Private Equity
2 min read · 05 April 2010
2 min read · 05 April 2010
1 min read · 05 April 2010
The Private Equity Council last week released a 27-page study addressing the great question of whether private equity destroys value. What do you think the PEC, an advocacy group for private equity firms, concluded? PEC determined that private equity-backed companies are not more likely to default than other companies, which differs from conclusions reached in recent reports from S&P, Moody's and even Bain & Company. The trade group even goes so far as to put the term "overleveraged" in quote marks. As if there isn't such a thing as too much leverage! But really, the PEC does make a few valid points. First, I think the record has been set straight about the BCG report from late 2008, which famously stated half of all PE-backed companies could default based on where their debt was trading, and concluded that 40% of all private equity firms could disappear in a great "shake-out." Although it somehow manages to earn a mention at every conference I've been to since its release, I think I can safely say not many in the industry, peHUB included, took it very seriously. (In fact, I hereby declare this site a BCG-"shake-out"-report-free zone.)
2 min read · 05 April 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 Tesla Earnings Decelerate in Q4 March Madness Update: We've Got A Leader Peoria Looks Down On Googleplex iPhone, SchmiPhone: Only One in Five Americans Using Smartphones ZipCar Begins to Rev Its IPO Engine Buyouts Announces Deal of the Year Winners Monte Brem Opening Stepstone's Beijing Office Cloudera Tops VCJ's Inaugural List of 20 Most Promising Startups FourSquare Funding Battle: And Then There Were Three... Are "Lazy" Reviewers Behind Yelp's Alleged Extortionist Scheming? DRI Crosses Fundraising Target, Doesn't Stop Prelim Data: PE Dealmaking Decreases in Q1 Thoughts on Today's Buyout-Pension Powwow VCJ 20 Most Promising Startups - The Full List M&A Monday (On a Tuesday) A Peek at ThreatMetrix, and Why It's Becoming Integral to a Lot of Other Startups A Penthouse Fit for a VP Level Employee at a Booming Pre-IPO Startup The Demise of The Mad Men Much Ado About Not Too Much Cleantech Investments Bounced Back in Q1
2 min read · 02 April 2010
Extreme Makeover: Wall Street edition. (NY Times) Growing Pains: American Apparel is having some issues after its explosive growth. Is anyone surprised or upset by this news besides investors in the American Apparel SPAC? Probably not. Maybe this means the company will buy fewer exploitative billboards... (WWD) Going Up: Deal multiples, that is. Apparently buyout barons are ready to start paying more for companies. I wonder if that loosening of the all-important "discipline" coincides at all with a return of leverage... (Reuters) I Knew It! Back when Berkshire, Advent and Bain struck their deal to acquire Skillsoft, we wrote that analysts and shareholders seemed unimpressed by both the price and the opportunity for a counterbid. Lo and behold, the buyout firms have sweetened their bid. (Reuters) Opportunity is EVERYWHERE: David Rubenstein is the biggest private equity cheerleader out there. While other accomplished buyout barons such as Kravis or Bonderman may sit back with the attitude that they don't have to explain themselves to us, Rubenstein is out there beating the buyout drum. (CNN)
1 min read · 01 April 2010
2 min read · 01 April 2010
Scott Sperling, Co-President of THL Partners, appeared on The Faber Report this morning to discuss the return of deal financing and, in turn, LBOs. He commented that even though high yield is killing it and CLOs are starting to inch back, buyout pros need to exercise caution when executing LBOs. "The thing we need to be careful about is not to make the mistakes that we an an industry made in '07, which is, we used better financing in order to pay more for companies beyond their inherent fundamental values," he said. THL has done one of the largest deals of the year with its February acquisition of CKE Restaurants, for $928 million.
1 min read · 01 April 2010
By our count only six private equity-backed companies have filed for Chapter 11 bankruptcy protection in 2010. That’s a far from cry the 24 that occurred in the first quarter of 2009. In fact, in all of March, there was just a single private equity-backed bankruptcy, which occurred this week. St. Louis-based Electrical Components International Inc., which in 2007 received a $75 million equity investment by Francisco Partners, filed for bankruptcy protection yesterday.I think this is a pretty good sign, considering we recently learned that PE-backed companies are more likely to default (but also more likely to recover). It seems to follow that if the bankruptcy rate of debt-laden companies is dropping, that bodes well for the rest of the economy. Then again, there are a lot (LOT) of debt-laden companies that haven't even begun to imagine how they'll go about repaying it. That's for 2014 my friends... Download the updated list below.
1 min read · 01 April 2010
As usual, we have a week's worth of ratings actions on the debt of LBO-backed companies from ratings agencies Moody's Investor Service. This week we have just one downgrade, possibly because it is a short week (tomorrow is a holiday). Even though Moody's downgraded the debt of Central Parking, backed by Kohlberg & Co. and Versa Capital Management, the ratings agency said is expects liquidity to remain adequate for the company's 6x leverage level. Company: Central Parking Sponsor: Kohlberg & Co. LLC and Versa Capital Management Action: Moody's downgraded the company's corporate family rating and probability of default rating to B3 from B2. Highlight: "This rating action reflects revenue and operating results that continue to trend below expectations, largely a result of the negative impact that high unemployment rates have on the demand for parking. Moody's does not expect unemployment in the US to rebound materially over the medium term, and cost cutting and operational initiatives undertaken by management have only partly offset negative 'same store' volume trends in CPC's leased properties."
1 min read · 01 April 2010
