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I had the opportunity to listen to Patty Dunn speak at the Western M&A forum yesterday in San Francisco. With her attorneys at her side, she gracefully dodged any questions pertaining to the HP drama and addressed the crowd of investment bankers, transaction attorneys and private equity firms with a perplexing observation on the recent buyout activity. Her point focused on the fact that many public companies feel the need to go private (or "go dark") in an attempt to move away from public company scrutiny. Instead of worrying about back dated options, (or leaky board members) the executives can focus on running the company. Although Ms. Dunn failed to consider the factor of leverage, the greatest returns are generated in the dark stage, and it is the reason that so many public pension funds are allocating substantial amounts of resources to this alternative investment category. The irony she points out is that it is these funds that are often leading the charge on greater regulation and visibility in the public markets, but increasing investments in limited partnership interests, where visibility is even worse.

So let's see. This sounds a bit like 2000 all over again. Higher returns, public funds follow, someone screws up, public funds point finger, and heavy regulation followed. For what it's worth, I hope nobody screws up......

Category(s): Valuation Thoughts
Posted by Tom Miller at 01:36 PM | Permalink | Comments (0) | TrackBacks (0)