Friday means I have had at least a little time to absorb this week's Economist. I have been hard on "financial journalists" this week, what with the Mark Cubans of the world poisoning an already flagging sector, and causing at least one to complain that I have been painting the group with a wide brush. The Economist, which, by the way, usually leaves its articles uncredited, tends to assuage my bristles in this department. This week is no exception. As usual, the articles therein draw a keenly stitched thread through areas of great interest to me. This week, however, that thread begins with DealBook, which, in turn, points to an Adam Lashinsky piece in Fortune on what might be signs of a pending correction in private equity. Many of the old arguments are re-hashed. LIPOs like Burger King are mentioned, J. Crew ignored (a quick reminder that the CNN/Money logo atop the Fortune webpage has deeper meanings). New though, is the voice of University of Chicago's Steven Kaplan. "Historically, this looks a lot like 1987 and 1998," says Kaplan. This, at least, is concerning. Some signs of hope exist, Lashinsky manages to admit. Interest rate coverage is much better than "back then," and there is always the potential for well focused firms to pick up tasty morsels of any shakeout with distressed funds.
By contrast, the Economist's portion of the thread is less "pop" about its financial news. It begins with a pointer to a survey by Hay Group, a human resources consultancy, (subscription required) that shows that, cost of living included, senior management compensation is not what you think it is, that is unless you're a Going Private reader and have been following the facts, rather than the hype. By this measure management in India, Germany, Switzerland, Brazil, Spain, Russia, Poland, Turkey, Japan, Portugal and Ireland all turn out better than United States executives- wonderfully ironic given the amount of vitriol about executive pay spills in the direction of the United States via Europe in general and Germany specifically.
This easily sets up the observation by the Economist (subscription required) that European Leveraged Buyouts are the hot new ticket (as your humble author can attest to personally). Ironically, the by-line reads "Paris," but then, nothing is perfect. "Europe is behind Britain, which is behind America," the Economist quotes KKR's Europe guru Johannes Huth as saying. Indeed. Given the events of the last two days I suppose it would still be somewhat excessive to try to factor terrorist risk into my calculations of risk-adjusted compensation when arguing for my salary increase upon a European posting. Can't blame a girl for trying.
Follow that with a bit on inflation worries in Europe (subscription required) and the Economist has the private equity trifecta for the day. Typical Friday.
