Circuit City is a “potential” leveraged buyout target, according to a new Bear Stearns research report out today. The analysis comes after the electronics retailer posted a surprise Q3 loss, was picked up by Dealbook and has helped send the stock… PLEASE, MAKE IT STOP!
I know that both the analyst and the NYT blogger were just doing their jobs, but everyone needs to face the following reality: Almost every public company is a potential LBO target.
That includes Circuit City. And American Standard. And Barnes & Noble. And [enter your pet stock here]. In fact, buyout “potential” should become boilerplate on every research note for companies that would cost $80 billion or less to purchase. And, by this time next year, that theoretical ceiling probably will be raised to over $100 billion (that means you Home Depot).
Some of these deals are possible because the company is struggling, and is therefore a turnaround opportunity. Some because the company is underperforming. Some because the company is performing just fine, but some confident buyout pro thinks he can make it perform just that much better. In other words, all bets are on.
The breathlessness with which people predict the next big buyout is akin to breathlessness while watching a Seinfeld rerun. You know what’s coming, so just enjoy it without making such a big deal of it…