“My, what big teeth you have, grandma!” exclaims Little Red Riding Hood in the beloved, eponymous fairy tale. “All the better to eat you, my dear!” declares the Big Bad Wolf, before devouring Little Red Hiding Hood and running off into the woods. Over the last few months, investment bankers have been eagerly reaching out to corporate buyers at the large public technology companies, as their burgeoning balance sheets have grown large enough to cause even a sangfroid, buttoned-down banker to salivate. For example, the eight US-based technology companies with market capitalizations of over $100 billion (Apple, Microsoft, Google, IBM, Oracle, Cisco, Intel and HP) are sitting on over $200 billion in cash and short-term investments. Throw in the top three healthcare firms by market capitalization (J&J, Pfizer and Amgen) and the figure is $250 billion. Further, each of these companies is in a strong competitive position, competing in markets with positive secular trends thanks to the burst of innovation that is ahead of us. I can’t cite another time in the brief 50 years history of the technology industry when so many US-based companies were in such strong global leadership positions in so many compelling, growing markets.
Are middle market senior lenders really back? Newspapers and industry publications say they are. You hear of certain private equity funds that claim they’ve been accessing senior debt. You may even get calls from some lending officers offering their wares. Yet for all the hoopla that senior lending has returned, we believe that senior debt for middle market companies (defined as those with EBITDA less than $50.0 million) is still limited and only available to the best credits. Yes, there is an ample supply of asset based senior debt. Obtaining senior debt based upon collateral values is now easier than it has been in several years and some asset based lenders are even starting to offer overadvances, something unheard of even six months ago.
Investors are paying attention to loans as an asset class today for three reasons. First, default levels and price volatility coming out of the Great Recession returned to normal way faster than anyone anticipated. Second, the scare of defaults and volatility convinced portfolio managers that being at the top of the capital stack as a […]
Writing a book is hard. Really hard. Much harder than I thought. So I’m extra satisfied that “Do More Faster: TechStars Lessons to Accelerate Your Startup” is finished, in print and available for the world to buy. I’ve been helping create software and Internet companies for over 25 years, starting with my first company, Feld […]
Fall is officially here and for many diehard fans we’re happy to be in the midst of football season once again. For me, it means rooting for the Steelers and trying to get the weekly picks in on time. But for 27 million others, it means fantasy football. I have never quite understood the fantasy […]
Last week’s column got more reaction than any since our On The Left newsletter began publication two and half years ago. Who knew everyone has a meatloaf story? The best was from a friend of the firm who told us he couldn't believe any mother would foist a faux loaf on her children. "My mother would never have done that!" He was so upset that he called his own mother in Miami to relate his outrage. "You're right, dear," she told him, "my meatloaf was always the real thing." Brief pause. "But you never asked about my tuna casserole."
“Security Analysis” is cited by Warren Buffett as one of his top four favorite and most influential books. Written by Columbia University Professors Benjamin Graham and David Dodd, it was first published in 1934. The book is a thick tome that articulates the thesis of value investing—the analytical techniques for valuing securities and seeking to […]
On Aug. 9, 1995, a 16-month old “Web browser” company named Netscape, founded by a 23-year old Illinois programmer, went public. In much the same way that Netscape’s IPO became regarded as the starter pistol for the tech boom years that followed, some now reference Facebook’s 2005 institutional round as the unofficial start of the […]
There’s been much discussion of late about health care, including the worsening state of Americans’ health on an individual level, and the effects of recent health care reform. I think these changes create great opportunities for entrepreneurs and their investors in two areas: working to make our medical institutions better, and working outside of them […]
The recent pronouncements from Basel III are the latest regulatory attempt to play the role of Atlas beneath the world economy. Certainly, increases in primary capital ratios, specifically common stock paying no dividends, provide an increase in the margin for error. However, a ten year period to actually achieve those ratios eliminates the hope these regulations will mitigate systemic risk for the next decade. The regulations will also have the effect of reducing the amount of credit available to the world economy, and therefore to the financing of leveraged buyout transactions. More central to the question of regulation is not ratio management, but the taking of risk by the banks. Critical problems at the banks were inventory levels of and exposure to securitization products, proprietary trading operations and the banks’ counterparty risks.