Week in Review: Blankfein, Tiny Banks, and Bayer

It’s a week of good news and bad news. On the plus side, private equity seems to be outperforming most other asset classes. On the other hand, the demise of very small US banks may be near and Lloyd Blankfein is nervously watching interest rates.

In other news, Bayer is buying California-based Conceptus for $1.1 billion, deal leaks may not be as accidental as they seem, and MBAs might be more important than many people think.

Global Private Equity Watch 2013: According to a recent report from E&Y, private equity firms have been outperforming most other asset classes. While recent diversification and brand leveraging has paid off, most analysts are eyeing the encroaching regulatory changes and exit potential to see if the trend will continue.

It’s Time to Say “Goodbye” to Very Small Banks: Very small banks in the US may soon become extinct. Between new regulations, high overhead costs, and economies of scale, small banks are struggling to survive. Since 1988, the number of very small banks has declined by 8,216. If you’re looking for growth, keep your eye on medium-sized regional banks.

Blankfein Sees Parallels to 1994 Interest-Rate Increase: Sooner or later interest rates will have to rise, right? Lloyd Blankfein, Goldman Sach’s CEO, is concerned that the eventual uptick will catch many investors flat-footed, much as it did in 1994. However, as Europe entertains negative interest rates, an increase may not be too near in the future.

Bayer to Buy Conceptus for $1.1 Billion: Bayer AG announced on Monday its plan to acquire California-based Conceptus Inc. for $1.1 billion. The acquisition is part of Bayer’s plan to expand into the contraceptive space. Maybe the acquisition will distract investors and customers from Bayer’s existing contraceptive-related lawsuits.

Gabriel Gomez Wins Massachusetts GOP Senate Primary: Gabriel Gomez, an Advent International and Summit Partners veteran, escaped much PE criticism as he secured the republican nomination to run for Massachusetts senate. Has the public already forgotten about private equity? Or is Gomez’s history in private equity less important?

Studying the Dark Art of Leaking Deal Talks: Turns out that leaked deals may not be all bad — at least for the seller. According to a recent study from the Cass Business School, leaked deals typically realized an 18% increase in purchase price. Makes you wonder if the leaks are really accidental.

If MBAs are Useless, We’re All in Big Trouble: The merits of an MBA have come into question. Focused on innovation, entrepreneurs and corporate execs alike have begun to turn away from proven business practices and focus on newer approaches. But these “outdated” practices may be more valuable than they seem.

Celebrities Lend Power to Venture Capital: Looking for some capital? It might be worthwhile to add some celebs to your buyer list. Katie Roof reports that having an A-list celeb — like Ashton Kutcher, Bono, or Magic Johnson — as an investor offers needed capital and great brand recognition. However, don’t expect them to replace VCs entirely.

Did you hear?

• Ares Management Speaking to Banks about an IPO
• David Petraeus may join KKR
• Warren Buffett Joined Twitter
• Wyoming votes to invest $600M in private equity
• Glencore Completes Deal for Xstrata
• Instagram Deal Is Looking Better and Better
• T-Mobile Merges With MetroPCS, Will Trade as ‘TMUS’

Member Spotlight:

Founded in 2003, Kinderhook Industries is a private equity firm that manages $770 million of committed capital. The firm prefers to make control investments with transaction values between $25 – $100 million. Target investments include orphaned non-core subsidiaries of corporate parents, existing small capitalization public companies lacking institutional support and management-led recapitalizations of entrepreneur-owned companies. Additionally, Kinderhook is a licensed Small Business Investment Company (SBIC) with the U.S. Small Business Administration.

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