Welcome to the March 2010 edition of Pilot’s Log

We are now well into the first quarter of 2010. Around us are the signs of a slow recovery, as deal flow has gone from non-existent to slightly more than a trickle. Before the Lehman collapse, many had predicted that the ‘recovery’ could take 12-18 months; post Lehman few were making any predictions.

The reality is that deals are being done, and will continue to gather momentum. Not as many, not at the same multiples, and certainly not as leveraged as a few years ago. 100% equity deals are no longer as rare, as some houses predict (rightly) the ability to refinance in the not too distant future.

What hasn’t happened is the explosion of ‘bargain’ deals, nor a high volume of stressed deals closing. Many sponsors are sitting on large amounts of unspent funds and are beginning to feel some pressure to invest for fear of having to return uninvested monies to nervous LP’s. A number of houses almost see their unspent funds as impediments to moving on to the next round of fund raising.

There has been a shift in what many of our clients are looking for from us. Whereas a few years ago it was mostly long term interim or permanent hire candidates, now we are increasingly being asked for non-executives, chief restructuring officers, change management specialists, and lists of sector experts for commercial due diligence projects. In addition to that, more and more of our searches are focused outside the UK, particularly in Germany.

In this Pilot’s Log, we have focused on a number of very relevant topics in the current environment as we see it:

Piers Harmer and Chris Hart of Lloyds TSB Commercial Finance help to explain the benefits of, and the methodology behind their sophisticated asset based lending offering, detailing how applicable it can be for private equity firms looking for alternative, or more flexible, sources of debt.

Robin Dabydeen, corporate tax partner with Wedlake Bell, offers some timely planning strategies which are of particular relevance to the UK private equity community.

Andrew Marchant, of Cinven and Unigestion fame, is kind enough to provide us his unique insight into the relationship between GP’s and LP’s given the current market, and how the lack of funds flowing back to LP’s has exasperated LP liquidity issues.

Alan Thomas, recently with Grant Thornton, shares with us his experience and observations on the current state of stressed investing, its special challenges, and its unique risk reward dynamics.

And finally...for once we are giving ourselves a puff too – readers of Pilot’s Log have an early sight of the new edition of the PILOT pitch book – everything you ever wanted to know about our business but were afraid to ask.

Michael Gebauer
Partner – private equity practice

E: m.gebauer@pilotpartners.eu

T: 0783 423 5458