One of the reasons for today's cuts in the Fed Funds and Discount Rate was to help grease the wheels of the credit markets. Based on this premise, one would think that the cuts would have a positive impact on the companies involved in private equity buyouts. However, one of our Bespoke Indices, the Bespoke Discount to Takeout Price Index, which measures the average discount between where companies involved in private equity buyouts are currently trading versus their announced buyout prices, has not rallied today by nearly as much as the S&P 500. Based on this first impression, investors are either behind the curve or are not expecting today's cuts to have much of an impact on buyouts.
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