Private Alternatives to the Public Markets
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Private Alternatives to the Public Markets How to Survive and Grow in a Capital Constrained Environment. A Private Conference on May 16, 2001 Sponsored by: Windsor Group Investment Banking Deloitte & Touche Holland & Knight LLP Holland & Knight Consulting. Backdrop to Current Environment.

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Private Alternatives to the Public MarketsHow to Survive and Grow in a Capital Constrained Environment

A Private Conference on

May 16, 2001

Sponsored by:

Windsor Group Investment Banking

Deloitte & Touche

Holland & Knight LLP

Holland & Knight Consulting


Backdrop to current environment
Backdrop to Current Environment

  • Slowing economy and Internet “bubble” are reducing the opportunities for IPO’s and secondary stock sales

    • Number of United States IPO’s are down to 429 in 2000 from 538 in 1999 (down 20%)

    • Only $8.1 billion of proceeds in fourth quarter 2000 versus $27.4 billion in fourth quarter 1999

    • Performance very poor in 2000:

    • Rule “FD could make things worse, due to increasing uncertainty in minds of analysts and portfolio managers


Backdrop to current environment1
Backdrop to Current Environment

  • Leveraged loan market has contracted to levels of the early 1990s

    • Proceeds of debt syndications of $1,175 MM in 200 versus $1,298 MM in 1999 (down 9.5%)

    • Bank debt multiples at a 10-year low

    • Bank examiners caused 60% of syndication buyers to exit the market since mid-2000

    • Predicting a recession - and may be getting what they predicted!


Backdrop to current environment2
Backdrop to Current Environment

  • High-yield bond market is no longer an option for most issuers

    • Assets more concentrated than in stock market, leading to larger minimum size thresholds (now $250MM+)

    • Returns under 5% annually since 1998

    • Yields and spreads have increased, but liquidity has not returned

    • 2000 new issuance down to levels of 1994-95


Backdrop to current environment cont d
Backdrop to Current Environment cont’d

  • Significant amount of LBO capital has been raised but not invested yet

Source: Venture Economics/NVCA


Backdrop to current environment3
Backdrop to Current Environment

  • LBO funds are investing more equity in deals, despite high acquisition multiples implying a reduction in expected returns


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