Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (9153)	4/27/2007 11:00:25 AM
From: The Wharf	Respond to of 24758

cfo.com Although it may sound as if Conway were channeling Gordon Gekko, he was hardly exaggerating: nearly every Carlyle deal in recent years has worked. The private-equity firm's recent purchases of Hertz, Dunkin' Brands, and other companies have outperformed all but the most optimistic projections. What's more, Carlyle isn't the only one with the Midas touch. Private-equity firms are enjoying a success that eclipses that of the Michael Milken era of the 1980s, when leveraged buyouts (LBOs) came into vogue. Through the first three quarters of 2006, private-equity funds yielded an average 12-month return of 23.6 percent, versus 9.7 percent for the S&P 500, according to Thomson Financial. Over the past three years, buyout firms have averaged a 15.6 percent return, compared with 9.9 percent for the index. Did the eighties lead to the nineties and was not that the period that led to buttons that read loud and clear I survived 91 ? Currently, by some estimates, private-equity firms are collectively sitting on a $400 billion war chest. Indeed, credit terms for LBOs have never been easier. Banks, hedge funds, and other lenders have been willing to bankroll buyouts at historically low rates. Nor are they attaching many strings to the deals. Many loans have been structured with "covenant lite" agreements that put few restrictions or triggers on the terms. Increase in rates then what? Or is this the part of the why the Euro is right now to me way over valued. Some industry watchers worry that credit is getting too loose. They point, for example, to recent deals that have included so-called PIK (payment in kind) toggle loans, which give the lender the option of postponing repayment by paying more interest. One company, General Nutrition Centers, issued $300 million of floating-rate PIK toggle notes in March to finance a buyout. The notes give the issuer the ability to skip interest payments when cash is tight, in exchange for a higher interest rate on what is skipped, usually about 75 basis points. Critics compare the potential effect of the notes to the so-called death spirals of convertible bonds with a floating conversion rate, suggesting the notes may only delay inevitable defaults while causing more investor pain in the process Avoiding bad deals will depend on the supply of good targets, and there is plenty of debate regarding how many of those remain. Some observers contend that most of the low-hanging fruit — solid middle-market companies with low debt and healthy cash flow, but in need of some TLC — have already been picked. "There is so much money and so many firms chasing deals that finding [good targets] has gotten much harder," says Greg Peterson, transaction-services partner at PricewaterhouseCoopers So liquidity is not showing up in the stock market but the too liquid has been in the private equity market and I cant help but say water not only runs when it is hot it boils and bubbles while doing so problem is it freezes when it gets too cold, Deregulation has it pros and cons it makes for a very iffy situation in the beginning and yet if a hands off approach is taken meaning no bail outs folks you will have a group of strong companies that will survive Unfortunately takes years to come to be and the more we attempt to aid those that fail the more we will in my opinion destroy the future value potential of the US dollar.