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The rich keep getting richer, with the top two firms, Goldman, Sachs & Co. and Banc of America Securities LLC adding new middle-market clients this week. Both companies, Bellsystem24 and Tanenbaum-Harber, are privately held -- in Tanenbaum's case even private equity held. A sign of things to come in this brave new world, perhaps? It would make sense, especially seeing as the IPO option has essentially been removed as a viable exit strategy.
Unfortunately, as reported by The Deal's Luisa Beltran, there may not be any takers for Olympus Partners' portfolio company. Tanenbaum is an insurance company -- catastrophe insurance, not credit risk, but close enough to scare off many PE buyers. Strategics, meanwhile have enough of their own issues to deal with -- too much, one would think, to be able to justify an acquisition at this time. Nevertheless, at least there is some auction activity in the middle market -- more than can be said of the bulge bracket. For more on the middle market, the cover story of The Deal newsweekly (out Monday, but available online later Friday) kicks off a special report on the state of middle market -- loosely defined as those having market caps between $100 million and $1 billion. - Nathaniel Baker
About the table: Several times a week or more, there is news about a company hiring an investment bank "to explore strategic alternatives." Sometimes the phrase "including a sale" or "including a possible sale" is tacked on at the end of the statement. Other times the company is less obvious about its want/need to unload assets. In merger arbitrage land, the news triggers a set of Pavlovian responses, usually taking the form of a series of questions: What company did this? Why? Was it due to activist pressure? Earnings disappointments? A combination? More importantly, should we long this stock? If not, do we get in now? Who might buy? How likely is this to happen? Do we short them? Poor arbs. It is said their lives are nothing but long stretches of boredom interspersed with moments of stark panic. (Or maybe that was pilots?) Private equity firms flush with cash will of course take interest for a different reason -- as a potential bidder for some of the companies' assets, or perhaps even for the companies themselves. Lost in all this is the business done by the advisory firm that was hired to conduct the review. Just who are these guys, and how much business are they doing? This blog series was born of an attempt to answer this question and shed some light on this niche of the investment banking world. The below chart is a stab at putting it all into context. To narrow the scope somewhat, we have limited the data to new auctions announced during the 2008 calendar year. Unlike "traditional" league tables, which usually attempt to track revenues, this table is ordered by the number of new clients signed year-to-date by a particular firm. (Not all companies identify the firm they hired to conduct their review, though The Deal reporters are often able to dig this information up through sources. Still, the table will by definition be incomplete for this reason.)
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