Private equity and M&A companies
refocus at corporate growth conference
By Eddrick Osborne
The who’s
who of private equity and merger and acquisition
companies gathered last week at the Beverly Hilton
Hotel during the annual Association for Corporate
Growth (ACG) conference. ACGLA is one of the largest
and most influential business conferences held each
year.
The
theme of “Opportunity” took on more weight as the conference buzzed
with talk about the uncertain markets, the role of government intervention
and the future of insurance giant AIG.
Heavyweight keynote speakers included
Richard Parsons, chairman and former CEO of Time Warner; former Secretary of
Labor Robert Reich; NBA Hall of Famer Earvin “Magic” Johnson; and
former senior White House adviser Karl Rove.
Magic Johnson has quietly become
one of the most influential businessmen in the country. During his lunchtime
address, Johnson ticked off a number of solid business ventures that will help
him ride out this uncertain financial period. His diversified portfolio includes
owning the number one supplier of meat to Burger King, a 5 percent ownership
stake in the Los Angeles Lakers and joint ventures with Disney, Sodexo and
American Airlines.
Johnson gently reminded the corporate executives that “growth
is in urban America, not just suburban America.” Magic Johnson Enterprises
(MJE) is the number one brand in urban America, and its success is evident.
Basic business acumen and an understanding that “the number one goal
is to return a healthy return on investment” is Johnson’s strategy,
and it’s right on point.
Mergers and acquisition businesses depend on
private equity companies to provide the resources needed to finance large and
often complex transactions. The recent turmoil on Wall Street and decreased
access to debt financing has limited the availability of funds. At a time when
cash is short, MJE is sitting on more than a billion dollars of investment
capital, waiting for “the market to correct.” Johnson hinted that
MJE will start a mutual fund, possibly in the first quarter of 2009.
Richmond
native John Troughton, senior director at Cushman & Wakefield, led a breakout
session entitled “Maximizing Value from Real Estate and Insurance Assets.” When
asked if the bottom has been reached in commercial real estate, Troughton said, “We’re
not at a bottom, per se, there are opportunities out there, but there is an
increased focus on building costs, insurance and interest rates in a tightening
credit market.”
It is certain that government intervention will play
a major role in the future of the mergers and acquisition transactions; how
and to what extent remains to be seen.
Eddrick Osborne,
MBA, hosts the “Globe
Newspaper Hour” on Saturday mornings from 9 to
10 a.m. on 88.1 FM and 97.7 FM.
