For private equity (PE) firms, 2011 is the year of goldilocks — everything’s just right. Interest rates are low, the increasingly stable economy is pumping up corporate cash flows, and if you look hard enough, real bargains can be had. #-ad_banner-#The key for PE firms (also known as leveraged buyout shops) is to find companies that throw off lots of cash flow and also come with very healthy balance sheets. That way, a company can be acquired with its own cash and new loans, putting the buyout firms… Read More
For private equity (PE) firms, 2011 is the year of goldilocks — everything’s just right. Interest rates are low, the increasingly stable economy is pumping up corporate cash flows, and if you look hard enough, real bargains can be had. #-ad_banner-#The key for PE firms (also known as leveraged buyout shops) is to find companies that throw off lots of cash flow and also come with very healthy balance sheets. That way, a company can be acquired with its own cash and new loans, putting the buyout firms on the hook for only a moderate amount of upfront cash. Ideally, they look to take these companies public again a few years later (though with much weaker balance sheets by then). That’s what has happened to the likes of Hertz (NYSE: HTZ), hospital chain HCA (NYSE: HCA) and Burger King. A little sleuthing has revealed a list of companies that may now be in focus for a major deal in 2011. These companies are big enough (with a market value above $750 million) but not too big (with a… Read More