Earlier today, Lehman Brothers announced the sale of Neuberger Investment Management to private equity firms Hellman & Friedman and Bain Capital for $2.15 billion in an all equity transaction with each firm sharing an equal stake in the new company. The units offered as part of the sale include asset manager Neuberger Berman, as well as the “fixed income and certain alternative asset management businesses of Lehman Brothers’ Investment Management Division”.

In total, $230 billion worth of assets (as of August 31) are trading hands with the deal set to close in early 2009. What’s interesting about this transaction is that if we look back 5 years, we can see how drastic, times have changed and the tremendous deal H&F and Bain are getting.

In 2003, Lehman Brothers acquired publicly traded Neuberger Berman for $2.68 billion. At the time, the firm had assets of $63.7 billion and the transaction valued the company at roughly 4x revenue ($660 million). In comparing to the acquisition announced today, if asset managers typically generate revenues roughly equal to 1% of managed funds, H&F and Bain could actually be paying less than 1x revenue for Neuberger Investment Management. With the clear substantial discount (even by today’s standards), it is somewhat surprising that a higher value for the business couldn’t be delivered.

However, given a deal was quickly reached, this transaction represents a good example of what PE firms can offer that other likely strategic suitors may not. That being certainty of closure (all equity sure makes things easy in this case) and timing (deal announced in two weeks). No doubt these two points were brought up more than once as negotiations progressed.

Certainly everyone’s aware of the big story of the day i.e. the bailout plan’s failure to get passed the House in Congress and the stock market’s subsequent (not terribly shocking) disapproval. Declines lead advances at a lopsided clip of 20 to 1 on the NYSE with the Dow falling nearly 7%.

So in the small world of private equity that exists in the public markets, how did the notable firms fare?

> Fortress Investment Group (NYSE:FIG) - Closing Price: $11.00, - 0.13 (1.17%)

> The Blackstone Group (NYSE:BX) - Closing Price: 15.50, - 1.11 (6.60%)

> American Capital (NasdaqGS: ACAS) - Closing Price: 22.46, - 3.83, (14.57%)

> Allied Capital (NYSE: ALD) - Closing Price: 12.55, - 2.35 (15.77%)

> Apollo Investment (NasdaqGS: AINV) - Closing Price: 14.11, - 3.37 (19.28%)

> CapitalSource (NYSE: CSE) - Closing Price: 11.10, - 2.76 (19.91%)

Nothing but red certainly isn’t good, although in glancing at after-hours figures, things appear to be looking a little better with most firms recovering (albeit marginally). At the end of the day, the bailout lost by a close vote, so working out the details on an acceptable plan looks inevitable. Either way, it’ll be a turbulent and interesting week as we begin the fourth quarter.

Internet automotive “pioneer” Autobytel.com announced a workforce reduction of a third of its employees today and that the auto sales marketing company formed in 1995 has hired RBC Capital Markets to assist the company in analyzing various strategic alternatives going forward.  This follows a 14% workforce reduction during the fourth quarter of 2007 as the company continues to figure out how best to position itself in the increasingly competitive online auto space.

In 2006, Autobytel announced it would start transitioning more towards a “media-centric advertising driven business model” from its lead-gen roots, selling two businesses in 2007 and one early this year to help refocus the company.  However, the strategy isn’t working with advertising revenues actually falling from $19.2m in 2005 to $16.9m in 2007.  This comes with the rest of its business still stuck in the increasingly unprofitable activity of converting expensive internet traffic into auto and finance leads.  But while Google continues to be the true winner here, Autobytel still sits on some valuable assets.  

Car.com anyone?

Kohlberg & Company recently announced the firm had signed a definitive merger agreement to acquire Centerplate, a Spartanburg, South Carolina based provider of food and concession services to sports venues and other entertainment facilities across the US and Canada.

What’s interesting about this public-to-private transaction is how the last 12 months of deteriorating valuations on Wall Street is now presenting some interesting opportunities to the  PE firms patiently waiting on the sidelines.  Centerplate traded nearly as high as $18 a share last October and with Kohlberg’s proposed offer of $4 a share, is essentially paying about 5.5x EBITDA for a service based business that has actually shown descent top-line growth (and steady cash-flow) in each of the past 3 years.  At that multiple it most likely didn’t take the most sophisticated Excel model to justify the offer and pull the trigger.  It remains to be seen the activity that now follows as we near Q4 of 2008.

It’s been pretty well documented the benefits companies receive by maintaining a blog. Not only can you stay in touch with customers and get instant feedback on new products and services, but blog posts also build fresh content and enhance the likelihood of someone landing on your website. According to Hubspot (via a UMass - Dartmouth study), 36% of the 2008 Inc. 500 maintain a blog versus 19% the year before.  With such rapid adoption (at least amongst high-growth businesses), you would think this would trickle down somewhat to slower growth/established businesses, and perhaps even private equity firms.  However, in periodically updating firm information within Private Equity Database, one constant theme in reviewing firm websites is the lack of a blog. So why is it that private equity firms don’t blog?

Partly it must be the nature of the business with no real product or service needing close scrutiny from the public. However, given most firms maintain an active news page outlining acquisitions, disposals, and personnel moves, clearly there’s an interest in promoting firm activity. Through a blog, firms could easily expand on press releases, gain greater exposure, and offer a little firm insight to the dealmakers and entrepreneurs looking for an exit.

Blogging is increasingly common amongst VCs who have to stay in touch with the budding entrepreneurs they depend on for investments.  Kleiner Perkins recently started an iphone blog - iFundVC - to promote their new investment vehicle dedicated to iPhone apps, and VC firm Union Square Ventures maintains their entire website as a blog. 

At the end of the day, it’s all about deal-flow, finding the right deals, and connecting with dealmakers before everyone’s got wind of a transaction. Given the lack of private equity blogging, and the tremendous interest in the field, it seems as though the managing directors willing to polish their writing skills could get a leg-up.