slowdown

Richard Bove: Sell Goldman Sachs

Jim Kim — Mon, 11 Aug 2008 18:45:51 -0400

Analyst Richard Bove has reiterated his sell recommendation on Goldman Sachs and cut his earnings estimates. For the year ending November 30, he now predicts $14.16 per share, down from his $15.45 estimate. That puts him firmly on the low side. The average estimate (Thomson Financial) is $16.77 per share. We'll see if others follow him. "Business has dried up," he tells clients in a memo reported on by the AP. He cited weakness in mergers as well as alternative investments and prime brokerage, which may be an ominous sign for the hedge fund industry. While currency and commodities trading has fared well, it will not generate enough to offset the slowdown in other core businesses. "At the moment, the light at the end of this tunnel is very dim," Bove wrote. "In near term, a turnaround in the company's earnings is not in prospect."

For more:
- here's the AP article

Recovery in leveraged loan market?

Jim Kim — Thu, 10 Jul 2008 15:29:50 -0400

IDD reports that the syndicated loan market is still struggling. A big part of that is the on-going drought in leveraged loan issuance, which reflects largely the slowdown in LBO activity. New issuance of loans backing buyouts fell 86 percent in the second quarter to $7.9 billion. That compares with $57.7 billion in the second quarter of last year. But there are some signs that more deals might get done sooner than expected. Smaller deals for targets with good prospects will get some looks, no doubt. IDD reports that Deutsche Bank priced a $515 million term loan coupled with a $50 million revolving facility and $200 million in high yield bonds last week for Oak Hill Capital Partners, which is buying eight television stations. The real pain is at the mega-deal level. Apparently, a deal involving top banks arranging financing for Thomas H. Lee Partners and Bain Capital's acquisition of Clear Channel Communications is struggling as of now.

For more:
- here's the IDD article (For FierceFinance readers)

Citigroup analysts: Slowdown in M&A a good thing

Thu, 22 May 2008 06:59:56 -0400

This might get you punched in some offices: The current slowdown in deal making is a healthy thing. The case is really not hard to make, and Citigroup has made it well, according to the Financial Times. Wacky bull markets of the near-bubble variety give rise to deal making frenzies that seem to disregard way-too-high valuations. The report does not think we'll fall off a cliff. Rather, we'll return to normal, with more reasonable debts loaded up on acquired companies, more strategic deals and more reasonable valuations. It would be hard to argue that's a bad thing. But you may want to whisper.

For more:
- here's the Financial Times article

Small deal market still thriving

Tue, 01 Apr 2008 07:59:54 -0400

The plunge in financial sponsor activity fortunately has not proven contagious for really small deal makers. While big and mid-market deals continue to fall, those worth less than $100 million continue to rise, notes Investment Dealers' Digest. These deals tend to be easier to close, as they are less dependent on high-yield type financing. Regional and small banks tend to be behind the financing. A lot of this is the sale of family businesses, it seems. This isn't enough to make a dent in the overall deal slowdown, but hey, a little good news is better than no good news at all.

For more:
- here's the article

Related Articles:
Another sign of a private equity bubble. Article
The future of small and mid-size banks. Article

Leveraged deals in perspective

Fri, 29 Feb 2008 06:59:57 -0500

The current slowdown in the leveraged deals environment is starting to take on historic proportions. The Financial Times notes data from Thomson Financial showing that the announced deal volume in February was $827.7 million; that's the first time the monthly total has failed to pierce the $1 billion level since June 1998. You've got to wonder if all the announced deals will ever make it into the completed deals column. So far, institutional investors seem willing to stay the course. It will be a long time before returns return to the rates we've seen in recent years.

For more:
- here's the item

Read more on: leverage | institutional investor

Not surprising private equity returns slow

Mon, 04 Feb 2008 06:59:55 -0500

No one should be all that surprised that private equity returns slowed a bit toward the end of the year. In the third quarter, the slowdown was spread across all classes, buyout, venture capital, mezzanine and distressed debt buyouts, notes Financial News Online. It cited data from the State Street Private Equity Index, which calculates the internal rate of return. Venture capital had the biggest decline, dropping from 13.23 percent to 12.42 percent. Buyout returns, mezzanine, and distressed buyout returns were more modest. This is a blip in the big picture. But you have to wonder if a trend is in the making. A slower economy could really hurt. As could a narrower range of exit opportunities. One bright spot: due to the dollar, returns on overseas deals rose a bit.

For more:
- here's the Financial News Online article

Bain Capital wraps up massive fund raising effort

Fri, 01 Feb 2008 06:59:56 -0500

Financial News Online notes that Bain Capital is wrapping up a new $20 billion buyout fund. The slowdown in the industry apparently has done little to dampen the enthusiasm of institutions; many are upping their allocation to alternative investments. Bain expects a raft of deal opportunities to emerge from the credit crisis. You would have to think that this money will be deployed rather slowly. You also have to wonder if Bain will start targeting smaller companies. The private equity industry is nothing if not optimistic. Still, you'd be naive to expect anything other than fewer deals and smaller returns. Maybe this is a good thing, going forward.

For more:
- here's the article

Private equity firms are flush with cash

Mon, 14 Jan 2008 06:59:54 -0500

The deal slowdown is coming at tough time for private equity firms. Despite the turmoil at the end of the year, 2007 was a banner year for fund raising. Last year, 415 U.S. funds raised $302 billion. That's about 20 percent higher than the 2006 level, according to Financial News Online. Leveraged buyout funds led the way, of course. The obvious point to be made here is that all this cash will have to chase fewer deals, forcing down returns, making for a bitter year. We've heard all that before. While it is true, there are some opportunities, notably distressed securities funds. More than 20 of these funds raised $45 billion last year. That's three times the amount in 2006. That's a relative pittance, of course, but it does represent a possible way to temper the downturn.

For more:
- here's the Financial News Online article

SPOTLIGHT: End-of-year Credit Freeze

Wed, 05 Dec 2007 06:59:52 -0500

Investment Dealers' Digest notes that the normal end-of-year slowdown in the credit markets may end up an outright freeze this year. Article

Event-driven funds take their lumps

Fri, 30 Nov 2007 06:59:54 -0500

Activist hedge funds have been hit hard by the slowdown in the private equity industry. November in fact was nothing short of a debacle. The Financial Times notes the event-driven sector had dropped 4.3 per cent so far this month (Hedge Fund Research) with several big-name firms suffering double-digit losses. Only long-short equity traders fared worse in November. JPMorgan's Highbridge's Event Driven fund is among the big losers, down 13 percent. One might have thought that such finds would have been nimble enough to staunch the losses and even profit from the crunch. I'm sure some have. Most will likely sense whole new vulture-like opportunities.

For more:
- here's the Financial Times article