'M&A Lies'

In addition to the observations we reported this morning from the M&A conference underway here in Nashville, there were dozens of other cogent remarks by panelists -- for example, regarding the human impact of acquisitions: A spoofy brochure from Deloitte, titled "M&A Lies," was used by a moderator to poll panelists on how much credence an employee should give a new Private Equity owner's promise that "We keep most of the people we want to keep when we do a deal." That drew dark chuckles. Bryan Cressey rued the fact that while he says his firm does "try to take care of employees" in a transaction, many times he's seen top management "take transactions that hose the employees... where the owner-slash-CEO didn't really care." And what about the caliber of management getting top priority? Yes and no. Said Cressey, if you have to choose between a great management team in a bad sector and a "sorta average" management team in a great sector, "take the sector." Fellow panelist Jeff Rhodes of TPG Capital chimed in knowingly, "When a 'good' management team meats a 'bad' sector, it's the sector that keeps its reputation." By the way, there was general assent to the idea that in the current financial environment a CEO who got his job on the basis of the "growth" he or she could create probably now finds themselves spending their time managing the company's capital structure. Also, although liquidity's a challenge in some sectors, deals that involve companies with decent credit and "a clear story" are still getting done. With regard to struggling companies, look for spinoffs and carve-out startups. Read our report on prospects for health, IT and related investments here.