The club deal.WHAT can three private equity firms hope to gain in their quest to buy Computer Sciences Corp., the military and computer outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. giant? Massive fees, of course. Last week, investors in Computer Sciences got a jolt after Blackstone Group Blackstone Group L.P. (NYSE: BX) is a prominent private equity and investment management firm founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman. The company is based in New York City, in River House on Park Avenue at Fifty-first Street, with offices in Atlanta, , Texas Pacific Group and Warburg Pincus Warburg Pincus is a private equity firm with offices in the United States, Europe and Asia. It has been a leading private equity investor since 1971. The firm currently has approximately $14 billion under management, and invests in a range of industries including information and said they were in the early stages of exploring whether to buy the El Segundo El Segundo (ĕl sēgŭn`dō), industrial city (1990 pop. 15,223), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1917. Its products include navigation and computer systems, aircraft parts, office machines, telephone apparatus, and company or break it up in small pieces. The news is bringing much-needed volume and attention to Computer Sciences' beaten-down stock, which is now trading at $50 a share, a 12 percent increase from the day the news came out. But the real winners in any such deal would likely be the private equity firms themselves, which typically pocket 1.5 percent to 2.5 percent of the value of a given deal in management fees. Even if the fees are relatively low because of the size of a deal, a 1 percent fee can cost shareholders upwards of $100 million. That's if they can pull if off. Deals in which several private equity investors form a partnership, often known as a club deal, often founder because of the difficulty of having so many firms in control of one company. There's also Lockheed Martin For the former company, see . Lockheed Martin (NYSE: LMT) is a leading multinational aerospace manufacturer and advanced technology company formed in 1995 by the merger of Lockheed Corporation with Martin Marietta. Corp., which last week said it was looking at Computer Science's lucrative military business, with its long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. contracts and 30 percent growth over the past year. Any private equity buyer will likely pay a premium in the public market, particularly if strategic buyers such as Lockheed engage in a bidding war. |
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