Chicago-based GE Antares, which dominates the middle market, has walked away from commitments and even pulled staples, sources said. It's true that GE is, for the most part on the sidelines, a source told me, but the firm is still looking at deals. Same goes for Madison Capital, which is rumored to be closed for business. “They’re saying yes. Not often, but they’re still saying yes to conservatively levered loans with low loan to enterprise value and a lot of equity.” "Not very often" is pretty damaging, when it's the two largest mid-market lenders. In Q3 '08, deal volume was down 22.2% from Q3 '07, which was a post-credit crunch quarter itself. This week alone, peHUB tracked a mere 17 new deal announcements. Depending your size threshold for middle market, most of these deals barely even make the cut. The middle market even was down at the start of this year, when a headline
2 min read · 10 October 2008
Two thirds of CFOs surveyed by Grant Thornton think CEOs are overpaid. But only 25% think their own CEO is overpaid. Sounds like a case of “no one wants to call the baby ugly.” The board of directors would likely respond with a similar answer. Execs are spoiled, but ours deserves it. And the survey revealed another interesting point: 83% of those surveyed think the CEO and chairman role should be separate. Both of these answers support an argument in favor of private equity that says PE firms bring much-needed discipline to companies. The survey doesn’t ask why CFOs want less power and money for CEOs, but The Lehman Brothers Effect isn’t a bad guess. So I ask, if a failing company like Lehman, for example, were backed by a private equity firm, wouldn’t management have been dismissed many quarters ago?
2 min read · 10 October 2008
Speaking Of Rising Default Rates: Naked Capitalism elaborates on the other economic shoe dropping, as it relates to bad LBO loans, and that rising default rate we are hearing about. The amount considered "bad" has nearly tripled. Sad Guys On Trading Floors: There are a lot of photos of trading floor distress. Enough to make a topical comedic blog on it. David Pilling: Did America hang itself with an Asian rope? Despite the ridiculous metaphorical lead, the FT columnist very keenly points out how Asia has played a part in America's financial downfall in more than one way. But: Just when we thought we had it bad, Business Week reports that Europe is even less suited to handle a crisis.
3 min read · 09 October 2008
