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Financial intermediation consists of “channeling funds between surplus and deficit agents”. A financial intermediary is a financial institution that connects surplus and deficit agents. The classic example of a financial intermediary is a bank that consolidates bank deposits and uses the funds to transform them into bank loans . [ 1 ] Through the process of financial intermediation, certain assets or liabilities are transformed into different assets or liabilities. [ 1 ] As such, financial intermediaries channel funds from people who have extra money or surplus savings ( savers ) to those who do not have enough money to carry out a desired activity ( borrowers ). [ 2 ]
The drop-off in mid-market activity last year was worse than expected due to a series of factors including scarce credit, potential buyers focusing on internal issues instead of expansion, and a greater uncertainty surrounding economic recovery. But confidence is slowly starting to return to markets now that companies have cleared up their balance sheets and streamlined their operations. In the meantime, industrial output consistently increased in the US and Europe for most of the second half of 2009, fostering an improvement in confidence. Brighter prospects for the economy are also evidenced by predictions from the International Monetary Fund, the World Bank, the Organisation for Economic Cooperation and Development, and the United Nations, which forecast global economic growth of 2-3 percent in 2010.
Consolidating two companies after a merger may require liberal use of consultants for integrating systems, evaluating human capital, and other crucial tasks. But finance chiefs shouldn't let consultants do too much, even if the companies in question are multibillion-dollar businesses. That's the advice of Robert Daleo, CFO of Thomson Reuters, the $13 billion financial-information giant formed in 2008 by the merger of Thomson Financial Services and Reuters. Daleo explained his views on the role of consultants in mergers during a presentation at the CFO Rising conference in Orlando on Tuesday. At the beginning of a merger effort, "the consultants have the knowledge and you have the money," said Daleo.
By Andrew Ross Sorkin (NYTimes) - “If we need advice for a deal, we probably shouldn’t be doing it,” he said with his trademark chuckle. He told a story about how First Boston (now Credit Suisse) tried to gin up interest in the mid-1980s for Scott Fetzer, a hodgepodge of small businesses based in Cleveland. It called on 30 firms to help make a sale, but failed to find a buyer.
EvaluSys Releases New Private Client Features
General Cable Corporation has acquired Prestolite Wire, a manufacturer of wire and cable products and a portfolio company of Liberty Lane Partners.
This is the first post in a series that discusses working capital. The purpose of the series is to deliver a congruent and clear theory on how working capital fits into a private equiteer’s analyses. I plan to make practicable and thoughtful points that (hopefully) don’t regurgitate finance textbooks. So, if deep down, working capital is still a little bit of a mystery to you, stay tuned.
I received a call Friday from client of another M&A firm with more of a nationwide presence. The caller, James, informed me he went to one of this firm’s seminars and was pressured into signing as a client with a $40,000 upfront fee. James explained that although they wrote a beautiful memorandum, ultimately they didn’t bring ANY buyers to the table and weren’t timely about communication. He expressed his strong dissatisfaction and his personal frustration for not doing some basic Internet research before signing up at the seminar.
It was bound to happen sooner or later. In the past two weeks various sources have reported that two companies have sold themselves via Twitter. The first sale was the Russian beer restaurant chain Tinkoff Restaurants to Russian-based private equity fund Mint Capital . Russian entrepreneur Oleg Tinkov, who is known as Russia’s “Richard Branson“, announced his intention to exit Tinkoff via his Twitter account . In 2008, Mint Capital invested $10 million in exchange for a minority stake in Tinkoff Restaurants.