Private Equity
Remember when PE firms backed out of signed deals in droves? They looked like jerks at the time, but in retrospect, they were probably smart to avoid the overpriced, highly leveraged deals they had aggressively pursued for the past three years. Taking into account the Dow’s record breaking drops last year, and assuming that a company’s stock price reflects its health, let’s look at the stock performance of 2008’s busted take-private targets and recoil at the premiums PE firms might have paid.
2 min read · 11 March 2009
What's the alternative to a bankrupt portfolio company? A distressed credit exchange. Private equity pros are fully aware of this option, because it keeps their companies afloat without requiring new capital infusions or equity dilutions. Today Bloomberg reported there have been at least seven such transactions this year. Compare that with last year, which saw a total of 12 for the entire year, according to S&P. Lenders and bondholders are none too happy about the rising number of distressed credit exchanges. And why should they be? Lenders are offered a chance to exchange debt at a discount for cash or new securities. The transaction essentially benefits the PE backer because it keeps the company afloat while the bondholders take a loss.
3 min read · 11 March 2009
2 min read · 11 March 2009
Slow News Day: So yesterday there was an Economist story that mentioned Henry Kravis paid $22 million for this ugly chair. Of course, snark-tastic blogs Gawker and Dealbreaker picked up on it. Well, this info, which is apparently untrue, annoyed the folks at KKR enough to send out very prompt and categorical denials of such an instance. Even Kravis himself emailed Gawker. (So that's what I have to do to get in contact with him?) Capping off the zany gossip hijinks now known as "Chairgate" (thanks, Dealzone), we can rest in peace, as The Economist has issued a correction. I consider this entire trivial thing further proof that (A) there is seriously nothing going on in private equity these days and (B) PE pros will forever be sensitive about their post-Schwarzman Birthday lavishness. Whew. In Other News: Bankers are starting to think they'd be better off at a smaller, nimbler firms. (Dealbook) B-Schools and the Almighty Dollar: "A business school dean argues that students should be taught the societal value of business, not profit at any cost." Sounds nice in theory. (BusinessWeek) No Surprise Here: Michael Moore is looking for "Streeters" to have a "casual chat" with about Wall Street for his upcoming unnamed project. Wall Street Folly calls it a "Career Death Wish." (Wall Street Folly)
2 min read · 10 March 2009
The secondary market may be stalled until year-end numbers are out, but that hasn’t dampened interest in the asset class. Aside from firms starting new secondary intermediary practices left and right, many of the largest legacy buyers are in the market with new funds. Notably, one (Landmark) is raising a dedicated “secondary-lite” fund. Here’s the latest, according to sources and SEC filings: Landmark Partners (1) The Connecticut-based firm is raising Landmark Equity Partners XIV. The effort has a $2 billion target (a $2.3 billion hard cap, according to an SEC filing). Formed in May of 2008, the fund had gathered $590.15 million in commitments from 37 investors as of
3 min read · 10 March 2009
This Versus That: The financial sector meltdown has now surpassed that of the tech sector during the Internet bubble collapse, judging by stocks. (Marketbeat) Berkshire Hathaway: It's trading at a premium on Buffet's investing skills. But what's the probability of default? (Market Movers) CNBC In The News: Everyone has an opinion on it. NY Times asks if last week was CNBC's best or worst week ever. (NY Times) Speaking of that: The paper is no longer accepting comments on the story. Here are the editors' picks. Pitching Hacks: ScottDig reviews the venture capital pitching guide book, "Pitching Hacks." (Scottdig)
1 min read · 09 March 2009
1 min read · 09 March 2009
News of a potential wind-down from UK buyout firm Candover raises the question of what exactly that situation would entail. A run-off means the firm won’t raise new funds and basically manage its existing companies till they can be sold. Clearly it’s difficult to retain talent at a firm with no prospects of raising a new fund. In today’s job market, that may be less the case, but it hasn’t been at smaller firms like J.W. Childs and Willis Stein. Both firms, which haven’t shown much evidence of future fundraising efforts, have seen top talent exit. So if Candover begins losing managers, it would seem to follow that the best move is to sell off as many of the companies as possible. It’s all very hypothetical at this point, but is Candover’s portfolio up for grabs? Would there be buyers for the companies? Take a look at exactly what those funds include below.
2 min read · 09 March 2009
Jon Stewart Still Slamming CNBC: This time he has just one joke. He said to Letterman: "There are three 24-hour financial networks. All their slogans are like, ‘We know what's going on on Wall Street.' But then you turn it on during the crisis, and they're like, ‘We don't know what's going on.' It'd be like turning on The Weather Channel during a hurricane and they're just doing this: ‘Why am I wet?! What's happening to me? And it's windy!" What's going on? I'm scared!' How do you not know?" (Gawker) Want More? In other CNBC Vs. Stewart Cattiness, Dealbreaker has CNBC's hilariously immature unofficial response. (Even better, I'm pretty sure the headline is a Mean Girls reference.) (Dealbreaker) The Future of PE LPA Agreements? Pension funds are fighting for hedgies to lower their fees. Methinks PE will be next in their path, if it's not already happening. (WSJ) Get Jobs As Bankruptcy Lawyers: Corporate bankruptcies jumped 54% in 2008. (Reuters) Or Apply Here: One firm that's looking to add 100 fixed income employees. (Dealbook)
2 min read · 06 March 2009
Still on the “Secondary-Lite” beat, I stumbled upon a list of some funds that are considered attractive in the early stage secondary market. I spoke with Thomas Liadet, a Principal at placement agent and secondaries intermediary Campbell Lutyens, who said LP stakes in the following funds have drawn strong interest from investors:
3 min read · 06 March 2009
