h****z
发帖数: 2009 | 1 2009年买断，现在又要IPO，但好像过去两年亏钱
Before the controversial buyout of J. Crew, there was Bankrate.
Back in 2009, Bankrate management and two of its directors,
including its chairman, teamed up with the private equity firm Apax
Partners to take the company private. This team ended up buying
Bankrate, a consumer financial information company, but did so
pursuant to a sale process that came under heavy criticism by
Institutional Shareholder Services, among others.
The Bankrate board appeared to abdicate its responsibility to run a
sale process that was open and without conflicts of interest. It
contacted only one other potential buyer, which declined to make an
offer. The board then also failed to form a special committee and
instead proceeded to negotiate exclusively with Apax and Bankrate
management.
This would have been bad enough, but Apax and the management team
lowered the offer price at the last minute. The Bankrate management
based the reduction on suddenly lower earnings projections for the
company, projections they helped to prepare.
Deal Professor
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Faced with this price reduction, the Bankrate board decided to forge
ahead with a deal. Apax and Bankrate management completed the deal
in August 2009. The Bankrate transaction only succeeded because
interested management owned 26 percent of the shares. Only about 35
percent of the disinterested shareholders supported the deal.
Writing on the matter at the time, I remarked that the Bankrate sale
process showed the perils of management buyouts and how management
could potentially abuse its position.
Now, less than two years later, management is ready to cash out. On
Friday at 5:10 p.m., Bankrate filed for an initial public offering.
Bankrate’s quick run through the private equity grinder presents a
nice test to see if Bankrate’s lowered projections turned out to be
true. We can now ascertain whether the board was right to sell so
quickly.
The initial public offering is also a test of the Bankrate
management team’s reputation. The same team remains in place, and
the question is whether its conduct during the buyout process will
adversely affect this I.P.O.
Bankrate began its sale process with forecasts dated June 5, 2009.
These forecasts showed that Bankrate would have revenue of $182.2
million in 2010.
Bankrate’s adjusted Ebitda — or earnings before interest, taxes,
depreciation and amortization with an adjustment to back out stock
compensation — was projected to be $73.5 million in 2010.
This Ebitda figure is particularly important, because it is a
measure of the company’s cash flow. This is how much cash is
available to a private equity firm to pay for debt financing. These
figures therefore dictate how much the private equity firm can
borrow and pay for a company.
On July 15, 2009, less than six weeks after the June projections
were issued, Bankrate and its management team lowered the 2010
revenue forecast to $170.2 million. The forecast for 2010 adjusted
Ebitda was also lowered, to $64.4 million.
The Bankrate I.P.O. filing shows how valid these projections are. In
2010, Bankrate had revenue and adjusted Ebitda of $220.6 million and
$71.3 million, respectively.
The lowered projections were off, particularly with respect to
revenue. Bankrate performed significantly better than management had
forecast when it was bidding to buy the company. In the world of
Wall Street, this probably comes as no surprise.
But before we tar and feather the management team, it is important
to note that its earnings have been affected by two large
acquisitions. In 2010, the privately held Bankrate acquired NetQuote
Holdings for $202.8 million and CreditCards.com for $143.1 million.
Bankrate’s I.P.O. prospectus does not disclose how much these two
businesses contributed to the company’s revenue and Ebitda for all
of 2010. But my back-of-the-envelope calculations show that the
original Bankrate business likely had revenue and adjusted Ebitda
that was significantly lower than even the July projections.
How much? The I.P.O. prospectus states that if Bankrate had owned
both companies for the whole year Bankrate’s revenue for 2010 would
have been $300.9 million, while adjusted Ebitda would have been
$92.9 million.
NetQuote and CreditCards were acquired in July and August. The
I.P.O. prospectus implicitly discloses that up until this time, the
two companies earned revenue of $80.3 million and had adjusted
Ebitda of $20.6 million. The I.P.O. prospectus does not disclose
what the revenue and adjusted Ebitda for the two companies was for
the rest of 2010. We can, however, extrapolate from these numbers
that — absent these two businesses — Bankrate most likely would have
had revenue about $180 million and adjusted Ebitda of about $60
million.
These are rough figures, but if they are approximately correct, then
the Bankrate board had roughly the correct numbers before it when it
sold.
This does not excuse Bankrate management and Apax.
First, Bankrate could have made these acquisitions if it had
remained a public company. In such a case, these benefits would have
accrued to the public shareholders for whom these managers were
agents. On the flip side, management would most likely argue that
being private allowed them to take more risk and that the
acquisitions would not have been made if Bankrate had remained
public. This is unknowable, but subject to debate.
Second, Bankrate was bought using an apparently “flawed” sale
process. The question is whether management’s past conduct will
affect the success of this initial public offering. The underwriters
for the I.P.O. include Goldman Sachs and Merrill Lynch. Their
willingness to be involved shows how reputation is ephemeral on Wall
Street when money is in play.
In addition, Bankrate has decided to adopt a number of antitakeover
provisions in its charter and bylaws. These include devices that
could conceivably entrench management, including a staggered board,
a mechanism increasingly out of favor among public companies.
Apax will control more than 50 percent of Bankrate after the
offering, but the private equity firm will not be a shareholder
forever. When Apax leaves, the same management that took the company
private may still be there.
One would think that Bankrate management would want to show that
another management buyout will not occur.
One way to do this is through a sign of good faith by going public
with a company that does not have antitakeover devices that can
serve to inordinately protect management.
Alternatively, there could be a clause in Bankrate’s charter that
prohibits a future management buyout of the company or ensures that
certain procedures are followed in such an instance. None of this is
in the Bankrate prospectus.
And it even appears that management will be selling shares in the
offering, something that is often frowned upon as showing a lack of
commitment to the company.
We are faced with two tests of Wall Street’s memory and investing
ability.
The first test is really one of investing skill. Bankrate is now the
old underperforming Bankrate plus two new businesses that have been
a part of the company for less than a year. This is really just a
roll-up I.P.O. orchestrated by Apax.
Do investors really think that these quick add-ons will make this a
compelling investment? Would it be more prudent to wait until the
companies have been integrated and more extensive combined results
are available for a longer period of time?
The second test is one of memory. On the road show, will potential
investors ask Bankrate management about its prior conduct and what
it may do in the future? Will potential investors question these
proposed antitakeover devices and the latitude they provide
management? In other words, will potential investors trust
Bankrate’s management? | h****z
发帖数: 2009 | 2 Bankrate Inc, a publisher of various web content on personal finance, has
filed with the U.S. Securities and Exchange Commission for an initial public
offering of up to $500 million on Friday.
North Palm Beach, Florida-based Bankrate runs various personal finance
websites, including its flagship Bankrate.com, collecting and publishing
rates and other financial data in areas including mortgages, car loans,
banking fees and retirement savings.
The company plans to use IPO proceeds to pay down debt.
Bankrate started as a "Bank Rate Monitor" newsletter in 1976, shifting onto
the web in 1996, according to the website. In 2009, Bankrate was acquired by
Ben Holding S.a.r.l. through a fund affiliated with a private equity firm
Apax Partners LP [APAX.UL].
After posting a profit of $20 million in 2009, the company has operated at a
loss in the past two years. It reported a loss of $43 million in 2009 and
of $39 million in 2010, according to the filing.
Goldman Sachs, Bank of America Merrill Lynch, Citigroup and JPMorgan are
leading underwriters on the IPO.
Bankrate has not yet picked a symbol or a stock exchange to list its shares
and provided no further details of the IPO |
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