FIRST ROUND

A rare comedic treat was on full display last month as America's mainstream financial press stepped forward to valiantly repudiate the insane assertion that Microsoft might be taken private in a $288 billion leveraged buyout.

First a private equity industry blogger, who shall remain nameless, appeared on CNBC to explain to a shaken world why such a deal – if possible (which it's not) – was just too silly to even talk about.

Next up was BusinessWeek, which wondered whether talk of Microsoft's take-private might be a sign of the apocalypse in private equity. Even the New York Times noted that Microsoft may be on a “list being drawn up” of potential elephantine deals.

But just as the phrase “when pigs fly” does not indicate a belief that swine will eventually aviate, John Plender's subtly funny commentary in the August 19 issue of the Financial Times was not a sincere advocacy that Microsoft be taken private in the mother of all club deals. Instead (we write nervously, cognisant that explaining a joke makes it less funny), Plender's piece used a fictitious buyout of Microsoft to critique and gently skewer the mechanics behind the many deals of one-twentieth the size that have been making headlines of late. He proclaimed, for example, that a dividend recap of Microsoft would produce the “greatest dividend payment of all time” which would save all those LPs that have been trying to “punt their way out of pension fund deficits” through massive private equity allocations.

The definition of dramatic irony is a situation that is understood by the audience but not by those on stage. Plender's commentary appears to have produced the exact opposite. As he himself pointed out in a follow-up comment in the FT in mid-September, the episode confirmed “the conventional wisdom that irony is not something that works in the US. Judging by my e-mails, it also travels poorly in Asia.”

QUOTABLE
“One or two years ago there was a political discussion about private equity in relation to, for example, the fairness of economic incentives and private equity firms as sellers in IPOs. But in many ways, the perception of private equity has improved since then.”

Christian Sievert, managing partner of Swedish private equity firm Segulah, tells PEI that, in his view, politics and private equity now mix well in Sweden.

“These venture capitalists will break the national capital structures into pieces.”

Göran Persson, former Swedish Prime Minister and head of the socialist Social Democratic Party, in a speech prior to losing power in the country's general election on September 17 to the centreright Alliance Party. The speech referred to stakebuilding in Volvo by Swedish investment fund Cevian Capital, and appeared to confuse venture capital with hedge funds.

No court has yet put all of this together and banned management buyouts. But it took a long time for courts to bar segregation or for Congress to bar residential housing discrimination.”

Writer and comedian Ben Stein, in a New York Times op-ed, decrying the management buyout as a “sad and infuriating avatar of a decadent age”.