Annualgain

Wall Street Breakfast: Must-Know News

Don't look at everything in a vacuum. RailAmerica's IPO was a flop, but not because the economy isn't recovering. It was a flop because it was priced at an EV/EBITDA multiple of 11.8x (EBITDA is $130 million derived from 1H09 x 2). I would pay maybe 7x for a rail company and sell at 10x. That would mean buying at $3.60 and selling at $11, but this dog priced at $15. I mean, sheesh, even a quality name like BNI trades at less than 7x. Private equity is deluded if they think the stock investors will fix their problems by buying their over-priced deals once again. It's a new world, baby.