Archive for the ‘J.C. Flowers’ Category

Thoughts On Sallie Mae Buyout Collapse

Thursday, September 27th, 2007

One of the credit crunch’s victims is the huge Sallie Mae proposed buyout.

The Washington Post covers it extensively today – and includes my thoughts on what’s happening.

“One of the largest private takeovers in history — the $25.3 billion buyout for college loan giant Sallie Mae — unraveled yesterday after its buyers balked at the price, citing turmoil in the credit markets and federal legislation to cut subsidies to student lenders.

The buyers, headed by fund manager J.C. Flowers, left open the possibility of acquiring Sallie Mae at a lower price. Sallie Mae vowed, however, that it would fight to keep the deal intact ‘to the fullest extent permitted by law.’  …

‘Several deals have collapsed under their own weight. There will be more,’ said Frederic V. Malek, chairman of Thayer Capital, a private-equity firm in the District.”

Indeed. I’ll be curious to watch as the trend continues. My further sense however is that does not signal the end of the buyout boom.  We in private equity will just need to be more conservative in our pricing and leverage and earn returns the old fashioned way of growing revenues and profits.