There are a lot of struggling public companies these days, and lawyer Peter Mason is thinking of calling on a few hundred of them.
He and a lot of others figure there’s money to be made in taking publicly traded companies private again.
Granted, this pursuit isn’t as likely to capture the public’s imagination in the way the IPO boom did during the overheated ’90s. That’s a relief.
But with the stock market in the tank, and the costs and risks of running a public company climbing, private equity investors are exploring a whole new world of possibilities.
Mason, for instance, is looking over a list of 4,700 companies whose market values have fallen to between $5 million and $500 million.
These aren’t dot-coms trading for pennies on the dollar. The list includes big smokestack companies, midsize manufacturers and service businesses.
In some cases, the companies have more cash on their balance sheets than their public shareholders figure their entire operations are worth.
Depending on your investing skills and your appetite for risk, that’s a sign of impending financial doom or an investor’s dream.
It’s no secret that public companies’ stocks are beaten down. The question is, what are they worth to a private buyer with access to cash, junk bonds or bank loans and a talent for polishing up businesses and selling them?
Some companies are trading so cheaply, a well-heeled circle of private investors–the kind of affluent folks who put their money into tech deals a few years back–could stop poring over pie-in-the-sky business plans and buy a cash-flowing company.
Of course, if it were easy, the people who put together buyouts would be out of business.
Instead, they’re busy sizing up companies–or pieces of them. There’s a lot to choose from.
Large troubled companies are scrambling to raise cash to stay out of bankruptcy. Witness Qwest Communications, which sold its directories business in August for $7 billion to two private investor groups.
For every such multibillion-dollar deal, there are dozens of smaller ones.
Private equity firms are flush with cash. Having worked through some of their problems, they’re turning their attention to buyouts.
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“Private equity could be the place where a recovery begins,” says Robert Teitelman, who follows the market as editor in chief of TheDeal.com and the Web site’s weekly flagship, The Deal. “The rest of the landscape is a mess. This could be where money begins to move, and there’s some life out there.”
That fact hasn’t escaped Mason.
The corporate attorney managed to land safely–once again–after venturing far afield from his roots as one of the founders 20 years ago of Chicago law firm Freeborn & Peters.
His various stints during the 1990s included a post as chief executive of the former May & Speh Inc., a Downers Grove company he restructured and sold to Acxiom Corp., a compiler and manager of consumer databases.
He dabbled in venture capital and invested in a company that produced JobsOnline, one of several affiliates of holding company Toplander Corp.
Eighteen months ago, you would have found Mason throwing Oriental rugs on the bare linoleum floors of his CEO office at JobsOnline, explaining how the value of the site and its affiliates lay in the consumer data they collected–a business plan inspired by his experience at May & Speh and Acxiom.
He took the businesses through four restructurings before stepping out in February, keeping the title of Toplander’s non-executive chairman.
He rejoined Freeborn & Peters last month.
What did he learn from his dot-com fling?
“Markets can go down faster than they go up.”
At 50, Mason is young enough to see the business cycle come full circle.
The public markets will come back. If Toplander still is around as an independent concern, it wouldn’t be surprising to see Mason leading a road show for the company’s IPO.
For now, he’s happy to be working where money flows freely, in good times or bad.
He’s proof of one thing: Some people can go home again.
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