Testing New Acronyms

April 7, 2008

The deal community seems to relate well to acronyms. LBOs, SPACs, PIPEs, DIPs ... the list alone could exceed the 400 words or so that fill up this space. I would, however, like to offer a couple more, which I'm hoping might be useful the next time the M&A market hits an up-cycle: STYK, DWYGA, ICG, and SWTHAYTTAHI.

The first acronym is simple enough, shortening the standard cliche "stick to your knitting" to just four letters. DWYGA is perhaps a more difficult and less memorable way of saying "do what you're good at," but I'm hoping that in acronym form the deal community will place more weight on the message. I think the consultants will like ICG, "inhibit concentration growth," as it's an awkward way to say, stay focused.

The last acronym that I'd like to add to the M&A argot is a bit longer, but still shorter than: "Seriously, what the h&%# are you thinking? That's a horrible idea!" (SWTHAYTTAHI, pronounced swith ae ta hee).

I'll admit it's easy in hindsight to criticize and I don't want to pile on as the industry takes its lumps. But I'm amazed when investors continually make the same mistakes over and over again.

The cowlick had barely grown back from the haircut PE firms took in their late nineties pursuit of VC deals. Now many of those same groups are getting scalped for their strategy creep during this latest bubble. The issues at Carlyle Capital and KKR Financial only start to scratch the surface.

I'm not going to pretend to know exactly where those groups went wrong — I'm only a simple M&A reporter. But I'm going to guess that the first misstep occurred when their parents ambled off of the familiar sidewalk that they know so well.

All of this will pass, and Carlyle and KKR will likely suffer little more than a bruised ego (and perhaps millions of dollars). The next time around, though, it might help to remember the acronyms. ICG, ironically enough, was the name of a former tech investment that went under back in 2000.

At the very least, it pays to remember history.