Friday Letter: A night before Xmas

The week's best stories:The Night Before Christmas (At a US Private Equity Firm About to Undergo an Audit)  

‘Twas the night before Christmas, and all through the firm

The partners’ good fortune was starting to turn

 

The markets were tumbling and causing great fear

And what’s more, the auditors soon would be here

 

The deals to which money had been allocated

Were mostly in sectors the markets now hated

 

Consumer and retail, restaurants, automotive

Newspapers, lenders and other implosives

 

The comparable companies publicly traded

Would mean the portfolio’s value had faded

 

Each GP did supplicate unto high heaven:

“Please God, end this curse named FAS 157”

 

The year-end financials filled GPs with dread

While visions of zeros danced round in their heads

 

“Our fund is insolvent!” they said with a gasp

“There’ll be no more re-ups! Our best days are past!”

 

The auditors’ shadows did darken the door

They said: “Times, they have changed! Hold at cost? Nevermore!”

 

“On Hilton, on Harrah’s, on Hypo, on Chrysler!

On Clear Channel! On Freescale Semiconductor!”

 

“You must cut these values! These markings must fall!

So slash away, slash away, slash away, all!”

 

Then from a window the partners did spy

A sleigh pulled by reindeer descend from the sky

 

Aboard was a man who appeared to be Claus-like

But in fact his abode was far south of the Klondike

 

A partner said: “Wait, is this some kind of prank?”

When the Claus said: “I’m Henry, but please call me Hank”

 

The GPs all stared and asked, “How could it be?”

For there stood the Treasury Secretary

 

He took off his Santa Claus suit and hat

And asked that the founder come sit on his lap

 

“I come bearing gifts,” Hank said, trying to be nice

“But unlike real presents, these come at a price”

 

He then told the founder, now perched on his knee:

“I’ll bail out the whole LBO industry”

 

“This market’s a treasure and too big to fail

And so by my powers I hereby do bail”

 

“At last!” cried the GPs. “A package for us!”

But what they heard next made them grumble and cuss

 

“You all will submit to complete regulation

Filings, inspections and, yes, registration”

 

“I think that you’ll find in my plan nothing lacking

For I’ve built up your trust from my years Goldman Saching”

 

The partners looked glumly around at each othe

And pondered a future of government smother

 

The founder then rudely regained an aplomb

Not seen since the night of his ’64 prom

 

“We’ll sail our own ship! We’ll be our own bosses!

To hell with the bailout and interim losses!”

 

“You’re right!” said the head of IR, now in tears

“Our LPs have patience! We’ve nothing to fear!”

 

The auditors stayed and performed gruesome work fast

While Paulson flew off with his reindeer, aghast

 

When the clock struck at midnight the founder did shout:

“Happy Christmas to all and please, please don’t spin out!”

 

PS PEO’s intrepid staff has now taken pause for a winter break, with full coverage returning on 2 January. Best wishes for the New Year.