The Deal's senior writer Matt Miller moderated a panel that gathered some of the top private equity, hedge fund and other alternative investment investors in distressed assets. Talking about the factors that will be key in the coming wave of restructuring, the panelists -- Michael E. Heisley of Stony Lane Partners, Mark K. Holdsworth of Tennenbaum Capital Markets, Mark J. Leder of Sun Capital Partners,David Matlin of Matlin Patterson and Michael A. Psaros of KPS Capital Partners LP -- discussed whether or not valuations had fallen far enough that it was time to jump into dealmaking full throttle.
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"There are an unbelievable number of American companies being operated as if it was 1957," said Psaros. "We're really excited about this next cycle; there's so much opportunity."
While the entire group agreed that the new environment held huge opportunities for distressed investing specialists, the general sentiment was that events are happening so fast that it wasn't yet time to try and catch a falling knife.
Matlin speculated that things are moving so quickly that some industries may already be near the bottom. "Things are happening much faster than in prior cycles; look at housing." Nevertheless, he remains cautious, saying: "The mantra of buying on the dips has unraveled in the wake of the subprime disaster; until people start losing money on the way down and get discipline, it's hard for a solid base for better valuations to form."
For his part Psaros is taking a wait and see approach. "I've been preaching patience," he said. "The best investments we have done during a crisis were done well into it. The worst companies in an industry get sick first, the healthy companies take longer, so we're willing to wait for the best deals to come later. I think the best deals may get done next year." - George White
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