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Tom Taulli
California - http://taulli.com

Tom Taulli is the author of various books on finance, including The Complete M&A Handbook (Random House) and Investing in IPO's (Bloomberg Press). In addition to his writing, Mr. Taulli has appeared on high-profile television venues such as CNN, CNBC and Bloomberg TV, and has been quoted in the various print media sources such as the Wall Street Journal, USA Today and LA Times.

So this week, Bank of America (NYSE: BAC) agreed to exercise its option to double its position in China Construction Bank (CCB), which is the #3 financial institution in China. The stake comes to about 19.1%.

Keep in mind that Bank of America got a sweet discount on the option. Thus, the position is in-the-money – the investment has tripled in value to $14.5 billion -- and it may be tempting for the firm to start dumping shares. In fact, shares of China Construction Bank have taken a hit because of the this possibility.

And, as for Bank of America, it could be a savvy move. Of course, the firm had to slash its dividend and must integrate the huge acquisitions of Merrill Lynch (NYSE: MER) and Countrywide. At the same time, Bank of America's stock price continues to deteriorate. So, bagging a couple extra billion is probably a good bet right now.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

It's been "shock and awe" for the financial system over the past few months. Even seemingly invincible companies like GE (NYSE: GE) and Goldman Sachs (NYSE: GS) have not been immune. As a result, there has been a tremendous deflation of equity values across the globe.

Unfortunately, the game has also changed for your business. It's much more difficult to get debt or equity financing, and it may even be impossible, at least for now. Customers are having difficulties paying invoices. And, as for finding new customers, this is particularly tough.

So, in light of everything, what is the value of your business? Well, keep in mind that, for the most part, the value of a business is dependent on its cash flow. So long as this remains strong and long-lasting, you are likely to weather the storm. If anything, you could be in a nice position to capitalize on the situation, such as by buying companies, hiring employees and in making new investments.

But this is the rare exception. In fact, even some of the growth darlings are having issues. For example, the data service, VCExperts.com, has recently launched a new offering – called the Valuation Ticker – that provides valuations of venture-backed companies. Essentially, the system compares private companies to public indexes, such as the NASDAQ and S&P 500. Here's a look at a sample, with valuations over the last ten months:

• Facebook: $12.4B (12/31/2007), $6.9B (10/31/08) -- 44%
• Slide: $545.2M (12/31/07), $376.6M (10/31/08) -- 31%
• Yardbarker: $18.1M (03/03/2008), $14.2M (10/31/08) -- 22%
• Going: $21.9M (5/07/08), $15.2M (10/31/08) -- 31%

This week, some of the top veterans in private equity -- TPG's David Bonderman, Carlyle's David Rubenstein, and KKR's George Roberts -- got together at a conference in Hong Kong. And, all in all, it was fairly depressing (hey, I guess that's what happens when you lose billions and billions of dollars).

Take Bonderman. He thinks the downturn will be protracted, calling it an L-shaped recession (the more common description is a V-shaped recession, which means there is a strong snapback). In fact, he thinks U.S. unemployment will hit 10% or so.

Then again, keep in mind that Bonderman lost about $1.3 billion on his six month investment in Washington Mutual.

Despite all this, Bonderman still has an appetite for investments. For example, he's focusing on the debt securities from hedge funds. Because of massive redemptions, the prices are at distressed levels.

Rubenstein also gave a grim presentation (he thinks the downturn can last several years). But, he is still bullish on some opportunities, especially in Asia. For example, he thinks China offers some compelling valuations and that the country may become more open to outside investments.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

On the Q3 earnings conference call for Fortress Investment Group LLC (NYSE: FIG) -- a top alternative investment firm -- there was an interesting discussion of the recent volatility in the financial markets. For example, between 2003 to 2007, the S&P 500 only had two days where the markets moved 4% in a day. However, in October of this year, there were 20 of 23 days where the S&P had intraday moves of greater than 4% (one day had a 10% move).

As a result, it's no surprise that the Q3 results for Fortress were lackluster. The firm reported a loss of $20 million, or $0.04 per share, which compares to a profit of $111 million, or $0.26 per share in the same period a year ago.

In fact, Fortress hedge funds have been hemorrhaging. That is, investors have requested $4.5 billion in redemptions, which accounts for about a quarter of assets. Unfortunately, it looks like there will be more redemptions over the next couple quarters.

As for the private equity funds, things are much better. After all, there are long-term lock-ups on such vehicles. No doubt, these assets will be a rich source of ongoing management fees. And, when markets come back, there are likely to be incentive fees.

In light of the wrenching markets, it's likely to be a long slog. And this is not comforting for investors. Keep in mind that Fortress carries $675 million in debt, which could be in jeopardy of a covenant violation -- because of deteriorating cash flows.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

Like just about all other private equity firms, Blackstone Group LP (NYSE: BX) reported a horrible Q3, with losses of $502.5 million, or $0.44 per share. However, the firm was fairly optimistic on the overall value of its sprawling portfolio of companies. That is, the writedown was only about 7%.

As a result, some investors were naturally skeptical – and the stock price of Blackstone continued to slide.

Well, this week, the CEO of Blackstone, Stephen Schwarzman, opined on the matter at a Merrill Lynch investor conference. Basically, he was mostly rosy and thinks there are good valuations in the marketplace. But, paradoxically, he said the Blackstone equity portfolio is in good shape.

And, in general, he has a point. If you take a look at the history of private equity, the best investment periods are in tough times (such as the early 1990s and 2001).

An example is HomeAway, which is a vacation rental marketplace. The company's latest venture round comes to a whopping $250 million. This is the largest funding of an internet company since 2000. The investors include Technology Crossover Ventures, Institutional Venture Partners and Redpoint Ventures

What to do with the money? It looks like part of the proceeds will go to buy out some legacy shareholders. Also, HomeAway plans to ramp up marketing expenditures. After all, with online advertising softening up, this is probably a good idea.

Market opportunity for the vacation rental market is also quite large, estimated at more than $24 billion. More importantly, there's plenty of room to make the process easier, and allow the internet to help connect owners with renters. Keep in mind that HomeAway is already profitable and has revenues in excess of $100 million.

Something else: this is devastating for HomeAway's competitors. Basically, how can they compete with such a behemoth?

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

It's a common problem in today's tough economy: some customers are simply not paying their bills. Thus, business owners need to get up to speed on the ugly business of collections.

OK, so what are some best practices? Let's take a look:

Understand your collection cycle: With any accounting package, you can put together an accounts receivable aging measure. Essentially, this gives you a breakdown of how long it takes your customers to pay. It's a good idea to have at least a year's worth of the aging (note that there may be some seasonality in the data). With this, you can better gauge when there are danger signs with customers.

Escalate: "If you notice customers are not paying when they typically do according to your aging trends," says Dr. Devin A. Jopp, Chief Operating Officer of SCORE, Counselors to America's Small Business, "then you need to act quickly. The first step is to make a call and find out why."

As expected, the Blackstone Group LP (NYSE: BX) had a brutal Q3. There was a loss of $502.5 million, or $0.44 per share, which compares to earnings of $234 million, or $0.21 per share in the same period a year ago.

The downdraft is a combination of minimal dealmaking and writedowns of the portfolio. In fact, Blackstone says that the global economy will suffer a harsh recession and as a result, has taken steps to bolster its companies.

Now, Blackstone had some good news. For example, assets under management increased 18% to $116.3 billion. In other words, the firm has lots of dry-powder to get deals done (that is, once markets warm up). In fact, some deals are still getting completed, like the $1.7 billion buyout of Apria Healthcare Group Inc.

Blackstone is also getting traction with its M&A advisory business, which posted a $61.1 million gain.

Interestingly enough, Blackstone's Hamilton E. James sees signs that the credit markets are thawing out. This is certainly critical for the reemergence of dealmaking.

Yet, investors are still skeptical about Blackstone's stock. After all, it will likely take a couple years for returns to get back into shape.

So, now there are rumors that Blackstone will, ironically enough, go private (this is something speculated by Breakingviews). Hey, isn't this the advice that the firm gives its clients -- especially when public markets are harsh?

Besides, Blackstone's rich partners could probably pitch in a lot of capital to buy back the shares -- which means there won't be as much reliance on borrowing money.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

With the transaction, AT&T gets about 20,000 domestic hotspots (making the total more than 80,000). Some of the new accounts include the Wyndham and Four Seasons hotels, as well as McDonald's Corporation (NYSE: MCD).

Mobility is pervasive -- and customers expect to get Net access anytime, anywhere. So, the Wayport deal is a good move for AT&T to stay ahead of the curve. Last year, for example, about 300 million WiFi-enabled devices were shipped. And, by 2021, the figure is expected to reach one billion.

Move, Inc. (NASDAQ: MOVE), a leading real estate portal, has had to endure the financial collapse, the plunge in mortgages and the continued deterioration in the housing market. Despite all this, the company continues to get traction.

Just look at the Q3 results. Revenues came to $61.2 million, which compares to $63.4 million in the same period a year ago. Adjusted EBITDA (earnings from before interest, taxes, stock-based compensation and charges, depreciation, amortization and other non-recurring charges) was about $5.7 million. There is about $114 million in the bank.

Move is also continuing to find ways to boost cash flows. For example, the company is in the process of reducing expenses by $20 million per year, which would be a big boost.

At the same time, Move is taking steps to remain competitive and provide its users with a better experience. To this end, the company launched a redesign of its website. In fact, during September the Realtor.com site saw a 17% increase in total minutes spent on the destination.

For the most part, there is a major shift in marketing expenditures from traditional to online platforms. True, this is being muted because of the rough environment. But when things start to improve, Move will certainly be poised to capitalize on the growth.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

Greenlight Reinsurance Ltd. (NASDAQ: GLRE) is an off-shore specialty property and casualty reinsurance company. This week, the company reported its Q3 results, which showed a net loss of $118.4 million or $3.29 per share.

Something else: Greenlight's investment portfolio is managed by a top hedge fund manager, David Einhorn. He was the person who publicly criticized -- and shorted -- Lehman before it went bust.

So, it's interesting to listen to the Greenlight conference call to get a sense of Einhorn's strategy.

Now, like many other hedge fund managers, he wasn't able to avoid the storm. In fact, Greenlight's investment portfolio plunged 15.9% for the quarter.

Actually, he increased his overall short positions during the past couple months. Yet, it wasn't enough as the markets underwent extreme volatility. It also didn't help that the federal government banned short selling of about one thousand financial services companies.

It looks like Blackstone Group LP (NYSE: BX) will post its smallest profit since becoming a public company in June 2007.

Simply put, the firm relies on transactions -- which have ground to a halt. As a result, fees are likely to plunge. This is what happened to KKR Private Equity Investors LP, which recently reported 15% write-down of its portfolio.

Keep in mind that Blackstone will also need to come to terms with some mega-deals it struck before the credit crunch hit. An example is the firm's $26 billion leveraged buyout of Hilton Hotels.

True, it's a marquee asset. But the transaction was made when debt was dirt cheap. Blackstone raised about $20 billion in financing for the deal.

Now, with the global economy sliding into recession, it's inevitable that there will be cutbacks in travel.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.