What’s on Your Forehead?

February 25, 2008

By far, my favorite quote of last week came from Paul Weisbrich, Senior Managing Director of RSM EquiCo, who during our interview memorably opined, “Right now: Certainty to close. Put that on my forehead.” (See story, "Public to Private Window Closing?")

And indeed, as private equity deals are no longer able to rely on their “free money, all the time” mantra of yesteryear, the “certainty to close” buzz phrase is becoming increasingly important to dealmakers, especially when you're talking about larger sized deals. Need evidence? Just look at the letters EA sent to Take Two before its hostile bid.

But this got me thinking. If “certainty to close” is printed on Weisbrich’s forehead, what do the rest of us have on our foreheads?

So I prepared an extremely unscientific poll to get a sense of what the rest of us would have imprinted on that precious real estate between our hairline and eyebrows. After a round of calls to industry sources, here are the most popular responses to the "forehead inquiry."

“Certainty to close.”

“Banks aren’t lending money.”

“Make strategic sense.”

“A partner whom you can really trust.”

“Regarding the partner you choose to dance with — will they actually take you home from the dance?”

“You’re on deadline, Davis.”

Okay, so that last response was really just my editor sounding off his end-of-the-month warning, but the other quotes all seem to follow a theme.

At this point, there’s an increasingly deep distrust of private equity deals actually closing. None of my sources have yet gone so far as to say “steer clear,” but the consensus is certainly that it’s a delicate dance. This is true even in the middle market, where the actions of larger investors, such as Cerberus Capital Management, Kohlberg Kravis & Roberts, and Goldman Sachs, have put the onus on the entire industry to prove they'll follow through.

In honor of last night's Oscars, I’m holding an “Avram Davis Write-in-athon.” Please don’t hesitate to drop me a line (or a suspense-inducing sealed envelope) to let me know which of the above quotes should win the shiny statue for this year. My email is avram.davis@sourcemedia.com.

Regarding the larger question — How do you ensure that PE deals keep happening? — this remains a tangled issue. My personal thoughts are, stay friendly with your contacts, maintain your ever-important networks and stay true to your word.

And yes, you can put that on my forehead.