Chapter 2687: Stay Calm
The M&A team came in and sat around the conference table, quiet but proud.
Under the direct guidance and leadership of Feng Yiping, this team of capable people has now become the most famous team in the market.
Most of them had not played a key role in even a few hundred million dollars of M&A before joining this team, because most of them were still students who had just graduated from school, and most of these students came to the West and Silicon Valley after failing to apply for Wall Street.
There are also some small people who have passed the Wall Street application and worked in those famous companies on that street, but are still at the bottom.
Therefore, they are also a group of people who are extremely unhappy.
The bonus distribution on Wall Street is extremely unbalanced. The top leaders get a lot, and the bottom leaders get only enough to keep them alive.
If Wall Street is also a country, then it must be the country with the largest gap between the rich and the poor in the world.
But it is this group of people who have never been able to step into Wall Street, or have always been at the bottom of Wall Street, that have attracted the attention of the gold medal M&A teams of those famous investment banks on Wall Street.
Their growth is beyond the expectations of those people.
At the beginning, when they were acquiring Coin Star, their performance was equivalent to that of an intern in the eyes of professionals, that is, they knew nothing.
Although they were very studious, please, so what?
But now their achievements are beyond the expectations of those people.
This team is not only invincible now, but without exception, after the victory, their fruits of victory have been cultivated very fruitfully.
It can be said that this team is a lot of people who only know how to acquire, but cannot guarantee the development after the successful acquisition, so from the overall result, the entire acquisition is actually a positive lesson for the failed team...
These people in the acquisition team know that next, it will be their time to perform again.
They quietly looked at Feng Yiping sitting in the middle, who is the core and soul of their team, and they are confident that under his leadership, they can achieve any goal.
There are too many big companies and big figures who are worried about the current situation and even can't sleep at night, but for them, this will only be the best harvest season.
John quickly continued his explanation, "In the recent turmoil on Wall Street, private equity funds have also been very active,"
"We all know that in March, when the Bear Stearns crisis occurred, in addition to JPMorgan, there was another private equity fund, Flowers Private Equity Fund, that was interested in acquiring the company,"
"They were very active, expressing their willingness to acquire the company before JPMorgan, and also making an offer before JPMorgan. Their offer was also higher than JPMorgan's. In fact, their offer was 12.5 times JPMorgan's $240 million, a full $3 billion,"
Someone laughed out loud.
Flowers Private Equity Fund is really a very ambitious and aspirational private equity fund.
The problem is that their comprehensive strength is not enough to support their ambitions.
JPMorgan officially completed the acquisition of Bear Stearns at the beginning of last month. Although the price they paid in the end was not $240 million, but increased to $1.4 billion, it was still far from Flowers' $3 billion, because it was less than half of its offer.
But it was JPMorgan that completed the acquisition in the end, which can explain a lot of problems.
The participation of Flavos, just like now, only adds some jokes to everyone.
John also smiled, "These private equity funds," he paused, "we all know their nature, they have actually been doing the trick of making money out of nothing,"
"They don't have much of their own funds. Generally, after finding a suitable target, they first borrow a large sum of money from the bank, add a part of their own funds, and then start to quote and formally start the acquisition process,"
"Once the acquisition is successful, the private equity fund will quickly use the credit of the acquired company to sell bonds to the market, and use the income from the bonds to repay the loan owed to the bank. After that, they become the owner of the acquired company,"
"After holding these companies for a few years, they generally sell the target at a higher price through listing, splitting, mergers and acquisitions, etc."
These are the three tricks of these private equity funds.
The whole process is actually no different from those people in China who make profits by speculating in real estate.
"It can be said that the mergers and acquisitions of these private equity funds are mostly leveraged mergers and acquisitions,"
"Generally speaking, banks, especially investment banks, also like leveraged mergers and acquisitions very much, because they can first make money as merger consultants, make another money by borrowing loans, make another money by underwriting bonds, and finally make another money by investing with some investors..."
"But that is certainly not the case now. We all know that now is not only a time when investment banks, but also many commercial banks are short of money. The bankruptcy of banks such as IndyMei just proves this point,"
"So investment banks have recently been rushing to recover similar loans,"
"But the difficulties faced by those private equity funds are not just this aspect. For example, let's take Blackstone as an example,"
Although Blackstone is an asset management company, their largest business segment is private equity funds. Therefore, on Wall Street, Su Shiming and his Blackstone are also known as the "King of Private Equity Funds."
"In February last year, Blackstone used its usual high leverage to acquire EOP, the largest real estate company in the country, for US$39 billion,"
"I think Blackstone's senior management should have a certain understanding of the real estate bubble, because after the acquisition was completed, they began to deal with related assets at a blitzkrieg speed,"
John clicked on another table, "One week later, Blackstone sold 53 of the properties and recovered US$14.6 billion, equivalent to 37% of the acquisition cost,"
"One month later, Blackstone had sold $21 billion in assets, equivalent to 54% of the acquisition cost,"
"Three months later, about half of the property area had been split and sold, and US$28 billion was recovered, equivalent to 73% of the acquisition cost,"
As soon as such data came out, many people around the table were uneasy.
In other words, Blackstone still holds nearly half of EOP’s properties, but their investment has already been recovered by more than 70%!
And such results were achieved in just three months.
Therefore, the speed at which they accumulate wealth can be said to be astonishingly high.
Even though housing prices are falling now, Blackstone's profit from this acquisition is at least over US$5 billion now.
"Although we don't know how much of their own capital they invested, according to some sources, it must be less than US$5 billion," John added.
That's the beauty of leveraged buyouts.
However, some people estimate that due to the acquisition of EOP, Blackstone has currently occupied US$11 billion in funds.
Although most of this should come from bank loans, for now, this has undoubtedly brought a huge burden to Blackstone.
"Perhaps inspired by the high returns brought by this acquisition, we know that Blackstone quickly set its sights on the next target. In July last year, they acquired the Hilton Hotel for a high price of US$26 billion,"
"This time, we know they invested $5.6 billion of their own capital and over $20 billion in loans,"
"We also know that this time, they were not able to repeat their luck last time. The subprime mortgage crisis broke out and quickly affected the hotel industry. Hilton's passenger flow, cash flow, and asset valuations were all significantly reduced,"
"And their efforts to issue bonds have yielded no results. In the current environment, there is not a market downturn for bonds from companies like Hilton, but there is no market at all,"
Therefore, they can no longer play with their three-axe.
This is probably similar to a real estate speculator who became a landlord. It was not a real estate speculator who became a landlord under ordinary circumstances, but a real estate speculator who became a landlord in Hong Kong in the year of the handover.
"At the same time, Blackstone's other investment projects have also incurred considerable losses. The funds occupied by the investments in those projects are currently being actively pursued by various banks,"
John looked at Feng Yiping, "I think now is the time for us to take action,"
The people in the M&A team also looked at Feng Yiping, they were just waiting for Feng Yiping's order.
Feng Yiping laughed, "Be patient and don't be impatient, be patient and don't be impatient,"
He stood up, "I think it's not yet time, we can wait a little longer,"