If The Buyout Boom Were a Movie Character...

July 16, 2007

What movie character would the current buyout boom be? I'd like to put my two cents in for "The Terminator."

Let me explain. There are bombs going off all around us (in some cases smart bombs, but bombs nonetheless).

High yield bond deals are dropping from the primary, shot down by the sniper fire that is investor pushback, while issuers run for cover in the form of covenants. Moreover, observers far and wide are warning that the debt markets may have trouble absorbing what is in the pipeline. Meanwhile, ratings agencies have sent the ratings on billions worth of subprime mortgage-backed securities tumbling, causing tremors on the secondary markets.

Still, in the middle of it all, as all manner of sky is falling, the buyout boys are busy bulking up Paris Hilton's inheritance. For better or for worse, nothing seems to faze them.

To quote Kyle Reese, who shoots back in time to rescue Sarah Connor and unknowingly sire the freedom fighter who will save us all from death and destruction: "That terminator is out there. It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are..."

Ok, ok, I'm getting a little carried away, nobody's going to die here. And I apologize to our friends at the buyout firms; everyone knows that, when push comes to shove, they can be bargained with.

But I do wonder what it would take to get them to take a little break. Of course they won't stop; buyouts are what they do. But there doesn't seem to be much indication that deal flow is slowing down, despite the trembling markets.

Quite the contrary, the recently announced $48.5 billion deal for Bell Canada Enterprises, to be acquired by Madison Dearborn Partners, Providence Equity Partners and the private investment arm of the Ontario Teachers Pension Plan, sets new records (HYR, July 9, 2007). Then there's The Blackstone Group's $26 billion buyout of Hilton Hotels, Apollo Management's $6.35 billion bid for Huntsman, he list goes on.

In "Terminator Two: Judgment Day," the original terminator returns to rescue the pubescent future freedom fighter John Connor from an even higher-tech killing machine. "It's in your nature to destroy yourselves," he says of we nonsensical little humans. Maybe. Or maybe, in the end, the current smoke will quickly dissipate, and everybody will go back to making gobs of money. The buyout boys are obviously counting on the latter. - Carol J. Clouse

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