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Excerpt from our One-Page WSJ Summary:

HEARD ON THE STREET: Backstory of Kinder LBO Underscores Web of Ethical Issues Such Deals Face

Summary: Investors are starting to question recent leveraged buyouts ('LBO') that team corporate management with outside private equity funds. For example, Kinder Morgan (KMI) management took over two months to inform the board of directors that it was considering buying the company. Complicating matters, Goldman Sachs (GS) went from being a Kinder advisor to being one of the company’s buyers. In HCA’s (HCA) buyout, Merrill Lynch (MER) played a similar role, starting out as an advisor to the company and ending up as one of the buyers. Potential-conflict-of interest issues, coupled with the time it took for Kinder management to announce its buyout, are raising eyebrows: Investors want to make sure that companies which are going private in management/private equity deals are being sold at “fair” prices.
Related links: Full WSJ articleLBOs Making Executives Very, Very RichInvestment Banks Have Too Much Money On Their Hands8 of 10 All Time Largest Corporate Buyouts Occurred RecentlyKinder Morgan: The Path Not Taken By Enron • Bloomberg: Arbitrage Profit in U.S. Takeovers Pending on Sept. 28 • Forbes: Kinder Morgan Shareholders May See Modest Near-Term Upside
Potentially impacted stocks and ETFs: Bear Stearns (BSC), Lehman Brothers (LEH), Morgan Stanley (MS)

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Source: Investors Watching Management-Led Buyouts