Sunday, October 29, 2006

Weekend notes

  • Sentiment towards private equity groups is turning negative even though we are still in the early stages of this boom. Check out this Business Week piece titled Gluttons at the gate.
  • Andy Serwer writes about possible bigger deals to come! Serwer's regular column is an enjoyable read.
  • Business Week looks at another way that insiders maybe fooling regulators and shareholders.
  • Bethany McLean exposes another options trick, backdoor options used by insiders.
  • While the masses have not yet woken up to the M&A boom, a few brave souls are daring to name big targets for private quity or management buyouts. The names include Dell and even Microsoft. The latter, if it ever happens, will signal the end of this boom.
  • Private equity groups may be a target of federal antitrust investigation. Allegations include possible collusion to keep a lid on buyout prices. As a shareholder of some of the targets, I will definitely welcome more competition and better prices!
  • The Wall Street Journal reported that United Health CEO may actually have found a way to get the same options twice! Criminal - don't you think ?
  • A number of Silicon Valley executives are calling the options investigation as a witch-hunt, providing various excuses for the amazingly well-timed, gigantic grants. Hmmm! I hope more civil and criminal charges follow, and some of these visionaries(!) end up in prisons.
  • A while ago, I had written about a possible bad ending for some of the buyouts, given the high debtloads they are forced to take by their buyers. More and more observers are now predicting a bankruptcy spike, and reduced return to investors in private equity. This is probably still a couple of years away, given the low interest rates, but something to keep an eye on.
  • A couple of pieces over the last few weeks have highlighted the emergence of London and Hong Kong as alternate choices for IPOs. When I first wrote about it, I got some interesting ("Come on now") responses. Finally, the authorities seem to be waking up to this reality where the US may not be the premier choice for companies to list. Unfortunately though, the press (and ofcourse, the industry) is focusing on Sarbox as the deterrent, instead of blaming post-9/11 restrictions.
  • Predicting upcoming LBO deals by watching CDS moves ? Check this out! There was a related piece recently (can't recall the source) that argued that CDSs are being undervalued, possibly by a substantial amount, with credit troubles and bankruptcy chances being discounted.


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