Private Equity
Even though some are calling Kraft's deal for Cadbury a sweet one, to private equity firms, it tastes like sour grapes. In light of Kraft's generous use of leverage, the Private Equity Council, a PE advocacy group, released an analysis that can best be described as a vindictive "toldja so." And they're right, and they did tell us so, but still. The PEC's research that shows Kraft, a strategic buyer, will use more leverage (gasp!) on its deal for Cadbury than private equity did in the boom-era. For shame! According to the PEC, Kraft's leverage ratio is 24% higher than the average debt-to-cash flow ratio for large buyout deals between 2005 and 2008. The Counsel said:
2 min read · 21 January 2010
Oracle and Obama: Massachusetts voters may have had it with some of the Obama administration's policies. But it appears that Obama still has a fan in Omaha. (Deal Journal) Should Private Equity Be Investing in Residential Real Estate? Time thinks not. (Time) Looking to "Capitalise": Blackstone has applied for a British banking license. (Reuters) Fireworks: Cisco, Twitter See More Technology Takeovers for 2010. (Bloomberg) Amazing: Gary Fencik, once a hard-hitting safety with the Chicago Bears and now a partner with Adams Street Partners, turned down a chance to join some of his 1985 Bears' teammates in reprising their well-known "Super Bowl Shuffle" rap song and video for a Boost Mobile ad. (PE Beat) What Wall Street Really Fears: That Lloyd Blankfein, "the least-appealing CEO on Wall Street is leading the effort to change the public perception that the system is rigged against the little guy suffering through 10 percent unemployment while the big banks party on." (Daily Beast)
1 min read · 21 January 2010
Steep Climb to Mt. Kellet: A Star Goldman banker's struggle is showing "how tough it can be for hot-shot Wall Street bankers to strike out on their own as investors, especially in volatile Asia." (Reuters) Crazies on the Internet: A profile of VC-backed Yelp in Inc. magazine begins with a ridiculous story of one shopowner going mad over Yelp reviews, taking the fight from the internet to the streets (really). (Inc.) Want to Feel Old? Here's a list of "Timeline twins." For example, Listening to Michael Jackson's Thriller today is equivalent to listening to Elvis Presley's first album (1956) at the time of Thriller's release in 1982. (Kottke) The Downfail of Dykstra: At least his creditors can't take away his nickname: Nails. (Business Insider) $$$: NY financiers to reap $64 bln in bonuses in 2010 (Reuters) It's Worse There: UK Buyouts Hit 25-year Low As Debt Dries Up - Study (WSJ)
1 min read · 20 January 2010
The answer is not many. Back when this chocolatey drama began, we speculated that private equity’s biggest role in the deal may be to snap up a few divestitures. With a deal of this size (£11.5 billion, $19.5 billion), it seemed there’d be plenty, especially if you look at past precedent. Thanks to Anheuser Busch’s $52 billion sale to InBev, post-merger divestitures actually drove private equity activity in 2009. AB-Inbev scrambled to unload corporate orphans as a way to raise money to pay down the massive debt it took on for the merger; as a result, AB-Inbev divestitures made up three of the ten largest private equity deals of 2009. You’d think Kraft and Cadbury, striking in January what may be the largest deal of the year, would have a similar plan. According to Kraft's executives, that’s not the case at all.
2 min read · 19 January 2010
Here are some potential M&A ideas, rumored or official, to jumpstart your deal pipeline. Our sources are various news reports and the Buyouts “Seeking Buyers” list. For prior lists, see below. IDC (Interactive Data Corporation), is reviewing strategic alternatives. The listed company has a market cap or almost $2.7 billion and is majority-owned by Pearson. The FT, which Pearson also owns, reported that Hellman & Friedman, Kohlberg Kravis Roberts and Carlyle Group are interested bidders. Argon ST, a listed defense industry tech services company, has not moved forward its sale process since it hired Stone Key Partners last fall, dealReporter.com reported. However, Reuters reported that the company is being circled by a number of suitors. Brown's Chicken & Pasta, an Illinois-based restaurant operator, is seeking buyers for its three locations. General Motors Corp. is seeking a buyer for its Nexteer Automotive Steering and Driveline Operations, based in Sagnaw, Michigan.
2 min read · 19 January 2010
Here's a look at the last week's worth of scoops, data, and analysis from the peHUB team. Catch up on what you missed before it goes behind our paywall... All First Reads | All Second Opinions peHUB Returns to New York - Shindig in Three Weeks Enhanced Equity Raising Fund Two Video Q&A With Accel's Jim Breyer Blackstone Will Raise Year's Largest & Most Underwhelming Fund Roark Capital Cools to Financial Services, Cuts DeAngelo Kleiner Perkins In the Media Spotlight TA Associates In Hyperactive Mode This Year Do FDIC's Private Equity Guidelines Apply Or Not? Unleash Entrepreneurs From Obamanomics To Create More Jobs PE Debt Watch (Upgrades and Downgrades) Why Invest in oneforty and the Real-Time Web? CalPERS Dumps A Ton of Docs CalPERS Doc Dump Part 2 Laundry Room Chronicles: Chatting CalPERS A New Stewart Alsop? It's Official: The Secondary Market Slumped in 2009 Cleantech Investor? We Need Your Insights Founder Spotlight: Grockit's Farbood Nivi
2 min read · 17 January 2010
Wow: Remember when Steve Jobs said the Segway would be bigger than the PC? Yeahhhh. It was quietly sold with little fanfare on Christmas eve, Dealscape reports. (Via @MKFlynn) Job Interview Techniques: Tips on how to research financial companies before interviewing with them. (FINS) Compensation: A report released by JobSearchDigest.com, publishers of Private Equity Jobs Digest, reveals that private equity and venture capital firms take very different approaches to compensation based on the size of their funds. More details here. Steve Rattner: Why are the former car czar/PE baron/NY Times editor/Democrat and his wife supporting Harold Ford? Because Kirsten Gillibrand broke his wife's brothers heart, apparently. (Gawker, WaPo) Hiring 2.0: Is it better to hire someone who gets social media but may not understand business strategy or to hire someone who understands business strategy and teach them social media? Tac Anderson asks his Twitter contingency and the answers are interesting. (New Comm Biz) Speaking of Social Media: Here are the 20 Best Marketing And Social Media Blogs By Women. (Forbes) Testing Rocking Waters: BC Partners seeks raise €5.8bn, the biggest fund since the collapse of Lehman Brothers. (FT)
1 min read · 15 January 2010
As usual, we have a week’s worth of ratings actions on the debt of LBO-backed companies from ratings agencies Standard & Poor’s Ratings Services and Moody’s Investors Service. This week is apparently Warburg Pincus week, as the firm’s portfolio companies make up two of the week’s three ratings changes. Warburg Pincus portfolio company Antero Resources was downgraded on its decision to take on $100 million in new debt to pay down another facility. Meanwhile the firm’s energy company, Bill Barrett Corp., was upgraded after the company increased its commitment under the company's unrated revolving credit facility. And CI Capital’s Ply Gem received another upgrade (last week was from Moody’s) on its new issuance. The company is receiving “unsolicited” ratings from S&P, which indicates CI isn’t being generous with information on the company for the ratings agencies to do their jobs with. Call this a victory for the watchdogs? I guess?
2 min read · 15 January 2010
Behind the Skype: Bloomberg digs into Skype's founders relationship with eBay, Andressen, and Silver Lake. (Bloomberg) Poor, Poor Rich Banker: "You're a senior-level bonus baby of Wall Street. How do you cope with what's happening to you: the angry blogs, the editorials demanding contrition, the tax threats, the suggestion that your bonus is an ill-gotten gain, the inquiry commissions, the "vilification" in Jamie Dimon's words?" (Dealscape) Men and Women Respond to Stress Differently: Finding calls for gender-specific treatments for some diseases, researchers say (BusinessWeek) The Lloyd Face: Lloyd Blankfein showed an amazing variety of facial expressions during the Financial Crisis Inquiry yesterday, Dealbreaker has a breakdown. (Dealbreaker) Name Drama: J.W. Childs' apparel company JA Apparel is embroiled in a lawsuit with the company's founder and namesake, Joseph Abboud. (WSJ)
1 min read · 14 January 2010
Mergermarket today released its Canadian M&A roundup. The data shows that the slowdown in Canadian M&A continued in 2009 as overall values decreasing by 20.8% and volume by 14.2%. However, there was an upward trend in volume figures throughout 2009 as the last quarter of the year saw an 81% increase from 65 announced transactions in Q1 to 118 in Q4. The sharp increase in number of deals was led by the Energy sector, which with 99 announced deals representing a quarter of Canadian M&A volume for 2009.
1 min read · 14 January 2010
