Neither a borrower nor a lender be, advised Polonius in Hamlet, but that hasn’t stopped banks from doing both—even, of late, in the same transaction.
In the latest edition of Buyouts Magazine, Senior Editor Ari Nathanson reports on a little-noted aspect of the giant Clear Channel LBO agreed to last month. Along with providing debt financing, Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley and RBS all stepped up to take equity in the radio company as well. It’s just the latest example of the trend, as lenders search for new ways to goose their returns in the face of a borrower’s market.
The danger, writes Nathanson, is that “with exposure on both sides of the balance sheet, equity-investing lenders are taking bigger risks on a per-deal basis, and run the chance—as both a lender and a shareholder—of having conflicts of interest if a deal goes south.”
Other highlights from the December 4 edition:
* Goodwin Procter is scouring the West Coast for talent, as it prepares to open a Palo Alto office in the next 18 months. The 700-attorney law firm, which opened offices in Los Angeles and San Francisco this spring, wants to expand its private equity practice from Boston, New York and Washington to California in anticipation of a wave of technology buyouts. The firm is open to hiring attorneys one by one, or scooping up entire practices that are already thriving.
* Herald Chen has quietly exited Fox Paine as managing director after a nearly four-year stint at the diversified buyout shop. The firm isn’t talking about the departure, but Chen takes with him a great deal of experience in both information technology and medical technology. Prior to joining the firm Chen, believed to be in his mid-30s, co-founded Jamcracker Inc., a Santa Clara company whose products help software developers provide on-demand services. While at Fox Paine, he has served as chief executive officer of medical-device maker ACMI Corp., and a member of the board of WJ Communications, a publicly traded provider of wireless communications equipment.