Amit Chokshi_

6 Reasons Blackstone's Still a Short

BX does M&A and lends in the middle market so it already has a smaller boutique ib in house. The CSFB/DLJ deal basically showed how worthless IB mergers can be (real IB mergers, not like C buying MS i.e. commercial + ib) and other banks have generally just picked off individual bankers to start up groups.

The analysis is interesting but did you do much work on what GSO brings to BX going forward and how that might offset/mitigate the impact of some of the warnings you mention?

Private Equity Leaders: Seeing the Big Picture

All old news as far as dividend refinancings, these things have been going on with as much, if not more, frequency since 2004. In some cases within a week of the original buyout a sponsor would do a quick dividend recap (see the PanAmSat deal). The LBO guys are smart, if there are stupid buyers that are yield hungry then who cares. It's no different than the late 90s as well, this cycle happens all the time, you'll see it again. In the 90s LBO guys got caught financing a ton of telecom and media deals which blew up on them. Same thing will happen but in the mean time it's just a cycle that's impossible to stop.

You think the M&A, leveraged finance, and high yield bank group heads are going to say we think it's getting toppy? They're compensation is based on beating last years #s so they'll continue to sell these deals as aggressively as possible and compete with other banks by underwriting more paper with looser covenants to rake in the fees. If you look at any number of these mega deals and you're the banker with the relationship with the big sponsors and you pass on a deal because it's a bad credit, you think you'll look like a hero in front of the group head when it's year end and they say why weren't we on this x billion dollar deal?

It's always easy to judge this ex post when a few deals blow up and credit markets tighen but in the mean time, from the banker/underwriter's view, they miss out on hundreds of millions of dollars in fees and a lot of lost goodwill with some of the most profitable clients.