The Leveraged Buyout Target List

Oy, the LBO’s are back.  Blackstone (BX) just shattered their earnings expectations this quarter, business is getting good again and dealmaking has returned.  I jokingly refer to private equity guys as moles and Morlocks, but I know a few of them in real life and they genuinely believe that they are more than just undertakers and graverobbers.

Anyway, leaving aside the philosophical debate about the need for so much PE, let’s have the more interesting discussion about which stocks might be the next targets for the KKRs and the Blackstones.

Barron’s looks at a list compiled recently…

What companies could be the next targets? Randy Udell and Ben Canet of the UBS U.S. special-situations equities sales team, recently listed 27 potential targets. Two prior lists, published in March and July 2010, had a good hit ratio of LBOs and other takeovers, such as King Pharmaceuticals, bought by Pfizer in March.

Before the picks themselves, a word on their methodology:

The UBS duo created the list by screening for multiple financial and business criteria. Among the assumptions is that private equity could offer at least a 15% premium above the stock price and that total debt of the privatized target can be no more than six times 2010 cash flow…

They assume a 30% equity contribution and that the total LBO size not exceed $15 billion because it can be tough to finance large deals. They also figure that buyers can generate a 15% annual return.

The list is laden with retailers like Limited, RadioShack (what else is new), Aeropostale, and Ross Stores.  This is unsurprising as multiples have been compressed for this group for ages.  It should be noted, however, that some of the most disastrous PE deals of the last cycle were retailers (Linens & Things anyone?).

Head over below to see all 27 names UBS came up with.


LBO Hunt: Who’s Next (Barron’s)

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here:

Please see disclosures here.

What's been said:

Discussions found on the web
  1. video transitions filmora pro commented on Sep 15

    … [Trackback]

    […] There you can find 44173 additional Info on that Topic: […]

  2. w88 commented on Sep 21

    … [Trackback]

    […] Information on that Topic: […]

  3. Eat Verts commented on Sep 22

    … [Trackback]

    […] There you can find 90592 more Information on that Topic: […]

  4. bitcoin evolution commented on Sep 30

    … [Trackback]

    […] There you can find 27192 additional Information to that Topic: […]

  5. tangerine savings account login commented on Nov 14

    … [Trackback]

    […] Find More here to that Topic: […]

  6. td easy login commented on Nov 17

    … [Trackback]

    […] Here you can find 38178 more Info on that Topic: […]

  7. high quality wigs commented on Nov 28

    … [Trackback]

    […] Find More on to that Topic: […]

  8. software functional testing commented on Dec 09

    … [Trackback]

    […] Info to that Topic: […]

  9. Grimsby Garage Doors commented on Dec 20

    … [Trackback]

    […] Find More Info here to that Topic: […]

  10. Software Testing company commented on Jan 12

    … [Trackback]

    […] Find More Information here on that Topic: […]

  11. rego search commented on Jan 15

    … [Trackback]

    […] Find More Info here to that Topic: […]

  12. Philips HD7470/20 manuals commented on Jan 21

    … [Trackback]

    […] There you can find 1966 additional Info on that Topic: […]

  13. best dumps shop commented on Jan 26

    … [Trackback]

    […] Information to that Topic: […]