Of course the credit crisis is complex - especially if CDO's, CLO's, credit default swaps, and mortgage backed securities are not part of your every day conversation. That in mind, we thought we'd add this as a back ground primer- Marketplace does a good job at explaining one of the conerstone issues of the crisis - mortgage securitization and CDO's.

In yet another scary missive about the state of AIG, the New York Times writes today that AIG had already drawn down $61b of their newly minted $85b line of credit. In concert, S&P has issued yet another warning on AIG.

All this calls into question whether the Fed's emergency intervention with AIG will be the end of the bail-out, or rather somewhere around half-time.

Of interest for Agencies,

Information Arbitrage (a great read by the way) had a post regarding the future of Investment Banks. The whole post is worth a read, but a tidbit that we certainly agree with:

 

Investment Banking 2.0 will be the re-emergence of the boutique, the focused, nimble, high-touch firm that was the bedrock of capital formation in the early years of the stock market boom. Because these mega-firms being created at the urging of the Treasury are not sustainable.

This couldn't be more true for mid-market companies.  The bulge bracket banks have been focused on returns trading complex products on their own account.  And while M&A is always a fee multiplier in a bulge bracket bank, more recently other products have taken center stage.

As a middle market company, your needs are different.  You need a "high touch" firm that can offer expertise when you need it - namely when you need to recap, or are working through an acquisition.  The boutique is just what the doctor ordered.

CHG Healthcare, one of the oldest and largest healthcare staffing firms in the United States, announced in late September it has acquired AHR Pharmacy Solutions. Terms of the deal were not disclosed.

Deal Motivations: Defensible Market Niche

Although CHG is already regarded as one of the top healthcare staffing firms in the United States, they are always looking for ways to capture more

Taleo, a leading on demand recruiting company for small to medium sized businesses announced in late September it merged with HRhome, an online resource center for HR professionals. Terms of the deal were not disclosed.

What Were They Thinking?

• Increased service offerings
• Wide customer base

HRhome, a provider of tools and processes to ensure employees are hired and managed

Interesting article in the WSJ deal book this morning - basically confirming what we have been seeing in the market place. In sum: deals are trending downward in size, and the lower-middle market remains surprisingly strong.

The simple reason? Less leverage on deals. Historically these companies have transacted for far lower multiples than their PubCo and much larger cousins. And in an

Brian  Burke will be hosting a conference call today at 2 p.m. to discuss the AIG situation and how it is likely to impact agency owners.  

Conference Dial-in Number: (269) 320-8100
Access Code:

Didn't think that the Fed could simply starting making loans, did you? Neither did we.

Fortunately we were not the only ones curious - hence we didn't have to look to far. Apparently the Federal Reserve Act of 1933 (Section 13(3) to be precise) allows the Fed to make direct loans under "exigent circumstances."

Seems that this week's developments could fall under the rubric of "exigent."

Fed is offering a $85b (yes billion) bridge loan to AIG. In return, AIG will give up some 75% of equity.