bloggingbuyouts

Private equity powerhouse TPG has been busy with financials lately. The firm recently took a stake in Washington Mutual (NYSE: WM) and even tried to invest in Merrill Lynch (NYSE: MER).

Well, this may have been the start of a trend. For example, the co-founder of the Carlyle Group, David Rubenstein, is also talking up financials.

He even said the sector was the "single biggest opportunity," at least in the U.S.

Hey, private equity firms certainly have an intimate understanding of financials. After all, both have been partners in many deals over the years.

Plus, as seen with Citigroup (NYSE: C) – which recently announced it is issuing $3 billion in equity – it looks like the balance sheets are still iffy.

Rubenstein thinks that there are many mid-tier financials that present great opportunities for value as well. And, with over $80 billion in assets under management, Carlyle certainly has some firepower to get some of these deals done.

Tom Taulli is the author of various books, including The Complete M&A Handbook (www.mergerbook.com) and is also a principal in Averiware, which provides an ERP system to small and midsize businesses.

Lew Dickey started up Cumulus Media (NASDAQ: CMLS) back in 1997. Before this, he founded Stratford Research in 1985, a top research firm focused on the radio and television markets. He even wrote a book: The Franchise - Building Radio Brands.

But his biggest deal was Cumulus, where he arranged more than 130 acquisitions to build a powerhouse in radio.

Yet, with private equity dollars flowing, Dickey has now decided to do a buyout . He has partnered with Merrill Lynch Global Private Equity (NYSE: MER) for the $1.3 billion deal.

The radio sector has seen a lot of dealmaking. For example, there's the $19.5 billion buyout of Clear Channel Communications (NYSE: CCU).

While the internet may pose some threat, investors are still convinced of the future of traditional radio. And the cash flows are fairly predictable (making it easier to get debt financing).

On the news of the deal, Cumulus' shares spiked 32.74% to $11.11. The buyout offer is $11.75.

If you want to check out some more recent M&A transactions, click here.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

As seen with the KKR IPO filing, top-tier private equity firms realize they need to –- in essence -– be quasi executive search firms. Basically, when the price tags on buyouts get to nosebleed levels, it's critical to have top notch operators.

Well, this week, private equity firm Oak Hill Capital Partners said it has retained Alan Lacy as a senior advisor to the firm. That means he will provide some high-end consulting (I'm sure at hefty billing rates) and perhaps be available for some stints at various companies.

Lacy's background is in retail, such as with Sears (NASDAQ: SHLD), Kraft and Philip Morris (NYSE: MO). In fact, perhaps his tenure at Sears is the most notable because he had to engineer a turnaround (yes, no easy feat).

So, maybe Oak Hill is thinking of doing distressed-type deals. At the least, the valuations should be a little more moderate.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Former U.S. Treasury secretary, John Snow, is now the chairman of private equity firm Cerberus Capital Management. He was fairly talkative today.

On CNBC, Snow mentioned that Cerberus has no plans to go public. Although, as we've seen in the private equity world, opinions can change quickly.

And, yes, he had some things to say about Cerberus' $7.4 billion purchase of Chrysler. Despite rumors to the contrary, he said the deal is on track. In fact, there are no immediate plans to sell it (but, again, keep in mind that opinions can change – especially if there is a pretty good offer on the table).

Interestingly enough, Snow believes that the auto industry is poised for a comeback. So why sell off the asset?

But, at the same time, Snow is very concerned that Congress's new fuel economy regulations will be detrimental to companies like Chrysler, Ford (NYSE: F), and GM (NYSE: GM).

He even thinks it could result in higher costs and capital requirements for the Chrysler deal. But Snow predicts the regulations will be softened.

Then again, he definitely needs to be upbeat. After all, Cerberus is going on a road show to raise billions for the Chrysler deal and the debt markets are getting a bit jittery right now.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Tuesday night two of America's biggest stars -- Napoleon -- a.k.a. Blackstone Group LP's (NYSE: BX) CEO Steve Schwarzman and Paris Hilton collided. The reason? The Wall Street Journal reports that Blackstone won a $20 billion bid to acquire Hilton Hotels Corp. (NYSE: HLT).

How much of this $20 billion will go to Paris? Nobody knows. However, the Conrad N. Hilton Fund, controls about 5.3% of Hilton's shares outstanding. If the Blackstone deal goes through, that stake will be worth about $990 million. Conrad has 8 children, including Paris's dad. Assuming that all the kids get an equal share, Paris's dad would get about $125 million -- if that figure was eventually split between Paris, and her sister, Nicky, Paris would receive over $60 million.

This spring a group of students in one of my classes delivered a presentation on the hotel industry. One of the students in that group predicted that Marriott International, Inc. (NYSE: MAR) and Hilton could get taken over by private equity. Another student commented, with apologies to Paris Hilton, "That's Hot!"

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned in this post.

Back in the late 1970s, Kip Tindell, Garrett Boone, and John Mullen started a new retail store, called The Container Store. The idea was to offer an "exceptional and eclectic mix of products devoted to [help] people simplify their lives."

It's turned out to be a great success. For 2007, the company expects to generate $600 million in sales and believes it can continue to grow 15%-20% per year.

However, as the owners get older, there is the inevitable question: How to get liquidity?

Well, today we got that answer. The company has partnered with private equity firm, Leonard Green & Partners, L.P.

So how much money is involved? Interestingly enough, the press release doesn't mention an amount.

But keep in mind that Container wants to maintain lots of control of the company. So, in this deal, Leonard Green may actually be getting a minority position. That's a fairly unusual thing for a private equity firm to do. Yet, it's something we may see increase as business owners start to retire.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Wall Street has been playing the odds on the takeover of Everlast Worldwide Inc. (NASDAQ: EVST) and so far has been spot on. The company's suitor, Hidary Group, has announced that it has upped its bid to $31.25.

Oh, and there's a new wrinkle. That is, existing shareholders have an opportunity to rollover half of their holdings into the new entity (which will be private). This is known as an "equity stub" and has become popular lately – so as to get approval on buyout deals.

According to the Everlast press release, the rollover option will mean that shareholders can "participate in the Company's future growth."

So, if there is growth ahead, might the buyout offer still be too low.

It looks like that's the case. After all, there is also a rival suitor, Sports Direct International (a UK sporting goods retailer).

On the news, Everlast's stock price is up 8.14% to $31.90.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

The IPO of Blackstone Group (NYSE: BX) continues to deteriorate but that doesn't seem to be an issue for other private equity firms that want to go public.

The latest buzz comes from The Carlyle Group, another top-tier global player. According to a report in the The Wall Street Journal, Carlye's managing director Jason Lee has called Blackstone's IPO a success and said that his firm is mulling the possibility of hitting the public markets.

Actually, I wouldn't be surprised if Carlyle is working on putting together a prospectus right now. The fact is that Blackstone's valuation is still pretty frothy.

In fact, Carlyle may have no choice. With an IPO, it's easier to retain and recruit key employees (because the stock has liquid value).

There are also the possibilities with acquisitions. As seen with BlackRock Inc.'s (NYSE: BLK) deal to purchase a hedge fund this week, public stock can be a very useful tool.

So, we might see a filing for Carlyle in the summer and perhaps an IPO in the fall.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

With the mega offering of Blackstone, it's inevitable that other top tier private equity shops will file to go public. In fact, according to a report from CNBC's Charles Gasparino, it appears that KKR is getting its papers together and has even retained Morgan Stanley (NYSE: MS) and Citigroup (NYSE: C).

While Blackstone is a premier firm, KKR is still the pioneer. Back in the 1970s, the firm invented much of the foundation for private equity.

Although, even if KKR can file a prospectus within the next couple weeks, an IPO is not likely until the fall. It's usually tough to get enough investor interest during the doldrums of the summer.

Gasparino also thinks other firms -- like Apollo, Carlyle and Texas Pacific Group -- will go public.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

For some time, things haven't been friendly at Friendly Ice Cream (AMEX: FRN). According to the Wall Street Journal [subscription required], cofounder S. Prestley Blake sued Chairman Donald N. Smith for alleged misuse of a company jet. Despite a $65,323 payment from Smith, a Massachusetts state judge refused to dismiss the case.

So Friendly is doing something to get out of the kitchen: go private. Sun Capital Partners has agreed to purchase the company for $337.2 million, or $15.50 per share.

Founded in 1935, Friendly's now manages a chain of 514 stores. There is also a major distribution business.

In fiscal Q1, revenues dropped 3% to $122.6 million and there was a net loss of $6 million, or $0.73 per share. Same-store sales fell 4.1%.

On the news of the deal, Friendly's stock price increased $0.82 to $15.15.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Until recently, tech deals have been taboo for private equity firms. But with huge amounts of capital to work with, private equity is now targeting the space; recent deals include Freescale and Alltel (NYSE: AT).

So this week, KKR announced that it's beefing up its tech bench. That is, the firm is hiring Richard L. Clemmer as a senior advisor.

Clemmer's most recent gig was CEO of Agere. Interestingly enough, he merged the company in an $8 billion deal with LSI (NYSE: LSI).

Some of his other positions include CFO of Quantum Corporation (merged with Maxtor) and also a senior officer of Texas Instruments (NYSE: TXN).

In other words, he has lots of operational and financial experience, which is a great combination for a private equity firm.

Basically, the tech sector is massive and something that can't be ignored. And so far, KKR wants a piece of the action.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

With Blackstone prepping for its mega IPO, there have been lots of comparisons to another premier financial firm, Goldman Sachs (NYSE: GS).

So, I went to EDGAR and pulled up the filing for Goldman's IPO (that hit the markets in May 1999). Here are some interesting takeaways:

• There was only one mention of "private equity." Instead, Goldman was benefiting from the dot-com boom.
• Goldman issued shares at $53 and raised about $3.6 billion. Blackstone's IPO calls for a price range of $29-31 and expects to raise $4.7 billion.
• The compensation for Goldman's Henry Paulson, Jr. (co-CEO) was $12.7 million and Robert J. Hurst's (co-CEO) pay package was $11.3 million. As for Blackstone's CEO Steve Schwarzman, his compensation was $398 million last year.
• How did the Goldman IPO perform? The stock shot up to $77.25. However, after the excitement subsided, the stock fell back to the $50s over the next couple weeks.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

It's hard to believe, but somehow Libya has become a stable nation. I guess Muammar Qaddafi has realized that the U.S. can be a great ally.

Interestingly enough, there's lots of foreign investment coming into Libya -- and part of it is in the form of private equity.

Take a look at this week's $5.4 billion deal for Tamoil, a major oil refiner. The seller is the Libyan government and the buyer is Colony Capital LLC. Libya will keep a 35% minority stake.

In fact, another bidder on the Tamoil deal was the mighty Carlyle Group. The private equity firm has a history of doing deals in far-off places and we are likely to see this accelerate. After all, it's not easy deploying billions and billions of capital.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

DealBook reports that the prospectus for The Blackstone Group LP's IPO is getting as thick as James Joyce's Ulysses. As of Monday, it had 647 pages.

The only thing that's vaguely interesting about the latest version is that former Canadian Prime Minister Brian Mulroney has been added to the board. I suppose this will help Blackstone if it wants to buy Canadian companies. Mulroney left office in 1993 and is now a senior partner at law firm Ogilvy Renault. The board will also feature Lord Nathaniel Charles Jacob Rothschild, a British investment banker and part of the Rothschild dynasty.

But the prospectus leaves out the key details: How much will Blackstone's top executives get paid? I guess that will keep reporters ready to leap on each new -- and fatter -- version of the Blackstone prospectus.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter.

To pursue private equity or not to? That is the multi-billion dollar question for dealmakers.

And that's the question in a recent piece in the Wall Street Journal [subscription only].

As is always the case in these matters, there are major differences of opinion. There are unabashed bulls like Henry Kravis of KKR and there are bears like the Carlyle Group's David Rubenstein.

Given the easy credit and the bull market, it's been fairly easy to do deals. Yet, such conditions cover up mistakes.

So if history is any indication, it's only a matter of time until we see an implosion.

What's more, a key reason for the recent bull run in stock prices has been the anticipation of more and more buyout deals. But, what if private equity firms pull back? What if they wait for better valuations?

Basically, a fall-off could ultimately be a self-fulfilling prophesy. Funny enough, this would probably be a good thing for private equity firms -- because they will be able to once again get better valuations on their deals.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.