Searching for Perfect ROI

Tiger Global Takes 9.9% Stake in Groupon

Mon, 19 Nov 2012 19:57:43 -0500

Tiger Global Takes 9.9% Stake in Groupon:

The $8 billion hedge fund has taken a 9.9 percent stake in Groupon, as the daily deals company’s stock hovers near all-time lows.

"For the first time, it's clear that size and complexity come with a higher cost..."

Tue, 13 Nov 2012 16:56:34 -0500

"For the first time, it's clear that size and complexity come with a higher cost...":

Goldman is relying more on technology and reducing expenses as it contends with new regulations and an uncertain market, Goldman’s chief executive, Lloyd C. Blankfein, says.

A Dose of Realism for the Chief of J.C. Penney

Tue, 13 Nov 2012 11:32:09 -0500

A Dose of Realism for the Chief of J.C. Penney:

J.C. Penney reported last week that its sales had fallen 26.1 percent in the most recent quarter, but Ronald B. Johnson, its chief executive, promoted the success of the company’s store renovation plan.

Leucadia to Buy Jefferies in $3.6 Billion Deal

Mon, 12 Nov 2012 11:56:06 -0500

Leucadia to Buy Jefferies in $3.6 Billion Deal:

The Leucadia National Corporation said on Monday that it would buy the Jefferies Group in a deal valued at about $3.6 billion.

Netflix Adopts Poison Pill

Mon, 05 Nov 2012 15:40:26 -0500

Netflix Adopts Poison Pill:

Netflix announced that its board had adopted a shareholder rights plan, or poison pill, just days after the activist investor Carl C. Icahn disclosed he had acquired a 9.98 percent stake.

The List That Big Banks Don't Wish to Be On

Thu, 01 Nov 2012 22:23:05 -0400

The List That Big Banks Don't Wish to Be On:

The Financial Stability Board, a body that coordinates international bank regulations, has come out with its list of “systemically important” big banks. Of the 28 firms on the list, eight are from the United States.

African Banks Must Prepare for a Boom

Fri, 12 Oct 2012 11:31:38 -0400

African Banks Must Prepare for a Boom:

Economies south of the Sahara are poised to experience a boost in economic growth between now and 2020. This builds on the real GDP growth of 6.5% between 2004 and 2008.

T-Mobile Deal for MetroPCS Adds Pressure on Sprint

Fri, 05 Oct 2012 13:45:27 -0400

T-Mobile Deal for MetroPCS Adds Pressure on Sprint:

The merger, formally announced on Wednesday, signals a renewed phase of jockeying among cellphone service providers as they race to draw in more smartphone users and upgrade to the latest high-speed data networks.

Examining the Ubiquity of Private Equity

Mon, 17 Sep 2012 14:18:47 -0400

Examining the Ubiquity of Private Equity:

A Q.&A. with Jason Kelly, author of “The New Tycoons: Inside the Trillion Dollar Private Equity Industry That Owns Everything.”

Welcome to the Occupation:

“You are mad and educated
Primitive and wild
Welcome to the occupation
Here we stand and here we fight”

DealBook: Daikin of Japan Said to Buy Goodman for $3.7 Billion

Tue, 28 Aug 2012 15:54:12 -0400

DealBook: Daikin of Japan Said to Buy Goodman for $3.7 Billion:

Daikin Industries has struck an agreement to buy Goodman Global for about $3.7 billion, a person briefed on the matter said on Tuesday, clinching the Japanese air-conditioner maker’s long quest to buy its American rival.

DealBook: Graphics: Mergers and Acquisitions, Top Financial and Legal Advisers

Fri, 29 Jun 2012 15:52:43 -0400

DealBook: Graphics: Mergers and Acquisitions, Top Financial and Legal Advisers:

In the first quarter of 2012, mergers and acquisition activity was down 34 percent worldwide to $481 billion. The U.S. share was $146 billion. Goldman Sachs and Freshfields Bruckhaus Deringer were the top financial and legal advisers.

The downturn is one of the main reason to put on hold your M&A. It is interesting to notice, that though McKinsey in there article about global M&A states that there is no country that dominates the M&A industry as a whole, the USA graph is almost replica of worldwide graph. One can think that each country’s M&A was influenced by the same extent however the fact that Europe is going through harsh time leads to the thought: Yes there are country that dominate the M&A industry and no doubt USA is one of it.

DealBook: With Lackluster Debut, Facebook Must Prove Itself to Investors

Sun, 20 May 2012 22:46:17 -0400

DealBook: With Lackluster Debut, Facebook Must Prove Itself to Investors:

“Facebook has a great product, but it’s not a great company yet,” Mr. Damodaran said.

The lack of a bounce in Facebook’s stock price on its first day might mean that investors are not comfortable with the high valuation for the social media site.

Some multiples are also better than others for comparing...

Wed, 16 May 2012 22:20:40 -0400

Some multiples are also better than others for comparing performance. Ubiquitous as the P/E ratio is, it is distorted in its traditional form by differences in capital structure and other non-operating items. For example, as Exhibit 1 illustrates, when one company is financed partially with debt and the other is financed only with equity, the one with higher debt will have a lower P/E ratio, all else being equal, even though they have the same ratio of enterprise value to earnings. As a result, most sophisticated investors and bankers compare companies relative to peers using an enterprise-value multiple¹—usually either EV/EBITA or EV/EBITDA.² Such multiples are preferable because they are not burdened with the distortions that affect earnings ratios.

DealBook: As One JPMorgan Trader Sold Risky Contracts, Another One Bought Them

Tue, 15 May 2012 23:48:29 -0400

DealBook: As One JPMorgan Trader Sold Risky Contracts, Another One Bought Them:

Dog-eat-dog world of JPMorgan or how not to communicate.

A mutual fund in a different part of the bank owns about $380 million worth of insurance identical to the kind the “London whale” sold.

It is not only about GDP growth, you also have to look to Market...

Sat, 12 May 2012 19:28:54 -0400

It is not only about GDP growth, you also have to look to Market Capitalization losses.

Can Facebook Live Up To Its Valuation?

Sat, 05 May 2012 21:25:09 -0400

Can Facebook Live Up To Its Valuation?:

So can the Facebook really Live up to its Value? With a two weeks before an IPO this question is bothering a lot of people. Thought there is a lot of expectation to make a huge amount of money in its IPO, sometimes it is important not to be caught in “inexistent gold rush”.

Simple glance at EV/Revenue(ttm) will give a different perspective:

Facebook: 25x
LinkedIn: 18x
Renren: 13x
Google: 3.75x

It is clear the FB is overvalued, at least using this indicator.

DealBook: Burger King to Return to Public Markets

Tue, 03 Apr 2012 22:57:08 -0400

DealBook: Burger King to Return to Public Markets:

Just 18 months after being taken private in a leveraged buyout, Burger King Worldwide Holdings, plans to list its shares on the New York Stock Exchange.

Going to the stock markets twice not always means bad thing.

DealBook: Dell to Buy Security Services Provider for $1.25 Billion

Sat, 17 Mar 2012 10:46:09 -0400

DealBook: Dell to Buy Security Services Provider for $1.25 Billion:

In an effort to expand its corporate services offerings, Dell agreed to buy SonicWall, a provider of network and data security services for a wide array of corporations, in a deal that is said to be worth about $1.25 billion.

The ROI of at least 223% at worst scenario.

The Big Data Era.

Tue, 21 Feb 2012 13:42:00 -0500

The Big Data Era.:

Radical customization, constant experimentation, and novel business models will be new hallmarks of competition as companies capture and analyze huge volumes of data.

The question is how it will impact the M&A in the IT industry. The big players in the industry has this data, and you can find a lot of small satellite companies around the big fish trying to create value through data analysis.

Is it profitable for the big player to acquire the small data analysis companies or just let them be?

DealBook: One Way to Look at Private Equity

Sat, 21 Jan 2012 12:56:05 -0500

DealBook: One Way to Look at Private Equity:

“I think it’s a pretty honorable industry, and I don’t know why people aren’t stepping up and defending the careers that define their lives. That’s a sad thing. What do they fear it will cost them?”

Many people can argue that the private equity (PE) firms are vultures who care only about the compensation; though the compensation is indeed one of the essential part of the incentive, there is also a help for a society embedded in PE. If you want to associate PE with an animal the best you can come up is a mix of hyena and beaver.

Like hyena, PE cleans economy of companies who can not survive and are in need to restructure a business model. At the same time, like beaver, PE builds the opportunity for the whole economic environment through creating leverage opportunities for potential companies to survive.