CFO in focus - Staying alive

“Down but Not Out”

By Vincent Ryan

Humbled by the credit crunch, private-equity firms are not the hard-charging dealmakers they once were. Still, they will continue to play an important role in the finance world in 2008 and beyond, with private equity remaining a force for companies looking to buy, sell or attract capital. “Most experts see private equity's current condition as a cyclical, and temporary, adjustment.”

Two case studies offer a glimpse into how private equity might operate if the crunch persists. One describes an agreement between Sun Microsystems and KKR, a private-equity firm, which opened up new opportunities for Sun, providing “an acid test of our vision, strategy and execution plans,” according to its finance chief. The other describes Sun Capital's (no relation) takeover of Friendly Ice Cream Corporation, which involved the private-equity group shouldering more risk than usual and financing the purchase in part by a sale-leaseback of Friendly's property assets.Read more...