Erin Griffith

Tomorrow, President Obama will announce his proposal for financial regulation reform, which is expected to include elimination of the Office of the Thrift Supervision. So will the new financial regulations affect private equity? Technically, they won’t. Indirectly, they will. The Office of the Thrift Supervision (OTS) is the agency known for being more lenient on private equity investments in banks. It’s the agency responsible for approving acquisitions of both Indymac and BankUnited by consortiums of buyout firms. With the elimination of the OTS, it’s possible that approval for these types of transactions could fall to the Fed, which currently regulates bank holding companies. Notably, the Fed has yet to approve a bank buyout by private equity.

Huntsman Gay Global Capital is a new fund in deal-doing mode during a painfully slow time for buyouts. How is the firm approaching the deal market? We’re busier now than we were a year ago. Right now M&A is more event-driven with business owners still out there wanting to diversify risk and take chips off the table. It seems sellers expectations are finally beginning to moderate on price a bit. In this unique environment,

That’s what a new study from Thomson Reuters and JPMorgan is suggesting. You can view the entire study, titled "The Era of Globalized M&A: Winds of Change," after the jump. Pointing out that private equity has historically been a key driver of M&A, the study discusses what we know as the “dry power,” or “overhang” conundrum. The disparity between the sheer amount of money invested in buyout funds and their inability to deploy it, the study argues, reflects a true negative in the market. The robust fundraising market “demonstrates clearly an over exuberance in the boom market rather than any prophetic insight prior to the subsequent busts.” In other words, LPs didn’t see this coming.

Fox Business: Not doing so hot. Not so surprising. (24/7 Wall Street) A Very, Very Thorough Liveblog: Huntsman Vs. Hexion, summarized, bottom-up. (Deal Professor) At Least Someone Did: Dell's making money from Twitter! (Bits) Lessons from the Meltdown: Rubenstein predicts that the U.S. economy will emerge from what he called "the great recession" at the end of this year or early next year. (BW) Meanwhile: Carlyle is setting its sights on the banks, with Sarkozy in the driver's seat. (WaPo) Graphics: The largest bankruptcies in history. (Good)

Extended Stay went bankrupt, in part, because of its aggressive capital structure. The company was passed from one buyout firm (Blackstone) to another (Lightstone) at the top of the market. The deal, engineered by Wachovia's Rob "Large Loan" Verrone, took the company's debt-to-equity ratio to a crazy 12.7x from the already-high 11.1x at the time Blackstone Group bought it. Verrone got his nickname from his coworkers for obvious reasons. He was later named by the New York Times as part of the problem behind Wachovia's massive writedowns.

Regardless of whether you believe the market bottom is real or red herring, the year's IPOs have performed well -- a fact not lost on exit-hungry private equity firms. This year, the rare PE-backed IPOs have come from the middle markets (Bridgepoint Education, Rosetta Stone), even though it's the mega-buyouts that need them most. With portfolio company valuations starting at $5 billion, an IPO is often a mega-firm's only way out. If any PE-backed company is positioned to go public, it's KKR's discount retailer, Dollar General. Speculation on the transaction began in January, when Breakingviews argued that the company was worth $7.5 billion (minting KKR better than a 33% return, according to the story).

Not Afraid Of Employee rants: Nokia set up an intranet soapbox last spring known as Blog-Hub, opening it to employee bloggers around the world.(BW) Inside The Startup Office From Hell: Frank Addante, the Los Angeles tech entrepreneur, has helpfully consolidated pretty much every terrible office idea and Web 2.0 startup cliché into one place: This video tour of his online ad company, Rubicon Project. (Valleywag) Contradictions: The Shrinking VC world isn't scaring off business grads. (Venture Dispatch) Meanwhile: MBAs have "downgraded" their expectations for careers. I.E., being realistic? "Many are rethinking ambitions, trading dreams of high-paying careers in hard-hit fields like investment banking for positions in less-battered sectors." (WSJ)

It has not been an easy year for Permira, 3i Group, Apax, and Terra Firma, some of the largest European buyout firms. Portfolio company trouble for these firms has been well-publicized, and while their write-downs are comparable to what we’ve unearthed of their U.S. counterparts, their leadership has reacted much differently. Permira, which has several […]

As usual, we have a week’s worth of ratings actions on the debt of LBO-backed companies. This week we finally say goodbye to Chrysler once and for all, as the company emerges from bankruptcy and Cerberus officially loses its investment. Meanwhile, auto parts maker Dana Corp., backed by Centerbridge Capital, was downgraded and, in a curious twist, Harrah’s was upgraded. Despite the excitement around Harrahs’ successful debt offering, I’m not rushing to remove it from the “Top Ten Worst Deals of 2008” list yet. Company: Dana Holding Corporation Sponsor: Centerbridge Capital Partners LP Downgrade: Moody’s lowered the company’s corporate family rating to Caa2 and its probability of default rating to Caa1. Highlights: “On May 8, 2009, Dana commenced a tender offer for a portion of its outstanding senior secured term loan at a deep discount to par value. The company's PDR and the rating on the term loan were adjusted to Ca at that time to reflect the potential for loss to investors. With the passage of time since the May 12 target date for concluding the tender, Moody's has now repositioned the PDR at Caa1.”

A Daring Trade Has Wall Street Seething: Texas Brokerage Firm Outwits the Big Banks in a Mortgage-Related Deal, and Now It's War. (WSJ) Was is smart or conniving? Deal Journal breaks it down. (Deal Journal) The Drinkable Portfolio: As an investment, wine has outperformed the market and delivered handsome returns. What you need to know about liquid assets. (WSJ) Bold: Venezuela has banned Coke Zero, saying its poses a health danger. (Reuters) Welcome: Shanghai has opened its doors to private equity firms establishing wholly owned units in the city. (DJ) LP Churn? Private Equity pros are going to have to fund new investors, according to a new survey. (Dealscape)