Andrew Ross Sorkin: What were the other bad deals? I feel like I need a computer to look at bad deals. I would cut that Symantec/Veratos answer, just because it wasn’t-- you can say something about the airlines. Recent bad deals, just the scene on the CBS thing on its face doesn’t look like it makes much sense. But there are deals that originally never looked great and then all of a sudden turn around. Nothing sadly in the past year, well hold on. You look at-- you ask about bad deals and I was thinking of strategic deals, meaning one company buying another
So in terms of bad deals, I think we're going to see a lot of them frankly and they're probably going to come from the private equity space. If you understand the model of private equity, they need to sell these companies at some point. They can't hold on to them forever. And historically the, what they call hold period, has been 2, 3, 4 years. They'd say probably up to 7 and so some of them will be able to hold them that long. But a number of them are going to get in trouble and so you're already seeing Linens 'n' Things file for bankruptcy protection. There's something called Free Scale, which makes microchips and a number of other companies where people have probably paid too much money.
Now some of these may fall into bankruptcy and that's really the worse result. More likely I think you're going to see and I don't know, when you talk about bad deals, deals that just don't make that much money. So the private equity guys have taken all their investors money and told them, we're going to return a 20 percent annual return. So when you talk about bad deals, I think you're going to see a lot of deals or a lot of private equity firms that are only returning five or ten percent. Now that may be better than the market, so you may say those are great deals. It's all relative.
Recorded on: June 3, 2008