August 28 - Forbes - Could the airline sector be taking off soon?
With key players in the industry looking to consolidate, the fall may bring traders' money and headlines to an industry dogged by high fuel prices.
Although he does not believe any deals are imminent, Calyon Securities analyst Ray Neidl said in a research note that the market may start to factor merger considerations into stock prices. Read More.
Thursday, August 30, 2007
Canadian mergers hit record, but may have peaked
August 29 - Reuters - The value of mergers and acquisitions involving Canadian companies surged to a record in the second quarter, data showed on Wednesday, but that could be the peak of a year-long buyout binge.
Companies announced transactions worth C$202 billion ($191 billion) in the quarter, more than double the previous record of C$89 billion set in the third quarter of 2006, according to joint Financial Post and Crosbie & Co. data.
Even without the boost from two blockbuster transactions -- the announced buyouts of telecommunications group BCE Inc and aluminum producer Alcan Inc. -- the three-month period to June 30 would still have been a record. Read More.
Companies announced transactions worth C$202 billion ($191 billion) in the quarter, more than double the previous record of C$89 billion set in the third quarter of 2006, according to joint Financial Post and Crosbie & Co. data.
Even without the boost from two blockbuster transactions -- the announced buyouts of telecommunications group BCE Inc and aluminum producer Alcan Inc. -- the three-month period to June 30 would still have been a record. Read More.
Wednesday, August 29, 2007
CFOs see private-equity activity increasing: survey
Execs expect buyout binge to continue, but others say deals will be smaller
August 28 - MarketWatch.com - A survey released Tuesday of more than 100 chief financial officers found that 75% of them expect the number of companies seeking private equity to increase in the next 12 months.
But others aren't so sure. "I'd be very surprised if private-equity activity picked up at this point," said Jon White, president at Beacon Hill Financial in Orlando, Fla. "The credit crunch is making deals much more expensive. We're probably looking more at moving toward historic long-term averages where private equity deals number a lot less and involve substantially less money."
None of the CFOs expect private-equity activity to decline in the coming year, according to the survey conducted by Tatum LLC. Another 25% forecast some leveling off, according to the Atlanta-based strategic planning firm. Read More.
August 28 - MarketWatch.com - A survey released Tuesday of more than 100 chief financial officers found that 75% of them expect the number of companies seeking private equity to increase in the next 12 months.
But others aren't so sure. "I'd be very surprised if private-equity activity picked up at this point," said Jon White, president at Beacon Hill Financial in Orlando, Fla. "The credit crunch is making deals much more expensive. We're probably looking more at moving toward historic long-term averages where private equity deals number a lot less and involve substantially less money."
None of the CFOs expect private-equity activity to decline in the coming year, according to the survey conducted by Tatum LLC. Another 25% forecast some leveling off, according to the Atlanta-based strategic planning firm. Read More.
Private equity lessons
August 27 - Financial Times - Runaway booms always mask a raft of questionable activities. The buy-out frenzy was no exception. Problems being exposed by the credit market crunch go beyond the exuberant funding promises that the banks now regret. Home Depot’s renegotiation underlines a few of them.
First, there is “stapled finance”. The idea was that banks advising on a sale would also offer financing terms to potential buyers to lubricate the process. That created a conflict of interest by positioning the bank alongside both buyer and seller. In Home Depot’s case, Lehman Brothers advised on selling the supply division, helped provide the financing and then, when the deal looked tenuous, helped to force a renegotiation and price cut. At that point, it was removed as an adviser. But it should never have been on both sides. In a tight spot, the interests of its shareholders were always going to come above Home Depot’s. Read More (subscription required).
First, there is “stapled finance”. The idea was that banks advising on a sale would also offer financing terms to potential buyers to lubricate the process. That created a conflict of interest by positioning the bank alongside both buyer and seller. In Home Depot’s case, Lehman Brothers advised on selling the supply division, helped provide the financing and then, when the deal looked tenuous, helped to force a renegotiation and price cut. At that point, it was removed as an adviser. But it should never have been on both sides. In a tight spot, the interests of its shareholders were always going to come above Home Depot’s. Read More (subscription required).
Tuesday, August 28, 2007
Alternative Energy: Can It Compete?
August 27 - Seeking Alpha - It's no secret that alternative energy is an emerging market with enormous potential for growth; fossil fuel depletion, political volatility in oil producing nations, and the effects of greenhouse gasses have become pressing issues for many in recent years. But for all the hype, the question remains: Can it compete?
The dig against alternative energy has always been costs. Yes, solar power is nice, but if it costs 10X more than burning oil, we'll stick with our dinosaur fuels.
Technological advancements over the past few years, however, have significantly decreased production costs. With rising prices for fossil fuels, solar power, wind power, hydropower, bio-diesel, and ethanol have seen tremendous growth. Thanks to increased cost efficiency, alternative energy sources have caught the eyes of many governments and energy producing companies across the globe, which are throwing increasing amounts of money at the concept. Is this money over the bridge, or have alternative energy sources turned the corner to become cost effective? Read More.
The dig against alternative energy has always been costs. Yes, solar power is nice, but if it costs 10X more than burning oil, we'll stick with our dinosaur fuels.
Technological advancements over the past few years, however, have significantly decreased production costs. With rising prices for fossil fuels, solar power, wind power, hydropower, bio-diesel, and ethanol have seen tremendous growth. Thanks to increased cost efficiency, alternative energy sources have caught the eyes of many governments and energy producing companies across the globe, which are throwing increasing amounts of money at the concept. Is this money over the bridge, or have alternative energy sources turned the corner to become cost effective? Read More.
Monday, August 27, 2007
Capgemini says 28.5 pct of US executives mulling mergers to keep market position
August 23 - Thomson Financial - IT services company Capgemini said 28.5 pct of US executives it surveyed are considering mergers and acquisitions as a way to maintain or increase their companies' global market position in the next three years.
Capgemini said it comes amid a broad lack of confidence that sales can rise enough to achieve this goal with existing resources.
It said 38.3 pct of the executives are considering greater capital investments and 32 pct are thinking of adding jobs.
Other options being considered by at least 32 pct of the executives are improving company practices outside of production, more training and outsourcing some functions.
Friday, August 24, 2007
Developers a-callin' on private-equity firm
August 23 - IndyStar.com - The subprime mortgage collapse. Shrinking credit. Stock market angst.
For many investors and real estate developers, the news lately hasn't been good. But for others, including private-equity firms such as D.W. Funke Investments, the housing market's losses have been their gain.
"We are in high-growth mode," said David W. Funke, president and chief executive of the Carmel-based investment company.
"Because of what's happening with the subprime collapse and the shaking up of the capital markets, generally all we have to do is respond to the phone calls coming in" from commercial real estate brokers, bankers and developers, he said. Read More.
For many investors and real estate developers, the news lately hasn't been good. But for others, including private-equity firms such as D.W. Funke Investments, the housing market's losses have been their gain.
"We are in high-growth mode," said David W. Funke, president and chief executive of the Carmel-based investment company.
"Because of what's happening with the subprime collapse and the shaking up of the capital markets, generally all we have to do is respond to the phone calls coming in" from commercial real estate brokers, bankers and developers, he said. Read More.
Thursday, August 23, 2007
Private Equity Firms Are Vital Components in Today’s Global Economy
August 22 - New Age Media Concepts - Gone are the days of true corporate raider, where companies were torn apart and sold off to the highest bidder. The misconception in today’s market place by investors, not institutional investors mind you but individual investors, is that when a Private Equity Firm takes over a public company that the corporate raider mentality comes into play. This is far from the truth actually.
Private Equity firms, as it relates to public companies, add true value through restructuring. Keep in mind that when a public company does anything dramatic that could temporarily reduce a company’s earnings or asset base, the street is unforgiving. Its this fear that actually puts a blockade in place and prevents most public companies from doing what a private equity firm is already geared up to do, and that is reduce the fat, build a strong sound foundation and add true growth to the company. Read More.
Private Equity firms, as it relates to public companies, add true value through restructuring. Keep in mind that when a public company does anything dramatic that could temporarily reduce a company’s earnings or asset base, the street is unforgiving. Its this fear that actually puts a blockade in place and prevents most public companies from doing what a private equity firm is already geared up to do, and that is reduce the fat, build a strong sound foundation and add true growth to the company. Read More.
Private Equity, Public Gain
Let's lay to rest the myths about private equity, once and for all. There's no question PE is a boon to society
August 21 - Business Week - Recent turmoil in credit markets and hedge fund losses, along with the public offering of the Blackstone Group, have reignited controversies over the growing power of private equity. Critics call private equity outfits such as Blackstone the new robber barons, ready to plunder great corporations and leave them in a shambles.
Nothing could be further from the truth. The dynamic leadership of private equity is providing great benefits to corporations, the economy, and society.
Let's take a closer look at some myths about private equity: Read More.
August 21 - Business Week - Recent turmoil in credit markets and hedge fund losses, along with the public offering of the Blackstone Group, have reignited controversies over the growing power of private equity. Critics call private equity outfits such as Blackstone the new robber barons, ready to plunder great corporations and leave them in a shambles.
Nothing could be further from the truth. The dynamic leadership of private equity is providing great benefits to corporations, the economy, and society.
Let's take a closer look at some myths about private equity: Read More.
Wednesday, August 22, 2007
The Right Stuff
August 21 - ThomasNet Industrial Newsroom - Apathy, budget cuts and growing global competition ... despite a number of concerns, the worldwide aerospace and defense market is on track to grow by more than 19 percent by 2011.
And “as airline profitability improves, OEMs steadily raise delivery schedules and supply chain businesses see strong levels of shipments to Airbus and Boeing,” the outlook for the A&D sector “remains extremely attractive thus far in 2007,” investment firm RSM EquiCo Capital Markets noted in April.
Meanwhile, merger and acquisition activity in the A&D sector continues to rise, as "strategic and financial players gain confidence in the long-term stability of the commercial build-cycle and bipartisan defense spending,” according to RSM EquiCo’s Q2 Aerospace & Defense Review. Read More.
And “as airline profitability improves, OEMs steadily raise delivery schedules and supply chain businesses see strong levels of shipments to Airbus and Boeing,” the outlook for the A&D sector “remains extremely attractive thus far in 2007,” investment firm RSM EquiCo Capital Markets noted in April.
Meanwhile, merger and acquisition activity in the A&D sector continues to rise, as "strategic and financial players gain confidence in the long-term stability of the commercial build-cycle and bipartisan defense spending,” according to RSM EquiCo’s Q2 Aerospace & Defense Review. Read More.
Deals still flowing for mid-market buyout firms
August 20 - Crain's Cleveland Business - A focus on smaller deals has helped insulate Northeast Ohio’s private equity firms from a sudden chill in buyout activity felt at the high end of the acquisition market.
Officials at these middle-market buyout firms, which specialize in acquiring companies with $500 million or less in annual revenue, report healthy deal pipelines. Their ongoing flow of deals contrasts sharply with the recent drying up of transactions involving big buyout firms that as late as this spring routinely were pulling off billion-dollar deals, such as the $7.4 billion acquisition announced in May of a controlling interest in automaker Chrysler Group by Cerberus Capital Management.
“So far, from what we’ve seen, there hasn’t been any appreciable slowdown in the activity of our clients, which are middle-market buyout funds,” said Ira Kaplan, associate managing partner and chairman of the private equity group at Cleveland law firm Benesch, Friedlander, Coplan & Aronoff LLP. Read More.
Officials at these middle-market buyout firms, which specialize in acquiring companies with $500 million or less in annual revenue, report healthy deal pipelines. Their ongoing flow of deals contrasts sharply with the recent drying up of transactions involving big buyout firms that as late as this spring routinely were pulling off billion-dollar deals, such as the $7.4 billion acquisition announced in May of a controlling interest in automaker Chrysler Group by Cerberus Capital Management.
“So far, from what we’ve seen, there hasn’t been any appreciable slowdown in the activity of our clients, which are middle-market buyout funds,” said Ira Kaplan, associate managing partner and chairman of the private equity group at Cleveland law firm Benesch, Friedlander, Coplan & Aronoff LLP. Read More.
Why buyer's won't walk in private equity's world's changed circumstances
August 21 - Blogging Buyouts - For the past few years, things have been nearly perfect for the private equity world. Credit was cheap and public companies were certainly willing to go private.
But, of course, things are much different now. In fact, there is some doubt that mega deals -- such as for TXU Corp. and SLM Corp. - may not get done because of the tough credit environment.
However, can buyers legally walk from a deal?
Not very easily, actually. After all, when a buyer signs a merger agreement, it's an enforceable contract. And, if it is breached, the consequences can be severe. In fact, in some cases, the buyer may be required to complete the deal. The New York Times looks at this issue in depth today. Read More.
Tuesday, August 21, 2007
Chemical M&As "maintaining momentum": report
August 17 - Canada Plastics - Merger and acquisition activity has maintained strong momentum during the first half of 2007, according to the new quarterly Chemical Compounds report by PricewaterhouseCoopers. The report found that Western Europe still maintains the highest deal value, but a larger number of deals are occurring in North America.
Overall, in terms of value, 2007 outpaced the first half of 2006 due to the large value of "mega-deals," the report noted. Read More.
Overall, in terms of value, 2007 outpaced the first half of 2006 due to the large value of "mega-deals," the report noted. Read More.
Friday, August 17, 2007
Private equity still drawing big investors
August 15 - CNN Money - Amid the freeze on private equity deals, big investors like pension funds and college endowments are still plowing money into buyout funds, suggesting they still see opportunities for outsized returns.
Buyout funds have already raised $139 billion globally so far this year and are on pace to exceed the $212 billion raised in 2006, according to London-based research house Private Equity Intelligence.
Another record year of fundraising comes just as the buyout boom has come to a grinding halt. A push back in the debt markets that began in late June has erupted into a full-blown credit crunch, with financing for leveraged buyouts now at a standstill. Read More.
Buyout funds have already raised $139 billion globally so far this year and are on pace to exceed the $212 billion raised in 2006, according to London-based research house Private Equity Intelligence.
Another record year of fundraising comes just as the buyout boom has come to a grinding halt. A push back in the debt markets that began in late June has erupted into a full-blown credit crunch, with financing for leveraged buyouts now at a standstill. Read More.
Private Equity Party Not Pooped In Europe
August 16 - Forbes - The wisest investors are sometimes those who refuse to follow the crowd, and the big guns of private equity are hoping the credit crunch hasn't put off any European buyout fans. As of Thursday, Apax Partners, Kohlberg Kravis Roberts and France's PAI are all looking for over $10 billion each to fund their future conquests of Europe.
According to data from London-based research firm Private Equity Intelligence released Thursday, Apax Partners is raising 10 billion euros ($13.4 billion) for its Europe VII fund, while former BNP Paribas subsidiary PAI partners is also looking for the same amount for its Europe V fund. These are the top two European buyout funds on the market according to target size. Read More.
According to data from London-based research firm Private Equity Intelligence released Thursday, Apax Partners is raising 10 billion euros ($13.4 billion) for its Europe VII fund, while former BNP Paribas subsidiary PAI partners is also looking for the same amount for its Europe V fund. These are the top two European buyout funds on the market according to target size. Read More.
Nanotech’s Impact on Cleantech Growing Rapidly
August 16 - Business Wire - With the fevered search for new clean technologies, attention is turning to nanotech’s potential in energy and environmental innovation. Nanotechnology’s impact on cleantech is growing, and happens both through product and process innovations, with each type of impact posing its own set of challenges, according to a new report titled “Nanotech’s Impact on Energy and Environmental Technologies” available exclusively to Lux Research clients.
“The rapid increase in nano-enabled cleantech patents and publications relative to overall cleantech numbers indicates that nanotechnology’s impact on cleantech, though small at present, is growing at a fast clip,” said the report’s lead Lux Research analyst Jaideep Raje. “However, the near-term cleantech applications of nanotechnology are likely to come in more mundane forms like catalysts, coatings, and additives – not through big-ticket applications like next-generation photovoltaics.” Read More.
Thursday, August 16, 2007
New BCG Study Identifies Major Trends That Will Continue to Drive M&A Through Volatile Financial Markets
Despite Near-Term Slowdown in Deal Making, Most Sectors Expected to Keep Consolidating as Private Equity Firms Remain Influential Players
Report Shatters Several M&A Myths and Sheds Light on Keys to Success in Increasingly Tough Market
August 15 - Marketwire - One of the largest-ever studies of mergers and acquisitions, conducted by The Boston Consulting Group (BCG), identifies several trends that will continue to drive high deal flow, albeit at a reduced rate, through current volatility in the global financial markets.
The study, published in a new BCG report entitled "The Brave New World of M&A: How to Create Value from Mergers and Acquisitions," is based on a detailed analysis of more than 4,000 completed deals between 1992 and 2006. It is believed to be the largest nonacademic study of its kind.
"We are seeing a return to normalcy, which is healthy," said Jeff Gell, a Chicago-based partner and coauthor of the report, upon its release. "Prices and leverage will come down slightly, but volumes will remain high as the strategic need for most deals is still present. Companies are still sitting on excess cash that they need to deploy, and private equity funds still have large war chests that they need to put to work."
Report Shatters Several M&A Myths and Sheds Light on Keys to Success in Increasingly Tough Market
August 15 - Marketwire - One of the largest-ever studies of mergers and acquisitions, conducted by The Boston Consulting Group (BCG), identifies several trends that will continue to drive high deal flow, albeit at a reduced rate, through current volatility in the global financial markets.
The study, published in a new BCG report entitled "The Brave New World of M&A: How to Create Value from Mergers and Acquisitions," is based on a detailed analysis of more than 4,000 completed deals between 1992 and 2006. It is believed to be the largest nonacademic study of its kind.
"We are seeing a return to normalcy, which is healthy," said Jeff Gell, a Chicago-based partner and coauthor of the report, upon its release. "Prices and leverage will come down slightly, but volumes will remain high as the strategic need for most deals is still present. Companies are still sitting on excess cash that they need to deploy, and private equity funds still have large war chests that they need to put to work."
Cheaper stocks may trigger mergers
August 14 - The Cincinnati Post - The beating Wall Street suffered this past week might have actually created the perfect conditions to launch its revival - cheaper stock prices can herald a comeback for corporate acquisitions.
Dealmaking has been one of the market's biggest drivers, with some $1.26 trillion worth of acquisitions and private equity transactions announced in the U.S. so far this year. Market watchers believe mergers and acquisitions - particularly by big public companies - might be the catalyst to help get Wall Street back on track after the volatility seen in the past few weeks. Investors have weathered some tough sessions where stocks zigzagged, making triple-digit gains and losses. The Dow Jones industrials rose more than 150 points on Wednesday, then plunged about 400 points on Thursday and fell more than 200 points Friday before closing with a minuscule 31 point loss. Read More.
Dealmaking has been one of the market's biggest drivers, with some $1.26 trillion worth of acquisitions and private equity transactions announced in the U.S. so far this year. Market watchers believe mergers and acquisitions - particularly by big public companies - might be the catalyst to help get Wall Street back on track after the volatility seen in the past few weeks. Investors have weathered some tough sessions where stocks zigzagged, making triple-digit gains and losses. The Dow Jones industrials rose more than 150 points on Wednesday, then plunged about 400 points on Thursday and fell more than 200 points Friday before closing with a minuscule 31 point loss. Read More.
Canada: Private equity buyouts hit record levels
August 15 - National Post - The value of private equity buyouts in Canada for the first half of the year has already far exceeded the value for all of 2006, the Canadian Venture Capital Association said Wednesday.
In the first six months of 2007, 96 Canadian buyout transactions were announced with a value of $61-billion -- $13.8-billion of which was outside the record-breaking $47.2-billion Bell Canada buyout, the CVCA said.
That compares to 101 buyouts valued at $11.6-billion in all of 2006, it added. Read More.
In the first six months of 2007, 96 Canadian buyout transactions were announced with a value of $61-billion -- $13.8-billion of which was outside the record-breaking $47.2-billion Bell Canada buyout, the CVCA said.
That compares to 101 buyouts valued at $11.6-billion in all of 2006, it added. Read More.
Small cement firms may hog limelight
August 16 - The Economic Times - Shares of smaller cement companies are likely to be back in focus led by attractive valuations, firming product prices and likelihood of mergers and acquisitions (M&A) in the sector, according to investment bank CLSA Asia-Pacific Markets.
Though the cement industry is likely to see some news flow, both positive and negative, over the next three months, positive events may be the winner in the near term, which will bring smaller cement shares back to focus, CLSA said in a note to clients. Read More.
Wednesday, August 15, 2007
Credit crunch: Blackstone smells opportunity
President Tony James says the private equity firm has an eye on debt that has been oversold in the market.
August 13 - CNNMoney.com - The debt markets may be creating trouble for some leveraged buyout deals, but private equity titan Blackstone is sniffing out opportunities.
The private equity firm is keeping an eye on the debt of buyout deals that have come under financing pressure, Blackstone President and Chief Operating Officer Tony James said Monday.
"We're starting to look directly at debt securities that are trading at distressed levels" but which aren't distressed at all, he told analysts. Read More.
August 13 - CNNMoney.com - The debt markets may be creating trouble for some leveraged buyout deals, but private equity titan Blackstone is sniffing out opportunities.
The private equity firm is keeping an eye on the debt of buyout deals that have come under financing pressure, Blackstone President and Chief Operating Officer Tony James said Monday.
"We're starting to look directly at debt securities that are trading at distressed levels" but which aren't distressed at all, he told analysts. Read More.
PE firms to maintain M&A pace
August 14 - The Deal Blog - Boston Corporate Finance certainly isn't afraid of clambering out on a market-withered limb. The investment bank predicts flatly in a new report on recent technology M&A that buyout firms will continue making big acquisitions this year despite turmoil in the credit and debt markets. Citing strong growth among tech companies, robust corporate profits and investors' need to deploy capital, BCF says that "we do not believe private equity players will slow down their aggressive acquisition pace in the second half of 2007." Read More.
Tuesday, August 14, 2007
In hi-lo deal game, middle’s the winner
August 13 - Financial Week - While the plug has been pulled in the debt markets for the largest leveraged buyouts, activity in the middle market has surged on—for now.
“So far, we’ve seen no change in deal flow,” said Chris Williams, co-founder of middle-market investment bank Harris Williams & Co., adding that his company has closed five deals in recent weeks.
To the segment’s benefit—lately, at least—most middle-market deals, or those under $1 billion, have not been structured with the loosest terms, such as covenant-lite debt issues. Hence, the middle market isn’t feeling the pushback from lenders quite as much as the biggest deals are.
“The turmoil is really applicable at the higher end of the market—the $10 billion and $20 billion take-privates,” said Steve Bernard, director of M&A market analysis with Robert W. Baird, a middle-market investment bank. Read More.
“So far, we’ve seen no change in deal flow,” said Chris Williams, co-founder of middle-market investment bank Harris Williams & Co., adding that his company has closed five deals in recent weeks.
To the segment’s benefit—lately, at least—most middle-market deals, or those under $1 billion, have not been structured with the loosest terms, such as covenant-lite debt issues. Hence, the middle market isn’t feeling the pushback from lenders quite as much as the biggest deals are.
“The turmoil is really applicable at the higher end of the market—the $10 billion and $20 billion take-privates,” said Steve Bernard, director of M&A market analysis with Robert W. Baird, a middle-market investment bank. Read More.
Monday, August 13, 2007
Seven Questions: Steve Forbes Loves Private Equity
August 12 - Foreign Policy - Many in the U.S. Congress complain that Wall Street’s new titans aren’t paying their fair share of taxes. But Steve Forbes, editor in chief of Forbes magazine, warns that a proposed new tax on private-equity managers would only weaken the U.S. economy, punish entrepreneurs for taking risks, and hurt ordinary retirees. Read Q&A.
Funds find Detroit: Private equity money looks at affordable housing in Detroit
August 12 - Crane's Detroit Business - Private equity, flush with capital and running out of deals in traditional places, has taken aim at the local affordable-housing industry, with an expected deal in September expected to funnel more than $32 million directly into metro Detroit.
Why are such sums of money attracted to projects in distressed areas of Detroit and other communities? It's because navigating the complex world of tax credits allows banks, equity funds and builders to make money off projects that otherwise would make no financial sense.
The Lansing-based Great Lakes Capital Fund, whose Detroit office helps fund affordable-housing developments and commercial renovation in Southeast Michigan, is doing its first deal with a private-equity company, which wants to buy $300 million in bundled tax credits during the next three years. Read More.
Why are such sums of money attracted to projects in distressed areas of Detroit and other communities? It's because navigating the complex world of tax credits allows banks, equity funds and builders to make money off projects that otherwise would make no financial sense.
The Lansing-based Great Lakes Capital Fund, whose Detroit office helps fund affordable-housing developments and commercial renovation in Southeast Michigan, is doing its first deal with a private-equity company, which wants to buy $300 million in bundled tax credits during the next three years. Read More.
A quiet kind of buyout boom
August 12 - Atlanta Journal Constitution - Phil Greifeld, CEO of Huddle House, remembers years of calls inquiring if his business was for sale.
It wasn't. But as buyouts flourished in 2006, Huddle House executives and directors reconsidered. Around Christmas, they sold a controlling interest to Allied Capital, a private equity firm in Washington, for $124 million.
Thanks to the flow of money into private equity — in other words, outside of public markets like the New York Stock Exchange or NASDAQ — companies around the Southeast have found willing buyers. Firms that specialize in the niche have prospered, too, because of the relative ease of raising or borrowing money.
Nationally, such deals have gotten much attention, such as the recent one that transformed Chrysler into a private company. The growing troubles in the sector are prominent, too, as the markets try to absorb the massive amount of debt needed to finance major transactions. Read More.
It wasn't. But as buyouts flourished in 2006, Huddle House executives and directors reconsidered. Around Christmas, they sold a controlling interest to Allied Capital, a private equity firm in Washington, for $124 million.
Thanks to the flow of money into private equity — in other words, outside of public markets like the New York Stock Exchange or NASDAQ — companies around the Southeast have found willing buyers. Firms that specialize in the niche have prospered, too, because of the relative ease of raising or borrowing money.
Nationally, such deals have gotten much attention, such as the recent one that transformed Chrysler into a private company. The growing troubles in the sector are prominent, too, as the markets try to absorb the massive amount of debt needed to finance major transactions. Read More.
A Private Equity Stance on Talent
August 7 - Business Week - There are lessons to be learned from how a private equity venture views talent acquisition. While the trend now in private equity is to take companies private, the traditional long-term (three-year) goal is to have a company re-emerge as a new, stronger, more-efficient public entity.
That means moving quickly in all aspects of the business, especially talent assessment and recruitment. Too often, though, companies that aren't playing the mergers-and-acquisition equity game manage their recruitment process with an incremental approach. They might do better to employ a mind-set similar to that of a private equity venture, and move faster and think bigger. Read More.
That means moving quickly in all aspects of the business, especially talent assessment and recruitment. Too often, though, companies that aren't playing the mergers-and-acquisition equity game manage their recruitment process with an incremental approach. They might do better to employ a mind-set similar to that of a private equity venture, and move faster and think bigger. Read More.
Green technology firm finds a warm welcome on stock market
The move by the company, which has a market capitalisation of £27m, is a sign of the growing attractiveness of the green and renewable technology sectors to the City.
The company takes prototype designs for clean technologies such as clean coal power and biomass boilers, develops them and launches them on the market as commercial propositions. The firm, which was established two years ago, is obtaining several patents.
It has raised £7.5m through the placing, which values its shares at 63p. It will invest the proceeds in expanding its portfolio. Read More.
Friday, August 10, 2007
M&A Activity Heats Up Lodging
August 9 - Globe St.com - The US lodging industry has experienced an unprecedented level of merger and acquisition activity during the first half of 2007. Healthy industry operating metrics, along with an abundant amount of institutional and private debt and equity capital, has resulted in significant numbers of corporate entity and property level deals. Several recent M&A deals have been record setting, including the recently announced $26 billion acquisition of Hilton Hotels Corp. by the Blackstone Group. Read More.
Thursday, August 09, 2007
The Joy of Private Equity
August 8 - Business Week - Private equity's proponents see privatizing as a fine way to fix a troubled business. Detractors say hooey—going private is about the money and that such deals do little more than make a few people very, very rich. The question: Do buyout firms like Blackstone Group and Kohlberg Kravis Roberts add value to companies or just collect a heaping wad of cash?
Kenneth Langone, the billionaire investor and Home Depot co-founder, is clearly in the quick-buck camp. As an old-time wheeler-dealer, he views private equity as little more than a way to "get more juice out of a lemon" for investors—and Langone has no problem with that. "It ain't complicated," he said on Aug. 6 at the Academy of Management's annual conference in Philadelphia, explaining why private equity deals get done. "We tend to mystify simple math." Read More.
Kenneth Langone, the billionaire investor and Home Depot co-founder, is clearly in the quick-buck camp. As an old-time wheeler-dealer, he views private equity as little more than a way to "get more juice out of a lemon" for investors—and Langone has no problem with that. "It ain't complicated," he said on Aug. 6 at the Academy of Management's annual conference in Philadelphia, explaining why private equity deals get done. "We tend to mystify simple math." Read More.
$924m private equity funds pour into realty
August 8 - ChinaDaily.com - Singapore-based Ascendas Pte Ltd, Asia's leading business property developer, yesterday launched two China-focused private equity funds totaling $924 million to invest in the country's booming industrial and commercial property market.
The $396 million Ascendas China Industrial & Business Parks Fund will seek to invest in industrial and business park assets in China, while the $528 million Ascendas China Commercial Fund will "target high-quality commercial properties" in the first-tier cities in the country, senior company officials said.
The industrial and business parks fund will mainly invest in light industrial and logistics facilities such as warehouses, distribution centers and suburban business offices, according to Tay Eng Kiat, CEO of Ascendas China. Read More.
The $396 million Ascendas China Industrial & Business Parks Fund will seek to invest in industrial and business park assets in China, while the $528 million Ascendas China Commercial Fund will "target high-quality commercial properties" in the first-tier cities in the country, senior company officials said.
The industrial and business parks fund will mainly invest in light industrial and logistics facilities such as warehouses, distribution centers and suburban business offices, according to Tay Eng Kiat, CEO of Ascendas China. Read More.
Wednesday, August 08, 2007
Energy Bill Raises Hopes
Cleantech investors hailed on Monday the passage of a long-awaited energy bill in the U.S. House of Representatives as a step toward a more cohesive national energy policy, even as they lamented what it left out.
Among the more striking provisions of the bill is a national renewable energy standard requiring utilities to generate 15 percent of their electricity from renewable energy sources by 2020. But the legislation, which passed in a 241-172 vote Saturday just before the summer recess, fell short of calling for an increase in fuel economy. Those and other results drew mixed reactions from venture capitalists and other investors who closely monitor the cleantech sector.
“There’s a real need for us to rethink how we use personal transportation,” said Peter Grubstein, managing member at NGEN Partners. “Changing the CAFÉ [Corporate Average Fuel Economy] standard would have been a push to both producers and consumers.” Mr. Grubstein also expressed disappointment the bill didn’t mandate a carbon cap-and-trade system. Read More.
Among the more striking provisions of the bill is a national renewable energy standard requiring utilities to generate 15 percent of their electricity from renewable energy sources by 2020. But the legislation, which passed in a 241-172 vote Saturday just before the summer recess, fell short of calling for an increase in fuel economy. Those and other results drew mixed reactions from venture capitalists and other investors who closely monitor the cleantech sector.
“There’s a real need for us to rethink how we use personal transportation,” said Peter Grubstein, managing member at NGEN Partners. “Changing the CAFÉ [Corporate Average Fuel Economy] standard would have been a push to both producers and consumers.” Mr. Grubstein also expressed disappointment the bill didn’t mandate a carbon cap-and-trade system. Read More.
Tuesday, August 07, 2007
Private equity investments in India can touch $15b in 2007
The total of private equity investments in India is set to cross $10 billion in the calendar year 2007 and may even touch $15 billion according to PricewaterhouseCoopers.
In the last 18 months private equity investments in India have picked up pace. According to Pricewaterhouse in 2005 the total private equity investment was $3.8 billion, in 2006 it moved up to $7.9 billion and in the first half of 2007 it has already crossed $6 billion.
PwC’s Sanjeev Krishan said: “In the last 18 months at PwC, we have done more work for private equity investors than for strategic investors. It was always the other way around before that. Private equity investments can touch $15 billion this year.” Read More.
In the last 18 months private equity investments in India have picked up pace. According to Pricewaterhouse in 2005 the total private equity investment was $3.8 billion, in 2006 it moved up to $7.9 billion and in the first half of 2007 it has already crossed $6 billion.
PwC’s Sanjeev Krishan said: “In the last 18 months at PwC, we have done more work for private equity investors than for strategic investors. It was always the other way around before that. Private equity investments can touch $15 billion this year.” Read More.
Monday, August 06, 2007
Private equity firms honing in on health IT
August 3 - Modern Healthcare - Dealmaking surrounding health information technology businesses has been on the upswing in recent weeks, with private equity players driving much of the activity.
Private equity firms are buying, selling and making partial investment in health IT, an industry they view as primed for future growth.
"The financial markets are starting to take notice of the opportunities, and are putting their funds behind the healthcare technology sector," said Vern Davenport, executive vice president and general manager of Misys Healthcare Systems, a Raleigh, N.C.-based division of software company Misys, in an e-mail. Read More.
Private equity firms are buying, selling and making partial investment in health IT, an industry they view as primed for future growth.
"The financial markets are starting to take notice of the opportunities, and are putting their funds behind the healthcare technology sector," said Vern Davenport, executive vice president and general manager of Misys Healthcare Systems, a Raleigh, N.C.-based division of software company Misys, in an e-mail. Read More.
Have private equity tech takeovers peaked?
August 3 - Computer Business - Has the boom in private equity takeovers in the IT sector peaked already? The recent squeeze in the credit market has meant that private equity groups are finding it more difficult to gain access to the cheap debt that has fuelled the remarkable explosion in leveraged buy-outs over the last two years.
Private equity giants such as KKR, Cerberus and Blackstone fund takeovers through loans from credit investors, but escalating mortgage defaults in the US have forced the lenders to adopt a more cautious approach to would-be borrowers.
There was evidence of this shift in sentiment last week when investors at Chrysler and Alliance-Boots both rejected the terms on senior debt arising from the recent buyouts. And there are now signs that the flow of private equity moves in the technology and IT services space may be slowing down. Read More.
Private equity giants such as KKR, Cerberus and Blackstone fund takeovers through loans from credit investors, but escalating mortgage defaults in the US have forced the lenders to adopt a more cautious approach to would-be borrowers.
There was evidence of this shift in sentiment last week when investors at Chrysler and Alliance-Boots both rejected the terms on senior debt arising from the recent buyouts. And there are now signs that the flow of private equity moves in the technology and IT services space may be slowing down. Read More.
Canada's oil sands mergers get painfully pricey
August 3 - Reuters - Fat wallets and limited opportunities elsewhere may continue to push acquisitions in Canada's oil sands region, analysts say, though soaring costs may leave the sector open to only the very biggest companies.
Earlier this week U.S. refiner Marathon Oil Corp. agreed to pay $5.56 billion for Western Oil Sands Ltd., an eight-year old firm whose only operating asset is a 20 percent stake in the Athabasca Oil Sands Project run by Royal Dutch Shell.
The agreement is the latest in a series of big-ticket deals that have extended the reach of some of the globe's biggest oil and gas players into the muskeg and forests of northern Alberta, where an estimated 174 billion barrels of oil lie trapped in sand, a resource second only to Saudi Arabia's. Read More.
Earlier this week U.S. refiner Marathon Oil Corp. agreed to pay $5.56 billion for Western Oil Sands Ltd., an eight-year old firm whose only operating asset is a 20 percent stake in the Athabasca Oil Sands Project run by Royal Dutch Shell.
The agreement is the latest in a series of big-ticket deals that have extended the reach of some of the globe's biggest oil and gas players into the muskeg and forests of northern Alberta, where an estimated 174 billion barrels of oil lie trapped in sand, a resource second only to Saudi Arabia's. Read More.
Friday, August 03, 2007
U.S. Middle Market Companies Confident about Business Growth in Year Ahead Despite Concerns about Slowing Economy
July 30 - Business Wire - Sixty-four percent of U.S. middle market companies, with revenues between $25 million and $1 billion, are predicting growth over the next 12 months, even though nearly 60% believe the U.S. economy will slow down, according to a new study from the Economist Intelligence Unit and CIT Group Inc., a leading global commercial and consumer finance company. Respondents also indicated that a "shortage of talented staff" and high "labor costs" were the top two challenges to achieving this growth.
The study, "Perspectives from America's Economic Engine: The CIT U.S. Middle Market Outlook 2007," surveyed more than 500 senior financial decision-makers at companies with revenues between $25 million and $1 billion. According to the most recent U.S. Census, the middle market accounts for more than $6 trillion in sales and employs almost 32 million Americans, which is more than twice the revenues and four times the number of employees of the blue-chip companies that comprise the Dow Jones Industrial Average. Read More.
The study, "Perspectives from America's Economic Engine: The CIT U.S. Middle Market Outlook 2007," surveyed more than 500 senior financial decision-makers at companies with revenues between $25 million and $1 billion. According to the most recent U.S. Census, the middle market accounts for more than $6 trillion in sales and employs almost 32 million Americans, which is more than twice the revenues and four times the number of employees of the blue-chip companies that comprise the Dow Jones Industrial Average. Read More.
China's Private Equity Dynasty?
August 2 - The Motley Fool - According to a recent piece in BusinessWeek, private equity firms spent a total of $737.4 billion in 2006 -- more than the entire GDP of Australia! With buyout firms profiting 20% to 30% per year on average from their lucrative deals, rapid growth in the private equity market is no surprise. Now these firms are turning to global markets for additional opportunities, and their attention is increasingly fixed on China.
In the past, Chinese government regulation has prevented foreign private equity firms from buying up companies there. However, Chinese leaders recently found that the majority of the country's corporate financing still comes from bank loans, and they now apparently realize the need for a domestic private equity industry. Accordingly, the government has created new regulations to allow private equity players access to Chinese companies. Read More.
Thursday, August 02, 2007
Stubs: Private equity opens its door to the public
August 1 - Report on Business - With tightening debt markets around the world forcing private equity firms to hit the brakes on as many as 20 planned leveraged buyouts, there is speculation the big buyout boom that's been driving stock markets may finally be running out of gas.
Where not too long ago private equity could command very favourable terms from the market, making the fuel for their leveraged buyouts quite cheap, skittish investors are suddenly demanding better terms for high-yield loans. Banks that loan billions of dollars to private equity firms for buyouts are having difficulties getting debt investors to purchase the loans.
Here's the thing. The sharp slump may make corporate valuations irresistible and, come Labour Day, some market watchers believe private equity will again be putting the pedal to the metal. So what's a smart private equity player to do? Look for ways to increase their leverage even further, of course. If there's one thing private equity players know and understand, it's how to use their cash to best advantage. Read More.
Where not too long ago private equity could command very favourable terms from the market, making the fuel for their leveraged buyouts quite cheap, skittish investors are suddenly demanding better terms for high-yield loans. Banks that loan billions of dollars to private equity firms for buyouts are having difficulties getting debt investors to purchase the loans.
Here's the thing. The sharp slump may make corporate valuations irresistible and, come Labour Day, some market watchers believe private equity will again be putting the pedal to the metal. So what's a smart private equity player to do? Look for ways to increase their leverage even further, of course. If there's one thing private equity players know and understand, it's how to use their cash to best advantage. Read More.
Wednesday, August 01, 2007
Murdoch and Dow Jones: How The Deal Got Done
August 1 - NY Times Blog - While Rupert Murdoch finally won his long-coveted prize — gaining enough support from the deeply divided Bancroft family to buy Dow Jones & Company, publisher of The Wall Street Journal — closing the $5 billion deal was a marathon of conference calls and all-nighters for those involved in the deal-making process.
Following four months of back-and-forth, during which some three dozen members of the family engaged in an intense, sometimes tearful debate about The Journal’s future, the boards of both Dow Jones and Mr. Murdoch’s News Corporation voted Tuesday night to approve the deal.
In a press release early Wednesday, Dow Jones said it had signed a “definitive merger agreement” under which it would be acquired by News Corp. Read More.
Industry Groups Warn Against Tax Hike
July 31 - Associated Press - Private equity, hedge fund and real estate executives warned senators on Tuesday that raising taxes on their firms would harm a wide range of companies that benefit from their investments, including developers in poor urban areas.
Congress is debating whether to force companies set up as limited partnerships _ and their managers _ to pay taxes at the same rate as income earned by ordinary Americans. Proposed legislation would raise taxes from 15 percent to as much as 35 percent for profits earned by private equity and hedge funds, and fees paid to their managers.
Though private equity groups and hedge funds could be tempting targets for lawmakers looking to pay for new federal programs, the industry has been lobbying aggressively against the tax hike and key senators appear to be heeding their concerns. Read More.
Congress is debating whether to force companies set up as limited partnerships _ and their managers _ to pay taxes at the same rate as income earned by ordinary Americans. Proposed legislation would raise taxes from 15 percent to as much as 35 percent for profits earned by private equity and hedge funds, and fees paid to their managers.
Though private equity groups and hedge funds could be tempting targets for lawmakers looking to pay for new federal programs, the industry has been lobbying aggressively against the tax hike and key senators appear to be heeding their concerns. Read More.
Corporate Buyers Hit Gas on Deals
July 31 - Wall Street Journal - With deal-related financing markets in disarray, private-equity buyouts are being delayed around the world, giving corporate buyers an advantage over the cash-rich private-equity firms for the first time in years.
Consider Virgin Media Inc. The British cable-television operator is proceeding with an auction of the company after already having received this month a nearly $10 billion takeover approach from Washington private-equity firm Carlyle Group. That could benefit the cable-industry players exploring a bid, a list that includes Liberty Global Inc., Time Warner Cable Inc. and Comcast Corp.
Carlyle and a competing consortium of four private-equity firms will likely have trouble making a firm bid until credit markets calm and banks are able to sell the stockpile of debt building up on their balance sheets, people close to the matter say. The cable companies, though, likely could plow ahead. Read More.
Consider Virgin Media Inc. The British cable-television operator is proceeding with an auction of the company after already having received this month a nearly $10 billion takeover approach from Washington private-equity firm Carlyle Group. That could benefit the cable-industry players exploring a bid, a list that includes Liberty Global Inc., Time Warner Cable Inc. and Comcast Corp.
Carlyle and a competing consortium of four private-equity firms will likely have trouble making a firm bid until credit markets calm and banks are able to sell the stockpile of debt building up on their balance sheets, people close to the matter say. The cable companies, though, likely could plow ahead. Read More.
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