Cerberus, the private equity fund that nearly ruined itself by making bad bets in Detroit, particularly on Chrysler, is considering taking its gun company interests public. According to The Wall Street Journal (subscription required), the firm "is in advanced preparations for an initial public offering of Freedom Group Inc." The company has about $900 million in sales.

The move may be a profitable one for Cerberus. Gun company Smith & Wesson (NASDAQ: SWHC) trades at just above $5, near the high end of its 52-week range. That gives the company a market cap of $300 million on sales of about $345 million. On a ratio-and-proportion basis, that would make Freedom worth close to $800 million.

In the wake of last week's public offering of Dollar General, more IPOs are expected to be coming down the pipeline as private equity firms seek a monetary return on investments made during the boom years. Speculation is that Toys "R" Us and Dunkin' Donuts could be next.

Toys "R" Us Inc. is owned by Bain Capital, KKR, and Vornado Realty Trust (NYSE: VNO). The world's leading dedicated toy and baby products retailer was a public company from 1978 until its acquisition by the private equity consortium in July 2005 for $6.6 billion. It has more than 1,500 stores in 33 countries, and its businesses include Babies "R" Us, eToys.com, and FAO Schwarz, the latter two acquired earlier this year. Main competitors include privately owned KB Toys, as well as big-box retailers Target Corp. (NYSE: TGT) and Wal-Mart Stores Inc. (NYSE: WMT).

It seems that no print publication is immune from the wrenching changes in the publishing industry. Look at Reader's Digest. The company said it will likely file for a so-called prearranged Chapter 11 bankruptcy.

The main reason: to pare down the heavy debt load.

At the height of the private equity bubble -- in July 2007 -- KKR agreed to purchase Dollar General for $7.2 billion. To pull off the deal, KKR was able to borrow $4.7 billion.

Of course, the bubble has since burst and, as a result, there are few successes for the private equity folks.

But now KKR is sensing opportunity. According to a report from the Wall Street Journal [a paid publication], it looks like the firm is in the late stages of filing the necessary legal documents to take Dollar General public.

When The Blackstone Group (NYSE: BX) went public, many observers -- myself included -- were concerned by the total lack of corporate governance checks and balances.

But at the time, the private equity industry was so hot that Blackstone could do no wrong, and no one cared enough to complain. Now that KKR is mulling a plan to list on the New York Stock Exchange, things could be different. The wheels have come off the industry, at least for now, and the arrogant attitude of "We'll tell you what we feel like telling you and you'll like it" may not play so well.

Over the past few years, the private equity powerhouse KKR has tried to go public. First, the firm attempted a typical public offering, but this failed because of the credit crunch. Then KKR tried to go public by using a complicated structure by purchasing another entity, KKR Private Equity Investors (KPE), which is listed on the Euronext.

Well, it looks like this plan may also be dead, according to the Financial Times, as KKR is considering an approach to purchase KPE without triggering a listing on the New York Stock Exchange.

Eddie Bauer Holdings Inc. (NASDAQ: EBHI), the once-proud seller of expensive, sporty outerwear, today filed for Chapter 11 bankruptcy protection, becoming the latest retail chain destroyed by the worst financial crisis since the Great Depression (Wall Street Journal, subscription required).

Under the terms of the bankruptcy, Eddie Bauer has agreed to sell its assets to CCMP Capital Advisors LLC., a private equity firm, for $202 million in cash. The investor, which supported debtor-in-possession financing of $100 million, plans to retain most of Eddie Bauer's employees and continue to operate most of its 371 stores.

OpenTable, which plans to launch its IPO this week, announced that the price range on the offering has gone from $12-$14 to $16-$18. In other words, there's quite a bit of investor interest in the deal. In all, the company plans to issue three million shares (about half of which will be sold by insiders of the company).

OpenTable operates an online network that manages reservations for restaurants. Some of the functions include table management, guest recognition, and e-mail marketing.

Founded ten years ago, OpenTable has been able to build a customer base of roughly 10,000 restaurants (processing three million diners per month). Keep in mind that there are 30,000 reservation-taking restaurants in North America.

Lately, there have been signs that private equity powerhouses are getting push back from investors. Look at the Blackstone Group LP (NYSE: BX). In the raise of its latest fund, California State Teachers' Retirement System (Calstrs) invested a mere $250 million. Keep in mind that the pension invested $1.7 billion in Blackstone's prior fund.

However, not all private equity operators are having trouble. Take TPG Capital. The firm is apparently in the process of scooping up $30 billion (this is according to The Wall Street Journal). In fact, about $20 billion will be allocated to TPG's leveraged buyout fund. Who said buyouts are dead?

So why the optimism? Part of it is timing. After all, TPG started its capital raising process earlier.

Another key reason is that TPG has a stunning track record. Since 1985, the internal rate of return is roughly 55% (yep, this is something to get investors excited about).

Back in the mid 1970s, three smart investment bankers from Bear Stearns started a new firm, KKR. They helped create a new way of buying companies called an LBO -- a leveraged buyout. Since then, KKR has been an innovator in that and other financial structures.

Well, this week, we got news of another one: KKR is going public through a complicated exchange of securities. KKR will merge into KKR Private Equity Investors, which is listed on the Euronext Amsterdam. This firm essentially is a co-investor in KKR deals; it raised $5 billion in May 2006 soon after it was formed. Ultimately, KKR will own about 79% of the entity.

From there, KKR will then list on the New York Stock Exchange, likely in Q4.

Something else: KKR will not get cash in the transaction, nor will the partners or employees. The insider shares will be locked up for six to eight years.

So why go public?

Take it Private! is a series looking at one company each week that, in my opinion, has no reason for being public. To find these companies, I screen for the following:

• high insider ownership
• a history of solid profitability
• a paltry Price/Earnings and/or Price/Cash Flow multiple
• a stagnant stock price accompanied by low volume indicating a lack of interest in the stock.

My purpose in highlighting these companies? This screen can be a good way to find deep value stocks, especially companies that may be attractive to a strategic buyer, private equity firm or management-led buyout at a premium to the current share price. However these profiles should not be interpreted as a recommendation to buy a certain stock. Let's take a look at Rex Stores (NASDAQ: RSC), a stock that I've followed with interest since 2004. Rex Stores owns and operates 111 electronics retail stores in 34 states, a business that has struggled in the face of lower-priced competitors from Best Buy (NASDAQ: BBY) to Wal-Mart (NYSE: WMT)

MicrocapTrader made a compelling and difficult to refute argument about the stock's value in this post from April of 2007: "In any event, assigning a proper valuation to RSC's property brings its tangible book value up to ~ $15 per share without even considering its inventory, worth another $6 per share at its carrying value."

And then there's the ethanol.

APP Pharmaceuticals Inc. (NASDAQ: APPX) is one of the more active pre-market stocks today. The surge in trading this morning is the result of an overseas buyout for some $23.00 cash per share, although shares are trading north of $23.00 because there are earn-out clauses could generate further premiums in the future.

German health-care giant Fresenius has agreed to acquire APP for $23.00 per share in a cash acquisition, and there is an earn-out option that would enable holders to receive up to an additional $6.00 per share if APP's financial results meet certain targets. The term may go out until 2011 for the extra cash, so this won't occur overnight.

This gives an implied merger price of about $3.7 billion up to $4.6 billion. So depending upon the earn-out and performance clause, investors will get either a 29% premium, or they will receive a buyout that could be as mush as 63% over the life of that term.

Continue reading at BioHealthInvestor.com for on the fly analysis, direction, and ramifications. You can also see how the unusual volume may continue after seeing the data at VSInvestor.com for the volume spike effect.

There is a rather interesting deal out there that can be viewed as a glass half-full or glass half-empty depending on whether or not you are from the private equity side or from a public company.

Fiserv Inc. (NASDAQ: FISV) has announced a rather interesting move this morning. It is selling a majority interest in its insurance business operations for some $510 million in equity and debt to Trident IV, a private equity fund managed by Stone Point Capital LLC.

The company has announced that it will turn around and repurchase up to 10 million shares of common stock in a repurchase program.

You can continue reading for the full details, on the fly analysis, and ramifications at 247Wallst.com.

Krispy Kreme Doughnuts, Inc. (NYSE: KKD) gave some very unusual volume trading alerts this morning, and the culprit here is nothing less than buyout offer chatter. Yep, it seems that the rumor mill has the fried dough maker as one of the next buyout candidates.

It took only about 35 minutes for us to see double the normal average daily trading volume. The culprit is a private equity buyout of $7.25 per share, yet no one understands if the "offer" is real. MGL Asset Management Group LLC out of Charlotte has been named as the suitor. Whether or not that is the case is something different entirely.

If you know the history of this company you probably understand that it is synonymous with "disappointment." The buyout chatter price is $7.25, yet the 52-week trading range is $2.23 to $9.48. You can determine on your own whether or not an offer is a good as a take. Chatter on top of that is yet another issue.

Despite this having been covered on CNBC and despite the written reports above, it would take a lot more faith than sense to believe this until actual facts are released from either the private equity firm or Krispy Kreme itself.

If you have been following the alternative energy saga alongside ridiculous oil prices going from rising to high to astronomical, you've run across the name Tesla Motors. Tesla is a venture capital and privately funded auto maker that produces a high performance electric powered sports car.

The Tesla Roadster and soon to be sedan are now both now going to be manufactured in California, or so a report in the San Francisco Chronicle and elsewhere are noting. Governor Schwarzenegger included some incentives that have kept the electric auto maker from moving manufacturing to New Mexico (besides the Governator ordering one unit for himself). But it appears that the State of California is giving it more than mere tax incentives.

It appears that this is going to get equipment leases from the state, as well as additional grants. What is interesting here is that this gets the company even further on the map. There have been recent reports that Tesla was in the market for another huge financing. Whether or not that comes about now is not certain. Other reports show that the company may even supply battery units to Daimler or other car manufacturers.

What is becoming fairly certain is that Wall Street expects to see Tesla file for an initial public offering. As capital intensive as these businesses are, the company needs to have a steady vehicle (no pun intended) to be able to raise the capital it needs.

Think of the good news.... At least one US auto manufacturer will be considered cool.