After completing such a large issue, I feel a little bit like a chef who’s finished preparing a seven-course meal. The work has been done, I’m pleased with the result, but the real test is whether you enjoy it. There are more stories and important nuggets of information in the first half of this issue than you’d probably find in some of our competitors’ entire issues. This issue also includes detailed descriptions of our Buyouts Deal of the Year winners. Each one of the winning transactions had something unique about it and stood out as one that should be recognized. Turn to page 61 to read about almost all of the winning deals.
I say almost all, because to find out which one of your peers won Firm of the Year, Deal of the Year and Pro of the Year, you’ll have to wait until they’re announced at the Buyouts Symposium (www.buyouts-symposium.com). In fact, some of you may be reading this at the event itself. I’m moderating the opening panel on Financial Engineering vs. Portfolio Management, which looks at whether LBO firms are better suited to focus on financial arbitrage-buying low, effecting some company change and then selling high-or whether their self-described mission of growing companies is a realistic and beneficial goal. We’ll be touching on several other relevant issues, like outsourcing, the growth of secondaries, European opportunities and surviving the auction process, to name a few. I hope to see you there.
Now back to the issue. So after looking at who won what, take a look at our article on multiples. I know many of you have been waiting for this. The reaction I got from you was pretty interesting, with most firms blaming the lenders for the rise in purchase price multiples. While rising debt multiples clearly affect all multiples, it seems a little idealistic to complain here. When the banks aren’t lending, buyout pros are ticked off, but then when banks are lending, as they are now, and multiples go up, buyout pros complain that they are paying too much for deals. We’re not seeing a jump in equity contributions, and we all know private equity firms are desperately trying to spend their capital, so I’m not sure banks should take so much of the blame here. You can draw your own conclusions after reading the story.
P.S. Let me know what you think of our Deal of the Year picks.