Erin Griffith

Excited about Exits? Reformed Broker said its "Too soon, guys." Then he adds a second "too soon" after that in case you didn't catch the tone of slight condescension. (Seems he would prefer you exit your "weak, debt-laden offerings" companies during the next bubble.) (Reformed Broker) Creative Deal Structures 101: In case you're just discovering the "How do I do deals in a credit crunch?" conundrum, here is a guide to creative earn-outs and other financing techniques. (NetNewsDesk) From the Campaign Trail with Steve Pagliuca: "Or ‘Pags,' as no one except his campaign literature calls him." (Boston.com) See! Look! Positive News! Boy private equity is taking a drubbing in the press lately. With all this buyout bashing, Dealscape writes that the fickle mainstream media is ignoring private equity's great successes, like Toys ‘R' Us. (I'd prefer to call Toys ‘R' Us a success once it's been exited.) I'm not sure private equity firms need media love, but if they wanted it, they could start by giving us more data to work with. Besides, they have the PEC to toot their horns, and also, aren't they rich white men with tons of cash? They don't need journalists do stick up for them.

After he sold his company, Fidelity & Trust Bank, to Eagle Bankcorp in 2008, Robert Fiallo has sought to build new bank by cobbling together a handful of the many failed institutions. In fact, he’s received regulatory approval to buy a federally chartered bank and is gathering commitments from private equity firms and high net […]

Tech Targets: Technology stocks are hot again. Here are 10 technology companies that Barron's views as takeover candidates. (Barron's, sub. req.) If you don't subscribe, this Dealscape post covers most of the story. Looking for Work in Private Equity? Here are some "resume eye catchers" from FINS.com, a job hunting site for financial pros. (Fins) Not Positive Evidence: One-third of the return from private equity transactions stems from the use of leverage, according to possibly the largest ever analysis of the European market. (FT) RIP Geocities: Today, Yahoo buried a painful chapter in its history. It shut down GeoCities, a social-networking site that it paid $4.7 billion for in 1999, one year after GeoCities went public and before it had even turned a profit. (Deal Journal) If you're a fan of internet geek comic, XKCD, check out its redesigned homepage tribute to DIY websites of yore, little "Under Construction" man and all. [Update: It was a one-day only tribute, so if you're just seeing this now, ya missed it.] Big Bloggy Debates: What if insider trading isn't such a bad thing? Clusterstock has argued as such, and thanks to the vehement commenter response, the site has opened the floor for compelling counterarguments. Best one gets its own post, apparently. (Clusterstock)

A new survey from BDO Seidman, an accounting and consulting firm, reports that buyout firms expect deal flow to rise, but not explode in 2010. Not revolutionary, but more hopeful than these types of surveys last year, which (correctly) predicted flat or declining deal flow for 2009. More interesting, to me, is that 93% of PE pros surveyed reported headcount reductions at their portfolio companies (what about at the firms themselves?), 81% have renegotiated debt and 83% have reassessed their market strategy. Nearly three in ten (28%) have declared bankruptcy for one or more portfolio companies, and 38% have engaged a turnaround professional. All that says to me is that amend-and-extends, along with other private equity techniques, must be working, at least for the short term. Update: The survey actually does address expectations around layoffs at private equity firms themselves. According to the survey, 86% reduced professional staff in the past year, and 40% plan to reduce more in the coming year. Guess those layoffs aren't all behind us. Read the rest of the results below.

Over the past week, Dan and I have been reading The Buyout of America, a new book about private equity by business reporter Josh Kosman. Due out on November 12, the book intends to expose the ways private equity firms destroy the companies they buy. The book draws a straight line from the LBO to a Chapter 11 in the case of some of the largest LBO-backed busts and makes the case that private equity firms damage healthy companies and hurt innocent workers. I haven't finished it yet, so I can't contribute an opinion on the book's thesis, except to say that it's written for a more general audience, so it does not dive deeply into some of the particularly wonkish aspects of the industry that we cover here at peHUB. Instead, I'd like to share one detail which exemplifies the book's overall tone. It's an observation from an interview with Scott Sperling at the offices of THL Partners, which owns Warner Music. In a time of growing populist rage against things like Wall Street bonuses, corporate jets, and yes, THL's profit on its failed investment in Simmons Bedding, this kind of anecdote can be particularly effective, regardless of whether it tells the whole story. And aside from all that, the existence of weird, cheesy deal trophies like this is, to me, just plain amusing. From the prologue:

Ares Capital today announced it will acquire its struggling peer Allied Capital, for $648 million. The deal came as a surprise to some, as the struggling BDC has only recently secured a debt restructuring after receiving a "going concern" notice from lenders in March. The restructuring was expensive, but Allied would have been able to make its 2010 payments, thanks to liquidity from a number of asset sales. That includes the auction of Callidus Capital Management LLC, which Bloomberg reported earlier this month. It's not clear how today's deal will affect that auction. We won't get any insight into management's thinking until next week, when Allied combines its conference call on this announcement with its scheduled earnings call. What we know at this point is that Ares Capital got Allied at a good price. Judging by trading since the announcement, the stock market favors the deal, as Allied shares had traded up by 34% as of publication. (With a negative spread, perhaps they're even expecting a higher offer?) The price represented a 23.78% premium from Friday's closing price. Allied Capital has around $11 billion in committed capital under management. By contrast, Ares Capital had approximately $30.0 billion of committed capital under management as of this quarter this year.

Private equity has been a like a drug dealer Advanstar Communications just can't shake. For the past 20 years, the company's entanglements with buyout firms have created a rollercoaster of near-disasters, yet the company keeps going back for more. Advanstar been around the Park Avenue block, with private equity fingerprints going all the way back to when LBOs were still called LBOs. In 1987, the company underwent a Kidder Peabody-backed MBO after fending off several hostile takeover bids. The debt from that deal eventually sent the company into bankruptcy in 1989, at which point Goldman Sachs gained control of the company through a debt-for-equity swap. Then in 1996, the company narrowly avoided another bankruptcy (according to reports at the time) when Hellman & Friedman purchased the company for $237 million. H&F led Advanstar through 28 acquisitions over its four-year stewardship, including a deal for its most profitable business, apparel industry expo MAGIC Marketplace. H&F exited Advanstar with a sale to DLJ Merchant Banking in 2000 for approximately $900 million. After at least one failed exit attempt, DLJ sold the business to Veronis Suhler Stevenson, Citigroup Private Equity and New York Life Capital Partners, for $1.14 billion. So to recap: Kidder Peabody --> Goldman Sachs --> H&F --> DLJ --> VSS and friends.

Here's a look at the past week of scoops, opinions and analysis from the peHUB blogging team. Read ‘em before they go behind our subscriber paywall... Chinese Cyberattacks Exploited Adobe And Microsoft Software Grant Thornton To Release "Blockbuster" Study Details on Novafora-Transmeta Asset Auction Guessing What Congress Will Do On Healthcare Steve Ballmer on Bing Bing Bing When VC and Buyout Firms Team Up... Private Equity Pros Want Your Vote On a Cloud, Q&A with CTERA CEO Liran Eshel Worst Period for Brand New Deals in 15 Years Galleon's Private Portfolio New Mexico CIO Resigns With Links to Pay-To-Play Scandal OMERS Gets Direct with Private Equity Midweek M&A Madness Q&A With Northern Lights Ventures On Small Market Asset Management Plays You Can't Slow Down FleetPride Vulture Investing: Best Before or After The Bankruptcy? Which Buyout Firms are Targeting Asia? Don't Piss Off A Mid-Market Lender

Catchy: The return of the Why-P.O. (The Reformed Broker via Abnormal Returns) Analysis: Amend & Extend, as told to Bloomberg. peHUB also covered this portfolio company saving move here and here. Ever Heard of Activist Mezzanine Investors? Neither had I. Here's one example. (Neal Unmack) Columbia Business School Admissions Tips: Mary Miller fields questions from potential applicants about getting into the elite MBA program, located in the business capital of the world (BusinessWeek)

The question of whether private equity creates or destroys jobs is one for the ages-it’s been hotly debated through all kinds of studies, white papers, surveys, books and conference panels. Fortunately for the already media-battered industry, that debate is not addressed in Michael Moore’s new film about the financial collapse, Capitalism: A Love Story. But […]