Multiples for solid, but very unspectacular companies have risen to the 8-9X EBITDA range, perhaps testimony to PE capital with a short half-life. PE buyers are again offering to purchase companies with no financing contingences and with management option plans tied only to time and not to performance. In the past few months staple financing for as much as 6X EBITDA has returned. The markets seem to have acquired a short term amnesia. We have seen this strategy in all aspects of our business as the economy has weakened. Sadly, the system does not penalize lawyers for knowingly wasting time and money. Rather than reasonably settle differences the party with the more tenuous moral position tends to instead have their attorney dredge up arcane legal arguments and assert them as a smoke screen to obfuscate their actual behavior. We have seen multiple situations where large customers have unilaterally modified long term agreements effectively telling small suppliers “Take it or sue me.” The tendency to hide behind a lawyer instead of living up to one’s obligation is increasing. Less in the eye of the media, where abrogation of contracts seems to be a new federal sport, is the “measure” of individuals in the commercial arena. Perhaps Congress could consider a version of “silent sidelines” outside their corridors. A local girl’s soccer league in CT was forced, due to aggressive parents, to switch to “silent sidelines” where no one is allowed to cheer. Recent disclosure of “hands in the kitty” as trades for votes offer Darwinian evidence of why mankind is endowed with the ability to blush. Juxtaposed against Judge Rakoff’s clear compass is the reincarnation in Washington, DC of Tammany Hall. He ruled the settlement “does not comport with the most elementary notions of justice and morality”. He rejected the SEC/BofA proposed settlement as a “contrivance” that punished only the shareholders, the victims of the purported under-disclosure. Certainly one of the more visibly tall has been Federal Judge Jed Rakoff.
Martin Luther King wrote “The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.”Ĭertainly the last eighteen months merit the label “times of challenge and controversy.” Measuring the men, women and our institutions by that standard produces an interesting roster of the tall and the short.
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