IPO Roundtripping - Public left holding the bag

The re-emergence of Dell as a Listed Company can only leave a sour taste in the mouth of anyone who supports a Market System that benefits the great majority and not just a few clever financial engineers.
For a long time Pro Governance has argued that it is much to easy to take listed companies 'private' (a misnomer in the case of 'Private Equity' backed deals as PE firms are mostly working with money from Joe Sixpack even if it is allocated by fiduciaries in the money management food chain).
Dell returns to public equity markets

Sports Direct has chosen a 30-year-old Barnstable shop manager to stand up for staff at the company

Insult to Intelligence! Like the Headmaster selecting the Head Boy, nothing but a poodle! Staff needs proper representation, the old Unions are not up to the job, still stuck in socialist mindset. What is needed is something akin to Activist Investors, Investment Banks representing employees and negotiating on even level with capital owners. So the EBU, the Employee Buy-out is the way to go. Who would ever have thought that a tiny niche, Private Equity, would become the Monster it has become in the past 30 years? Or the MBO that is abused by any number of insiders well placed to take advantage of their position? Both factors key contributors to the growth of Inequality and wealth of the 1%
Sports Direct has chosen a 30-year-old Barnstable shop manager to stand up for staff at the company

Kick-back Fraud in M+A transactions

News that German authorities investigate up to 30 employees of Bayerische Landesbank in connection with the takeover of Hypo Alpe Adria raises an important but often neglected point with regard to Merger and Takeover transactions. We do not even want to delve into the fact that many are value-destroying at least half the time. This has been proven in many academic studies and any experienced investor will have watched in disbelief when supposedly smart managements engage in deals that make no sense for one of the two involved parties. While better corporate governance will help to alleviate many weaknesses of the merger process little attention has been paid to a darker side of this process. As the abuse is incredibly difficult to prove not many instances of outright fraud have come to light over the years. Of course, situations where incumbent management of the takeover target or one of the merged companies is promised attractive new terms in the combined business do not pass the smell test. The practice that option and share awards to management are 'crystallised' and can be cashed in before their nominal due date can also be considered to be a questionable inducement to go ahead with a business combination. Passing on explicit bribes such as hard cash is even more difficult to detect but can never be excluded as long as decisions about major transactions are often made by a small circle behind closed doors. Only the restriction of all decision making to the full body of shareholders - and even then in a process subject to strict regulation - will prevent Merger and Takeover deals from being influenced by corrupt practices.
(28/02/2011)

New Look: Thanks a billion!

News that New Look will do an IPO - again - is another slap in the face of gullible institutional shareholders who agreed to a buy-out by management and private equity funds in 2004. Now the public will again be asked to pay vast profits to them - courtesy to their fiduciaries in the investment and pension management industry and a dysfunctional market for corporate control.

Thanks a billion public shareholders!

That is what the financial acrobats behind the buyout of HCA will not be saying as they cash in a cool $1.75 billion dividend from the company they have taken 'private' only a few years ago. As we continuously argue, there should be a big 'Seller beware!' sign attached to any buyout offer that speculative funds and their collaborators in management make to public shareholders. The trustees of the public shareholders - the major investment institutions - should be held to a very high standard of care when considering any bid, including takeover bids from competing businesses. The valuation and decision process in merger/takeover situations is deeply flawed and tends to short-change the sellers. That employees and clients are also often worse off (layoffs where the burden falls on the tax-payer due to rising costs of unemployment benefits, diminished competition due to increasing concentration) should also be mentioned. It is also instructive to re-read the warning that was issued by law professors at the time of the buy-out in 2006.

Matalan - Public Shareholders lose out

In 2006 the founder and owner of a 53 pct stake in the company took Matalan private. Now the company may be sold on for more than twice the price that was paid in the 2006 transaction. Pro Gov argues regularly against transactions that treat public shareholders as temporary guests on a path to riches - with the beneficiaries being majority owners, company management or so-called 'private' equity investors. It is in the public interest that as many companies as possible are owned by a wide spread of private investors and we argue that public companies should benefit from beneficial tax treatment in order to prevent the concentration of wealth among a very small part of the population. Those in charge of public companies (and the institutional investors acting as fiduciaries for the wider public who is the ultimate owner of the money they manage) must see a public listing not simply as a ticket to get rich but as a duty that carries significant responsibilities. Unfortunately, the way ownership in public companies gets traded is in contradiction to the rationale of publicly listed companies as we see it. There is no proper democratic process that decides the outcome of merger bids and buy-out offers. In the case of Matalan, for example, a clear majority of the shares not already controlled by the majority owner should have been required to vote for the bid. In addition, a single bid should be required in bid situations and that bid would have to be accepted by 95 per cent of the public shareholders in order to succeed. This would prevent the 'gaming' of bids and the process of haggling that currently occurs between the parties to the bid (and the media). As matters stand, the public - thanks to the casino mentality displayed all too often by their 'fiduciaries' - is the helpless spectator to another case were they see that someone reaps huge profits on the shares they were coerced to sell only a few years back. Is this Casino Capitalism in the public interest?