2 Consultants to Banking Industry Come Under Scrutiny

They are known as Wall Street’s shadow regulators. And after years of guiding banks through problems like money laundering and foreclosure abuses, their influence has soared.

Now, regulatory scrutiny of the consulting industry itself is intensifying.

New York State has subpoenaed two consulting firms as part of a broader investigation into the industry’s perceived coziness with Wall Street, according to people briefed on the inquiry. The two firms that received the subpoenas in recent months â€" Promontory Financial Group and PricewaterhouseCoopers â€" are among the industry’s biggest names.

The subpoenas by the New York regulator presents the latest threat to the consulting industry, which is being faulted for inadequately handling recent bank regulatory problems. In another sign that the industry’s clout is in jeopardy, federal regulators are rethinking their own reliance on consultants, which are often called in to bolster compliance procedures at banks.

The examination of the consultants stems from a concern that the industry’s business model is rife with conflicts of interest. While consultants are supposed to provide an objective assessment of a bank’s problems, they are also handpicked and paid by those same banks.

PricewaterhouseCoopers declined to comment on the subpoena. Promontory also declined to address it, but a spokesman acknowledged that the firm “from time to time receives document requests in the form of subpoenas related to client activities.” The spokesman, Christopher Winans, added, “Promontory does not disclose the nature of individual requests or scope of inquiry.”

Neither firm has been accused of wrongdoing, and New York has not indicated that it will penalize the firms. Time magazine earlier reported online that Promontory had received a subpoena.

In the past, the consulting industry defended the independence of its work. Conflicts of interest, however, were a central issue when New York took action against another seasoned consultant, Deloitte. New York’s financial regulator, Benjamin M. Lawsky, fined Deloitte $10 million in June and banned it from advising banks in New York for one year after accusing the firm of watering down a report about money-laundering controls at the British bank Standard Chartered.

At Standard Chartered’s request, Deloitte removed a recommendation from the report that was “aimed at rooting out money laundering,” Mr. Lawsky, New York’s superintendent of financial services, said when announcing the Deloitte action. Deloitte was not accused of intentionally aiding or abetting Standard Chartered. At the time, Deloitte said it “has an important responsibility to continually elevate the standards that govern our work and that of our profession.”

Mr. Lawsky is scrutinizing some of the same issues in his investigation of Promontory and PricewaterhouseCoopers, according to the people briefed on the matter.

The subpoena of Promontory seeks e-mails and other documents generated during the firm’s work for Standard Chartered, which settled with New York and federal regulators over claims that it had illegally transferred money for Iran. Mr. Lawsky is also examining Promontory’s work for another bank suspected of transferring money for countries blacklisted from doing business in the United States. The identity of the other bank was unknown.

Promontory helped Standard Chartered assess the amount of illegal transfers routed through the bank’s New York branches. Mr. Lawsky, the people briefed on the matter said, is questioning whether Promontory lowballed the estimate at the request of Standard Chartered.

“We were not retained to characterize the transactions or interpret their legal meaning,” Mr. Winans, the Promontory spokesman, said.

Even among regulators, there has been widespread disagreement about the extent of Standard Chartered’s wrongdoing, presenting a challenge for Mr. Lawsky’s investigation of Promontory.

Based on Promontory’s review, Standard Chartered originally estimated $14 million in illicit transfers but ultimately conceded that the problem reached $24 million. And Mr. Lawsky, who has a broader authority to penalize the bank for failing to keep accurate books and records, valued the bank’s misconduct at $250 billion.

In Mr. Lawsky’s examination of PricewaterhouseCoopers, he is focused on the consultant’s work for the Bank of Tokyo-Mitsubishi UFJ, which faced investigations over foreign money transfers, according to people briefed on the matter. In June, Mr. Lawsky accused the bank of processing 28,000 payments worth about $100 billion on behalf of countries that were facing sanctions by the United States. PricewaterhouseCoopers was tasked with assessing the volume of transfers.

Weeks before penalizing the bank, the people briefed on the matter said, Mr. Lawsky pushed PricewaterhouseCoopers to turn over additional documents about its correspondence with the bank. Before doing so, PricewaterhouseCoopers hired a law firm to review the material. Although most of the documents were innocuous and did not imply that the firm was complicit in the bank’s wrongdoing, language in a few e-mails did suggest that certain employees were not fully independent from the bank.

PricewaterhouseCoopers, which is cooperating with the investigation, has since begun to produce documents for Mr. Lawsky. The regulator, the people briefed on the investigation said, is also reviewing whether the PricewaterhouseCoopers and Promontory employees who worked on the cases have since moved on to Wall Street.

Until now, such consulting firms have enjoyed a certain cachet in Washington and on Wall Street. Promontory was founded by Eugene A. Ludwig, a former bank regulator and a law school friend of Bill Clinton’s.

But both firms came under the spotlight for their work in reviewing foreclosure abuses at banks. Consultants racked up more than $2 billion in fees while struggling to complete the assignment.

The consultants have defended their work, and the Government Accountability Office has placed blame on regulators. Still, Congress has questioned the $2 billion in payouts.

“Consultants have a financial incentive to do things to attract repeat business,” Senator Sherrod Brown, Democrat of Ohio, told a panel of regulators who testified before the Senate Banking Committee.

In testimony before the committee, a senior federal banking regulator said he was exploring new ways to curb the use of consultants. The official also petitioned Congress for greater authority to police the firms.

Mr. Lawsky, however, believes he has found the authority to rein in the consultants. Under an obscure law that goes back to the turn of the 20th century, Mr. Lawsky’s office controls access to documents that consultants need to advise a bank. Mr. Lawsky will block access to those documents if a consultant reveals a lack of independence.

“At times,” Mr. Lawsky has said, “the consulting industry has been infected by an ‘I’ll scratch your back if you scratch mine’ culture and a stunning lack of independence.”

An Initial Filing, in Fewer Than 140 Characters

Did you read about Twitter’s initial public offering filing?

If you did, it was probably scant on details. The only public information from the company was a single message on its own Twitter feed: “We’ve confidentially submitted an S-1 to the S.E.C. for a planned I.P.O. This Tweet does not constitute an offer of any securities for sale.”

That’s it.

So no selected financial data, no information about capitalization or operations, no “risk factors” â€" the sort of thing one typically finds in a company’s first filing for an initial public offering, known as a S-1. Thursday’s S-1 filing for Hilton Worldwide Holdings runs more than 200 pages, for example.

Twitter can fly under the radar because of the rules in the Jump-Start Our Business Start-ups or JOBS Act, which became law in 2012.

Among the concerns that opponents of the law had was exactly the kind of situation that is now going on with Twitter: a prominent company, known around the world, has filed for what will most likely be the most anticipated stock offering since Facebook â€" and we know precious little about its business.

How is this possible?

The JOBS Act allows what it generously defines as “emerging growth companies” to take advantage of reduced regulation during and after an I.P.O. I say generous because Congress defined an emerging growth company as one with less than $1 billion in revenue. That is about 90 percent of I.P.O.’s over the last 20 years. It’s a broad view of what an emerging growth company is by any measure.

Twitter certainly has less than $1 billion in revenue, though, and so it qualifies. Heck, even Facebook would have qualified.

One of the major benefits of the JOBS Act is that Twitter does not have to disclose publicly its registration statement for its filing. Section 106 of the law states that a registration statement for an emerging growth company can be filed and reviewed by the Securities and Exchange Commission confidentially. According to Ernst & Young, in the first year of the JOBS Act, 63 percent of eligible companies filed their statements confidentially, making this one of the new law’s most popular provisions.

The document that contains all of the information about Twitter’s I.P.O. â€" including financial statements â€" only needs to be made public at least 21 days before the company’s Wall Street bankers start to pitch the planned offering to investors, in what is known as a road show. At this time, any amendments made in response to comments by the S.E.C. will also be made public.

The idea behind this provision is to allow companies to test the waters. The S.E.C. will review the companies’ filings confidentially so that the company can decide whether to proceed with an offering without the public knowing. Additionally, this allows the company to work out any problems with the regulator outside of the glare of the public eye. Proponents of this rule advocated for it for this reason. They also argued that because the amendments were eventually made public before the offering, this meant that the public got to see what went on. It just had to wait for the S.E.C. to review the registration statement.

Yet there might be value in having the regulator’s critique of a company’s I.P.O. occurring more or less simultaneously in the public eye. For example, both Zynga and Groupon received pushback from the agency over their accounting methods. This arguably allowed the investing public to better assess the financial results.

But for Zynga and Groupon, the experience probably wasn’t so great, because it led to sharp criticism of their filings and put their stock offerings on a back foot. In both cases, the S.E.C. process raised warning signs that turned out to be accurate about these companies. And let’s face it: does anyone believe that Twitter would not have gone public if filing confidentiality had not been available? In the end, the JOBS Act provision might help some real emerging growth companies, but the need to apply it so broadly is questionable.

Nonetheless, there is no movement to change the law, and the provision applies to Twitter. For the next one to three months, the S.E.C. will be reviewing the company’s registration statement. It will be a review that will occur behind closed doors.

Once the agency and Twitter agree on the disclosure, the I.P.O. document will be released. The next month thereafter will involve Twitter preparing and presenting its road show.

We may have to wait some time for Twitter’s filing. When we see it, I bet that it will be full of surprises, such as special shares that allow the founders to keep control of their company, and other maneuvers to take advantage of the JOBS Act relief. The question is whether this relief is really doing anything that helps the investing public.

In the meantime, we are in the dark. Perhaps Twitter will deign to tweet a bit more about its I.P.O. But I doubt it. Instead you are left with less than 140 characters of information. Welcome to the modern age of social media.

Regulators Ask Financial Markets to Improve Technology

The Securities and Exchange Commission is asking the nation’s stock exchanges to introduce “kill switches” and other technological changes after the latest in a long line of computer problems scrambled stock trading.

The relatively new chairwoman of the agency, Mary Jo White, asked for the changes at a meeting on Thursday with the top executives of the nation’s exchanges. The exchanges will be expected to propose specific technology upgrades and new rules in the next 60 days, according to people at the meeting.

Ms. White called for the gathering after software problems took down trading in all stocks listed on the Nasdaq exchange for over three hours on Aug. 22. That event came just two days after Goldman Sachs sent out a burst of errant orders for stock options.

Ms. White said in a statement that she “stressed the need for all market participants to work collaboratively â€" together and with the commission â€" to strengthen critical market infrastructure and improve its resilience when technology falls short.”

The recent problems were only the latest programming blunders to raise questions about the stability and reliability of the nation’s increasingly computer-driven stock markets.

In the past, regulators also called for improvements in trading software and hardware, but those conversations and new rules have not prevented new problems. Some technology experts questioned whether the changes proposed on Thursday would be any different.

“My impression is that it’s the same old same old,” said Jeffrey Wallis, a managing partner at the trading technology provider SunGard Consulting Services. “We’ve been down this road before.”

The industry discussed using kill switches after a programming mishap led to losses of nearly $500 million at Knight Capital in August 2012. The switches would allow an exchange to cut off one of its customers if the amount of trading from the firm exceeded a preset threshold. Ms. White asked the exchanges on Thursday to make the switches uniformly available, and to propose new rules that would force trading firms to use them, people at the meeting said.

But kill switches would not address the issues that caused the Nasdaq disruption in August. The exchange stopped trading in response to a problem in the data system that provides the prices of recent trades.

The New York Stock Exchange and Nasdaq, which run the data feeds for stocks listed on their exchanges, were asked on Thursday to come back to the S.E.C. with specific steps they would take to improve their backup systems for the data feeds.

Nasdaq’s chief executive, Robert Greifeld, said in a statement that the meeting “was an important and constructive step forward to address the soundness and reliability of critical infrastructure underpinning the U.S. capital markets.”

Twitter Confidentially Submits Plans for I.P.O.

Twitter filed the initial paperwork on Thursday for its long-awaited initial public offering of stock.

We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale.

â€" Twitter (@twitter) 12 Sep 13

Unlike with typical I.P.O.’s, however, potential investors and the public will not yet get a look at the company’s finances.

The microblogging service, which has about 200 million users worldwide, filed its preliminary prospectus, known as an S-1, with securities regulators using a provision of the Jumpstart Our Business Startups, or JOBS Act, that allows the company to keep its initial filings confidential if it has less than $1 billion in annual revenue.

Judge Approves American Airlines’ Bankruptcy Plan, With a Caveat

A federal judge approved American Airlines’ bankruptcy plan on Thursday but ruled that the decision was contingent on the Justice Department approving the carrier’s merger with US Airways.

Judge Sean H. Lane of the United States Bankruptcy Court in Manhattan confirmed American’s proposal to exit restructuring proceedings nearly two years after the carrier filed for bankruptcy. As part of the plan, American agreed this year to merge with US Airways, a move that received the backing of creditors as well as its three main labor groups.

But the merger was challenged by antitrust regulators who filed a lawsuit in August to block it on the grounds that it would harm competition and passengers. The airlines have vowed to fight the challenge and a trial is scheduled for November before a separate federal court in Washington.

Thursday’s ruling was supposed to cap a two-year process since American sought court protection to reorganize its business, cut costs and rewrite labor agreements in November 2011. American had initially vowed to emerge as an independent airline, but eventually succumbed to the efforts by US Airways to merge.

Both carriers have argued that they needed to combine their networks to be able to better compete with Delta Air Lines and United Airlines, both bigger airlines that completed mergers of their own in recent years.

The elaborate plan was thrown off in August when antitrust regulators unexpectedly challenged the merger.

It was the first time regulators sought to block an airline merger since 2001. In recent years, the domestic airline industry has been transformed by large-scale mergers that have allowed carriers to streamline operations, abandon unprofitable hubs and rationalize their networks. Consumer advocates have argued that the mergers had allowed the airlines to charge higher fares and fees.

The bankruptcy judge ruled against one provision of the airline’s restructuring, a controversial plan to award American Airlines’ chairman, Tom Horton, a $20 million severance after he leaves after a short stint as the chairman of the combined company. The judge said that was not compatible with bankruptcy law although nothing stopped the airline from awarding the payoff once the merger was done.

This was the third time the airlines had requested the judge to rule on the exit from bankruptcy despite of the regulatory challenge. Judge Lane noted that, regardless of the legal proceedings, the restructuring plan was viable since it received the broad backing of the creditors, shareholders, as well as unions representing pilots, flight attendants and mechanics.

The court’s involvement may not be over yet. A settlement with the Justice Department that requires a divestiture of routes or airport slots by the airlines would have to be reviewed by the bankruptcy court. And if antitrust authorities prevailed in blocking the merger, American would have to submit a new restructuring plan before the bankruptcy court.

Vodafone Says Shareholders Clear Kabel Deutschland Bid

LONDON â€" Vodafone announced on Thursday that it had received sufficient investor support to win approval of its 7.7 bilion euros ($10.2 billion) takeover of the German cable operator Kabel Deutschland.

The British telecommunications giant had faced a nervous wait for at least 75 percent of Kabel’s shareholders to tender their shares ahead of a deadline on Wednesday.

Earlier this week, Vodafone said that it had the backing of only around 20 percent of Kabel’s investors, and a number of hedge funds, including Paul Singer’s Elliott Management, had built up large minority stakes in Germany’s largest cable operator.

The initial lackluster shareholder backing for Vodafone’s multi-billion dollar offer, coupled with the hedge funds’ activity, had raised hopes that the British company would have to raise its bid to secure Kabel. The British company plans to use Kabel’s extensive cable network across Germany to beef up its own offerings in Europe’s largest economy.

Yet as the deadline approached, Kabel’s investors finally gave their backing for the deal, and Vodafone confirmed on Thursday that it had secured the minimum 75 percent acceptance needed for the takeover to proceed.

Ackermann to Resign From Board of Siemens

Josef Ackermann, the former chief executive of Deutsche Bank, plans to resign as a deputy chairman of Siemens, a move that comes shortly after he abruptly resigned as chairman of Zurich Insurance Group last month.

Mr. Ackermann had stepped down from his post at Zurich Insurance after he was mentioned in a suicide note written by the company’s chief financial officer, Pierre Wauthier.

Mr. Ackermann said Thursday that his resignation from the Siemens supervisory board was not linked to his departure from Zurich Insurance. The decision to leave Siemens was made ”quite independently and for completely different reasons,” he told reporters in Berlin at an event to publicize his biography, according to news reports.

The biography, titled ”Late Remorse: A Close-Up of Josef Ackermann,” was written by Stefan Baron, an aide to Mr. Ackermann during his tenure at Deutsche Bank.

Mr. Ackermann’s decision was confirmed by a person with direct knowledge of the situation, who declined to be named because Siemens has yet to make a formal announcement.

Siemens, whose supervisory board is scheduled to meet on Wednesday, declined to comment on Mr. Ackermann’s decision.

Mr. Ackermann, a native of Switzerland, is to remain a non-executive director of the board at oil company Royal Dutch Shell. He is also a member of the board of directors at Investor, an investment company founded by Sweden’s Wallenberg family.

Mr. Ackermann left Deutsche Bank last year after 10 years as chief executive. He led the bank through the financial crisis, avoiding a direct government bailout, and became a spokesman for the banking industry as a whole.

But he has also generated controversy during his career, becoming enmeshed in several legal battles and getting into a public feud with Deutsche Bank’s supervisory board chairman over his successor at the bank.

Mr. Ackermann said last month he was ”deeply shocked” by the death of Mr. Wauthier. But he also said that suggestions by Mr. Wauthier’s widow that he should take some blame for her husband’s death were ”unfounded.”

Mr. Wauthier, who was found dead on Aug. 26 at at his home south of Zurich, wrote a suicide note whose contents alluded to a tense relationship with Mr. Ackermann, according to Tom de Swaan, who was named acting chairman of the Swiss insurer.

Lessons From the Dell Deal

The tortuous Dell buyout is essentially over after shareholders approved the company’s purchase by its chief executive, Michael S. Dell, and the private equity firm Silver Lake. Now it’s time to step back, be introspective and draw some lessons.

Procedure is only that. The Dell buyout was a model of procedural protections for shareholders. The board must be given credit for negotiating all of them. Yet, as I wrote when I first reviewed these procedures, my thought was that “if a runner is the only person in a race and runs really hard, can there still a winner?” What I was referring to was that Dell had negotiated everything in terms of deal protections. But the board may have negotiated these procedures because it could be safe in doing so knowing that a competing bid was unlikely, a fact later confirmed. The somewhat hollow nature of these procedures was confirmed when the Dell board changed the voting rules to make passage of the buyout easier. While these procedures are important, they don’t mean very much if competing bidders don’t emerge or shareholders can’t use them effectiely. Meanwhile, it is clear that the use of these procedures was an effective way for Dell to halt Carl Icahn’s litigation in its tracks. The Dell buyout shows that good procedure may be more about protecting a company from litigation than empowering shareholders. And don’t expect any bidder to agree ever again to the voting rules originally adopted by Dell, which counted votes not cast as “no” votes.

The initial bidding matters. If fault was to be found with the Dell board, it was in limiting the initial bidding to two private equity firms: the Texas Pacific Group and Silver Lake. When Blackstone inquired in the middle of the process whether it could join the bidding, it was told no and to wait for a deal announcement. Yet by that time, Dell’s business had deteriorated further and Blackstone, after some due diligence, declined to bid. The lesson here is that the initial design of the sale process matters. Dell’s failure to include Blackstone may have locked out a competing bid and cost Dell shareholders. And while boards are understandably sometimes hesitant to open up a full auction process because of the disruption it causes, in circumstances like this where the company is almost certainly to be sold, it appears to be perhaps the better course.In any event, the decisions made at the beginning about potential buyers and when they can bid can be critical.

Institutional shareholders don’t like risk. The bottom line in this deal was that Dell is a melting ice cube with its core personal computer business in decline. Institutional shareholders are in the business of beating the market by a few points, not taking significant risk. With money on the table and the long term risk in Dell, institutional shareholders were always likely to just take the money. That is what these shareholders did, waiting for a small bump but then proceeding ahead to take up the transaction. This is a big issue in markets today and is likely to drive future deal-making as executives realize that shareholders may just not be capable of saying no under these circumstances.

Shareholder activism pays. Let’s face it, $70 million for Mr. Icahn is not a huge payout, but it is a very nice return for six months’ work. While Mr. Icahn is a unique force, merger activism, either fighting a deal or arguing for an increase in price, is going to persist and increase in the markets. But the dynamics of merger activism also drive shareholders toward a deal. The only issue becomes price. So, expect merger agreements these days to be negotiated not only with a mind toward competing bidders but how the parties can fend off these types of activists regardless of whether it helps shareholders.

The Deal Machine must be fed. Once a deal is announced, it takes on its own dynamic. The parties to the deal lock into it psychologically. Meanwhile, the advisers want to be paid, something that often takes place only if the deal does. The market psychology also begins to work to push forward the deal as shareholders, employees and other parties expect it to happen. The question then becomes not whether the deal will happen or not, but under what terms. And as Dell showed, a company has substantial tools in its arsenal, like the ability to set a record date and meeting date, to optimally time success. All of this feeds what Dennis Berman has called the Deal Machine. It is hard to stop or say no to it.

Appraisal is not a panacea. There was much talk about seeking an appraisal action in this deal. Yet appraisal is costly. Shareholders must pay their own legal fees, wait years to be paid and then could end up getting less than they sought. While studies were trumpeted that appraisal in Delaware more often than not finds shareholders getting more, the past is not always the future. In particular, it is unclear what would happen if Dell’s shareholders sought appraisal en masse. In Dell’s case, a judge praised the process used by Dell’s board and appeared skeptical that a higher price could be obtained. In addition, he price of shares in an appraisal proceeding is assessed at the time the buyout closes, not when it is announced, and Dell’s business has deteriorated since then, making it worth less. In any event, even Mr. Icahn has not confirmed he will go through with appraisal, only saying so far that he will seek it. Mr. Icahn has 60 days to try and reach a deal with Dell before actually seeking appraisal. Dell may actually pay him a few cents a share just to go away, as people are wont to do with him. But there is only one Carl Icahn. It all means that appraisal is not the wholesale remedy many people think it is in this deal or others.

Management buyouts. The Dell deal shows the real perils of management buyouts. In an M.B.O., the board is faced with a choice of selling to management or doing nothing. Too often the board decides that a sale must go through and the only issue is price. This appears to have been the case here. The Dell board must be praised for attempting to prevent Mr. Dell from using his position to gain an unfair advantage, something Mr. Dell amenably went along with. But the question remains: Why can’t management simply run the company and make these gains for shareholders?

Hilton Is Ready to Go Public, But Other Buyouts Are Still Sitting on Sidelines

Hilton Worldwide Holdings filing on Thursday to go public appears that one of the biggest deals of the buyout boom that is headed toward a successful completion.

But other big buyouts led by private equity from that overheated period have not made as much progress.

Hilton, which was bought by the Blackstone Group for $26 billion in 2007, has experienced a remarkable turnaround, despite initially coming to symbolize the excesses of the years before the financial crisis, when private equity firms took on huge targets.

Some of the biggest of those companies â€" including Energy Future Holdings, First Data and Clear Channel Communications â€" remain in the hands of their private equity buyers, which are reshaping the companies with varying degrees of success. Others, however, have achieved a sale or initial public offering â€" commonly referred to in the industry as an exit.

Below is a scorecard of where some of the most prominent deals from the buyout boom are today.

Still owned by private equity

TXU | It was the largest leveraged buyout ever, and perhaps the most disappointing as well. K.K.R., TPG Capital, Goldman Sachs, Lehman Brothers, Citigroup and Morgan Stanley agreed to buy the Texas energy giant TXU, which later was renamed Energy Future Holdings, for about $45 billion in 2007. Since then, it has struggled as natural gas prices have fallen. Now, groups of investors are battling over the company’s future.

First Data | The credit card processing company First Data has struggled to turn a profit in the years since it was acquired for $29 billion by K.K.R. in 2007. This year, Frank J. Bisignano, a senior JPMorgan Chase executive, took over as First Data’s chief executive, and the company has tried unusual strategies to improve its numbers.

Clear Channel Communications | Clear Channel, a radio and outdoor advertising company, began to face challenges soon after being bought by Bain Capital and Thomas H. Lee Partners for $19.5 billion in 2008. With revenue falling in 2009, it became harder for the company to make payments on its billions of dollars in debt. Since then, Clear Channel has turned to the debt markets to raise more money and gain breathing room.

SunGard Data Systems | The software maker SunGard, which was bought by seven private equity firms for $11.3 billion in 2005, has been engaging in corporate maneuvers. The owners â€" Silver Lake, Bain Capital, the Blackstone Group, GS Capital Partners, TPG Capital, Providence Equity Partners and K.K.R. â€" took out a $720 million dividend last year through borrowing. In June, the company was reported to be considering a sale of a unit.

Toys “R” Us | The retailer filed to go public in 2010, but, after no deal materialized, it ended up withdrawing the filing this year, despite a buoyant stock market. The company â€" which was bought by Bain Capital and K.K.R., along with the real estate developer Vornado Realty Trust, for $6.6 billion in 2005 â€" was “grappling with how to grow,” The New York Times wrote last year.

Sold or taken public

HCA | The hospital chain went public in 2011 after paying hefty dividends to its private equity owners, allowing them to recoup their investment and then some. The 2006 buyout of HCA by Bain Capital, K.K.R. and Merrill Lynch’s private equity arm, worth about $33 billion, was regarded as one of the more successful of the credit boom.

Alliance Boots | K.K.R.’s $22 billion acquisition of the European pharmacy retailer Alliance Boots in 2007 was the Continent’s largest leveraged buyout. It has turned out to be a success. Last year, Walgreen agreed to a deal that would give it full control of Alliance Boots by 2015, providing a sizable return for K.K.R.

Freescale Semiconductor | After being bought for $17.6 billion in 2006 by TPG Capital, the Blackstone Group, the Carlyle Group and Permira, the computer chip maker Freescale struggled with weakened customer demand and a heavy debt load. When it went public in 2011, it was forced to price its shares at the low end of an expected price range.

Neiman Marcus | The luxury retail chain was sold this week to a group led by Ares Management and a Canadian pension plan for $6 billion. The private equity owners, TPG and Warburg Pincus, paid about $5.1 billion for Neiman in 2005.

Hilton Is Ready to Go Public, But Other Buyouts Are Still Sitting on Sidelines

Hilton Worldwide Holdings filing on Thursday to go public appears that one of the biggest deals of the buyout boom that is headed toward a successful completion.

But other big buyouts led by private equity from that overheated period have not made as much progress.

Hilton, which was bought by the Blackstone Group for $26 billion in 2007, has experienced a remarkable turnaround, despite initially coming to symbolize the excesses of the years before the financial crisis, when private equity firms took on huge targets.

Some of the biggest of those companies â€" including Energy Future Holdings, First Data and Clear Channel Communications â€" remain in the hands of their private equity buyers, which are reshaping the companies with varying degrees of success. Others, however, have achieved a sale or initial public offering â€" commonly referred to in the industry as an exit.

Below is a scorecard of where some of the most prominent deals from the buyout boom are today.

Still owned by private equity

TXU | It was the largest leveraged buyout ever, and perhaps the most disappointing as well. K.K.R., TPG Capital, Goldman Sachs, Lehman Brothers, Citigroup and Morgan Stanley agreed to buy the Texas energy giant TXU, which later was renamed Energy Future Holdings, for about $45 billion in 2007. Since then, it has struggled as natural gas prices have fallen. Now, groups of investors are battling over the company’s future.

First Data | The credit card processing company First Data has struggled to turn a profit in the years since it was acquired for $29 billion by K.K.R. in 2007. This year, Frank J. Bisignano, a senior JPMorgan Chase executive, took over as First Data’s chief executive, and the company has tried unusual strategies to improve its numbers.

Clear Channel Communications | Clear Channel, a radio and outdoor advertising company, began to face challenges soon after being bought by Bain Capital and Thomas H. Lee Partners for $19.5 billion in 2008. With revenue falling in 2009, it became harder for the company to make payments on its billions of dollars in debt. Since then, Clear Channel has turned to the debt markets to raise more money and gain breathing room.

SunGard Data Systems | The software maker SunGard, which was bought by seven private equity firms for $11.3 billion in 2005, has been engaging in corporate maneuvers. The owners â€" Silver Lake, Bain Capital, the Blackstone Group, GS Capital Partners, TPG Capital, Providence Equity Partners and K.K.R. â€" took out a $720 million dividend last year through borrowing. In June, the company was reported to be considering a sale of a unit.

Toys “R” Us | The retailer filed to go public in 2010, but, after no deal materialized, it ended up withdrawing the filing this year, despite a buoyant stock market. The company â€" which was bought by Bain Capital and K.K.R., along with the real estate developer Vornado Realty Trust, for $6.6 billion in 2005 â€" was “grappling with how to grow,” The New York Times wrote last year.

Sold or taken public

HCA | The hospital chain went public in 2011 after paying hefty dividends to its private equity owners, allowing them to recoup their investment and then some. The 2006 buyout of HCA by Bain Capital, K.K.R. and Merrill Lynch’s private equity arm, worth about $33 billion, was regarded as one of the more successful of the credit boom.

Alliance Boots | K.K.R.’s $22 billion acquisition of the European pharmacy retailer Alliance Boots in 2007 was the Continent’s largest leveraged buyout. It has turned out to be a success. Last year, Walgreen agreed to a deal that would give it full control of Alliance Boots by 2015, providing a sizable return for K.K.R.

Freescale Semiconductor | After being bought for $17.6 billion in 2006 by TPG Capital, the Blackstone Group, the Carlyle Group and Permira, the computer chip maker Freescale struggled with weakened customer demand and a heavy debt load. When it went public in 2011, it was forced to price its shares at the low end of an expected price range.

Neiman Marcus | The luxury retail chain was sold this week to a group led by Ares Management and a Canadian pension plan for $6 billion. The private equity owners, TPG and Warburg Pincus, paid about $5.1 billion for Neiman in 2005.

Dell Shareholders Approve $24.9 Billion Buyout

ROUND ROCK, TEX. â€" Dell shareholders voted on Wednesday to approve the computer company’s $24.9 billion sale to its founder, ending a monthslong slog that included fierce opposition from some investors.

At a brief shareholder meeting at Dell‘s headquarters here, Alex J. Mandl, the head of a special Dell board committee, announced that a majority of shareholders had voted in favor of the sale to Michael S. Dell and the investment firm Silver Lake.

But the result was long anticipated, after a Delaware court turned back a last-minute effort by the billionaire Carl C. Icahn to overturn changes to Dell’s voting rules that eased the path to a victory for the buyers.

Under the terms of the deal, shareholders will receive $13.75 a share in cash and a special 13-cent dividend.

“I am pleased with this outcome and am energized to continue building Dell into the industry`s leading provider of scalable, end-to-end technology solutions,” Mr. Dell said in a statement. “As a private enterprise, with a strong private-equity partner, we`ll serve our customers with a single-minded purpose and drive the innovations that will help them achieve their goals.”

The Many Mysteries of Air Travel

September 12, 2013, 8:54 am

Technology and air travel have always gone hand in hand, and they’re only getting more intertwined. From security at the airport to the rules about using electronics in flight to the final resting place of the plane’s toilet contents, airplanes and tech are a constant source of conflict, passion â€" and questions.

If you’d like the answers, I highly recommend Patrick Smith’s new book, “Cockpit Confidential.” Mr. Smith is a pilot and blogger; much of the book’s format and contents are on display at his Web site, AskThePilot.com, or in the archives of the “Ask the Pilot” column he wrote for Salon.com for years.

But as a frequent flyer, I’d much rather have the book, which is a far more comprehensive book of questions and answers about airplanes, airports, airlines and the psychology of flying. Here are some excerpts â€" factoids that every flier should know:

“Turbulence scares me to death. Do I have reason to be afraid?”

No. “A plane cannot be flipped upside-down, thrown into a tailspin or otherwise flung from the sky by even the mightiest gust or air pocket. Conditions might be annoying and uncomfortable, but the plane is not going to crash.”

“If all of a jet’s engines were to fail, can the plane glide to a landing?”

Yes. “There’s no greater prospect of instant calamity than switching off the engine in your car when coasting downhill. The car keeps going, and a plane will too.”

“I understand that planes can jettison fuel. Is this done to lighten the load for landing?”

Yes. “For a few reasons, the obvious one being that touching down puts higher stresses on an airframe than taking off.” But Mr. Smith also points out that only some airplane models have the ability to dump fuel â€" the big ones. “The 747, the 777, the A340, and the A330 all can dump fuel. A 737, an A320, or an RJ cannot. These smaller jets must circle or, if need be, land overweight.”

“What happens when lightning hits an airplane?”

Nothing. The energy “is discharged overboard through the plane’s aluminum skin, which is an excellent electrical conductor.”

“Are the contents of airplane toilets jettisoned during flight?”

No. “There is no way to jettison the contents of the lavatories during flight.”

“Many of the three-letter codes for airports make no sense.”

The non-obvious ones are probably holdovers from the airports’ previous names. “MCO is derived from MCCoy Field, the original name for Orlando International. Chicago O’Hare’s identifier, ORD, pays honors to the old Orchard Field.”

I should mention, by the way, that this book is frequently funny. For example, the author notes, “A campaign was launched in 2002 to change the identifier for the Sioux City, Iowa, from SUX to something less objectionable. The campaign failed.”

“We are told that modern commercial airplanes can essential fly themselves.”

Emphatically no. “A plane is able to fly itself about as much as the modern operating room can perform an operation by itself.” Autopilot is a tool, but “you still need to tell it what to do, when to do it, and how to do it.”

“Why the annoying rules pertaining to window shades, seat backs, tray tables, and cabin lights during takeoffs and landings?”

“Your tray has to be latched so that, in the event of an impact or sudden deceleration, you don’t impale yourself on it. The restriction on seat recline provides easier access to the aisle and also keeps your body in the safest position.” Raising your window shade, meanwhile, “Makes it easier for the flight attendants to assess any exterior hazardsâ€" fire, debris â€" that might interfere with an emergency evacuation.” Dimming the lights is the same precaution.

“Is it true that pilots reduce oxygen levels to keep passengers docile?”

No.

“Could some crazy or ill-intentioned person open one of the doors during flight?”

No. “You cannot â€" I repeat, cannot â€" open the doors or emergency hatches of an airplane in flight. The cabin pressure won’t allow it.”

Are cellphones and gadgets really dangerous to flight?

It depends. Laptops have to be put away for takeoff and landing “to prevent them from becoming high-speed projectiles during a sudden deceleration or impact.” As for tablets and e-book readers, “it’s tough to take a prohibition seriously now that many pilots are using tablets in the cockpit.” That’s why the Federal Aviation Administration is considering relaxing the ban on those gadgets.

And can cellphones really disrupt cockpit equipment? Probably not. “I’d venture to guess at least half of all phones, whether inadvertently or out of laziness, are left on during flight. If indeed this was a recipe for disaster, I think we’d have more evidence by now.”

My favorite bits of “Cockpit Confidential” are Mr. Smith’s rants. He’s a frequent passenger as well as a pilot, so he’s well equipped to rail about the stupidity of the methods for boarding a plane, and about the Transportation Security Administration’s expensive, absurdly misguided efforts. (One of the book’s funniest passages: the tale of the time he tried to carry airline silverware onto a flight, “part of my hotel survival kit.” The T.S.A. agent confiscated them â€" even though it was the same silverware the airline itself issues to passengers in flight!)

Truth is, the world would be a better place if the airline industry weren’t so secretive in the first place. The actions of pilots are hidden behind safety-reinforced doors, they speak to the flight attendants with signals and jargon and the airlines’ behavior in scheduling and pricing flights are always mysterious. They’d serve all of us better, including themselves, by offering a little transparency.

Until that day arrives, “Cockpit Confidential” is the document that belongs in the seat-back pocket in front of you.

The Many Mysteries of Air Travel

September 12, 2013, 8:54 am

Technology and air travel have always gone hand in hand, and they’re only getting more intertwined. From security at the airport to the rules about using electronics in flight to the final resting place of the plane’s toilet contents, airplanes and tech are a constant source of conflict, passion â€" and questions.

If you’d like the answers, I highly recommend Patrick Smith’s new book, “Cockpit Confidential.” Mr. Smith is a pilot and blogger; much of the book’s format and contents are on display at his Web site, AskThePilot.com, or in the archives of the “Ask the Pilot” column he wrote for Salon.com for years.

But as a frequent flyer, I’d much rather have the book, which is a far more comprehensive book of questions and answers about airplanes, airports, airlines and the psychology of flying. Here are some excerpts â€" factoids that every flier should know:

“Turbulence scares me to death. Do I have reason to be afraid?”

No. “A plane cannot be flipped upside-down, thrown into a tailspin or otherwise flung from the sky by even the mightiest gust or air pocket. Conditions might be annoying and uncomfortable, but the plane is not going to crash.”

“If all of a jet’s engines were to fail, can the plane glide to a landing?”

Yes. “There’s no greater prospect of instant calamity than switching off the engine in your car when coasting downhill. The car keeps going, and a plane will too.”

“I understand that planes can jettison fuel. Is this done to lighten the load for landing?”

Yes. “For a few reasons, the obvious one being that touching down puts higher stresses on an airframe than taking off.” But Mr. Smith also points out that only some airplane models have the ability to dump fuel â€" the big ones. “The 747, the 777, the A340, and the A330 all can dump fuel. A 737, an A320, or an RJ cannot. These smaller jets must circle or, if need be, land overweight.”

“What happens when lightning hits an airplane?”

Nothing. The energy “is discharged overboard through the plane’s aluminum skin, which is an excellent electrical conductor.”

“Are the contents of airplane toilets jettisoned during flight?”

No. “There is no way to jettison the contents of the lavatories during flight.”

“Many of the three-letter codes for airports make no sense.”

The non-obvious ones are probably holdovers from the airports’ previous names. “MCO is derived from MCCoy Field, the original name for Orlando International. Chicago O’Hare’s identifier, ORD, pays honors to the old Orchard Field.”

I should mention, by the way, that this book is frequently funny. For example, the author notes, “A campaign was launched in 2002 to change the identifier for the Sioux City, Iowa, from SUX to something less objectionable. The campaign failed.”

“We are told that modern commercial airplanes can essential fly themselves.”

Emphatically no. “A plane is able to fly itself about as much as the modern operating room can perform an operation by itself.” Autopilot is a tool, but “you still need to tell it what to do, when to do it, and how to do it.”

“Why the annoying rules pertaining to window shades, seat backs, tray tables, and cabin lights during takeoffs and landings?”

“Your tray has to be latched so that, in the event of an impact or sudden deceleration, you don’t impale yourself on it. The restriction on seat recline provides easier access to the aisle and also keeps your body in the safest position.” Raising your window shade, meanwhile, “Makes it easier for the flight attendants to assess any exterior hazardsâ€" fire, debris â€" that might interfere with an emergency evacuation.” Dimming the lights is the same precaution.

“Is it true that pilots reduce oxygen levels to keep passengers docile?”

No.

“Could some crazy or ill-intentioned person open one of the doors during flight?”

No. “You cannot â€" I repeat, cannot â€" open the doors or emergency hatches of an airplane in flight. The cabin pressure won’t allow it.”

Are cellphones and gadgets really dangerous to flight?

It depends. Laptops have to be put away for takeoff and landing “to prevent them from becoming high-speed projectiles during a sudden deceleration or impact.” As for tablets and e-book readers, “it’s tough to take a prohibition seriously now that many pilots are using tablets in the cockpit.” That’s why the Federal Aviation Administration is considering relaxing the ban on those gadgets.

And can cellphones really disrupt cockpit equipment? Probably not. “I’d venture to guess at least half of all phones, whether inadvertently or out of laziness, are left on during flight. If indeed this was a recipe for disaster, I think we’d have more evidence by now.”

My favorite bits of “Cockpit Confidential” are Mr. Smith’s rants. He’s a frequent passenger as well as a pilot, so he’s well equipped to rail about the stupidity of the methods for boarding a plane, and about the Transportation Security Administration’s expensive, absurdly misguided efforts. (One of the book’s funniest passages: the tale of the time he tried to carry airline silverware onto a flight, “part of my hotel survival kit.” The T.S.A. agent confiscated them â€" even though it was the same silverware the airline itself issues to passengers in flight!)

Truth is, the world would be a better place if the airline industry weren’t so secretive in the first place. The actions of pilots are hidden behind safety-reinforced doors, they speak to the flight attendants with signals and jargon and the airlines’ behavior in scheduling and pricing flights are always mysterious. They’d serve all of us better, including themselves, by offering a little transparency.

Until that day arrives, “Cockpit Confidential” is the document that belongs in the seat-back pocket in front of you.

KPN and América Móvil Still in Talks

KPN statement

LONDON - Carlos Slim Helú still has his sights set on Europe.

América Móvil, the Latin American telecommunications giant owned by Mr. Slim, confirmed on Thursday that it remained in talks with the Dutch cellphone company KPN about a potential bid worth 7.2 billion euros, or $9.6 billion.

The continuing discussions come after América Móvil’s announcement in late August that it was considering dropping its offer for KPN after an independent foundation connected to the Dutch company said it planned to block the takeover.

The acquisition of KPN, the former Dutch mobile phone monopoly, would be América Móvil’s largest foray into Europe and would play into a spate of deal-making in the Continent’s cellphone and cable industries.

América Móvil already owns a stake of just less than 30 percent in KPN.

The potential takeover offer, which would pay KPN investors 2.40 euros for each of their shares, comes after Vodafone sold its 45 percent stake in Verizon Wireless to its United States partner, Verizon Communications, for $130 billion. European and international buyers have also acquired a number of local cellphone and cable assets.

The deal for KPN, however, has faced vocal opposition from a foundation that has the right to buy preferred shares that would give it just less than 50 percent of the voting rights in the company.

In late August, the foundation said that América Móvil had not outlined its plans sufficiently to the KPN board and that it was concerned about the rights of minority shareholders and the effect of the deal on KPN’s employees.

In response, América Móvil said it was considering walking away from the deal, adding on Thursday that it was still committed to the original plan to buy KPN for 7.2 billion euros. Analysts say, however, that América Móvil may have to increase its offer to convince KPN investors to back the takeover bid.

“América Móvil continues to carefully evaluate all options available to it,” the company said in a statement on Thursday.

KPN, whose chief financial officer, Eric Hageman, unexpectedly resigned earlier this week for personal reasons, said it was still in discussions about the prospective takeover, though the outcome of the discussions were not guaranteed.

“We are carefully considering and weighing the interests of our shareholders, employees, customers and other stakeholders on financial and non-financial matters including safeguarding the vital role of KPN in Dutch society,” KPN’s chief executive, Eelco Blok, said in a statement on Thursday.

Shares in the Dutch company rose 1.7 percent in afternoon trading in Amsterdam on Thursday.

Mr. Slim owns about a 13 percent stake in The New York Times Company.

KPN and América Móvil Still in Talks

KPN statement

LONDON - Carlos Slim Helú still has his sights set on Europe.

América Móvil, the Latin American telecommunications giant owned by Mr. Slim, confirmed on Thursday that it remained in talks with the Dutch cellphone company KPN about a potential bid worth 7.2 billion euros, or $9.6 billion.

The continuing discussions come after América Móvil’s announcement in late August that it was considering dropping its offer for KPN after an independent foundation connected to the Dutch company said it planned to block the takeover.

The acquisition of KPN, the former Dutch mobile phone monopoly, would be América Móvil’s largest foray into Europe and would play into a spate of deal-making in the Continent’s cellphone and cable industries.

América Móvil already owns a stake of just less than 30 percent in KPN.

The potential takeover offer, which would pay KPN investors 2.40 euros for each of their shares, comes after Vodafone sold its 45 percent stake in Verizon Wireless to its United States partner, Verizon Communications, for $130 billion. European and international buyers have also acquired a number of local cellphone and cable assets.

The deal for KPN, however, has faced vocal opposition from a foundation that has the right to buy preferred shares that would give it just less than 50 percent of the voting rights in the company.

In late August, the foundation said that América Móvil had not outlined its plans sufficiently to the KPN board and that it was concerned about the rights of minority shareholders and the effect of the deal on KPN’s employees.

In response, América Móvil said it was considering walking away from the deal, adding on Thursday that it was still committed to the original plan to buy KPN for 7.2 billion euros. Analysts say, however, that América Móvil may have to increase its offer to convince KPN investors to back the takeover bid.

“América Móvil continues to carefully evaluate all options available to it,” the company said in a statement on Thursday.

KPN, whose chief financial officer, Eric Hageman, unexpectedly resigned earlier this week for personal reasons, said it was still in discussions about the prospective takeover, though the outcome of the discussions were not guaranteed.

“We are carefully considering and weighing the interests of our shareholders, employees, customers and other stakeholders on financial and non-financial matters including safeguarding the vital role of KPN in Dutch society,” KPN’s chief executive, Eelco Blok, said in a statement on Thursday.

Shares in the Dutch company rose 1.7 percent in afternoon trading in Amsterdam on Thursday.

Mr. Slim owns about a 13 percent stake in The New York Times Company.

Hilton Worldwide Files for an I.P.O.

Hilton Worldwide Holdings, the hotel company owned by the Blackstone Group, filed for an initial public offering on Thursday, seeking to raise at least $1.25 billion in what will be one of the most closely watched I.P.O.’s of the year.

Though details of the offering were not yet available, Hilton could be valued at about $30 billion once it goes public, capping a remarkable turnaround for what was once considered one of the worst deals of last decade’s private equity boom.

Blackstone took Hilton private in 2007, paying $26 billion for the company, which is based in McLean, Va. The deal was among those that came to symbolize the outsize ambitions of buyout shops in the years before the financial crisis as firms including Blackstone went after ever-larger targets.

Hilton did not disclose the precise sum it was looking to raise, or at what price it intends to price shares. But Blackstone does not intend to issue so many shares that it loses control of Hilton. Instead, the private equity firm will continue to own a majority of the voting shares, allowing it to control the makeup of the board.

With comparable hotel chains like Starwood and Marriott trading at about 12 times earnings before interest, taxes, depreciation and amortization, and Blackstone growing at a healthy clip, its valuation could be about $30 billion by the time shares are likely to start trading early next year.

Over the last six years, Blackstone has managed to turn Hilton around, making it an increasingly dominant force in the global hotel market. Revenue in 2012 was $9.3 billion, up 15 percent from 2010.

Adjusted earnings before interest, tax, depreciation and amortization were $2 billion in 2012, up 25 percent from 2010.

According to its filing with the Securities and Exchange Commission, Hilton has increased the number of open rooms in its system by 34 percent, to 170,000. That amounts to 4.5 percent of all hotel rooms globally, according to Smith Travel Research.

The company is also continuing to expand. It is responsible for 18 percent of global rooms under construction. In addition to Hilton brand hotels, the company operates the Waldorf Astoria, Conrad, DoubleTree and Embassy Suites brands.

Hilton has achieved its growth by doubling down on its strategy of licensing the Hilton brand to franchisees around the globe. These properties, owned and managed by other operators, which pay Hilton a franchise fee, are more profitable than the hotels owned and operated by Hilton itself.

The main underwriters for the I.P.O. are Deutsche Bank, Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley.

Morning Agenda: In Dell Buyout, a Final Chapter

IN DELL BUYOUT, A FINAL CHAPTER  |  After months of boardroom wrangling and public accusations, the fight over Dell may be drawing to a close. Shareholders are meeting on Thursday to vote on the $24.9 billion buyout proposal by the company’s founder, Michael S. Dell, and the investment firm Silver Lake.

It appears that the prospective buyers have now secured enough votes to win, according to Bloomberg News. The machinery for a buyout is already in motion, as the computer company set indicative pricing on a $5.5 billion loan to finance the deal, Reuters reported on Wednesday. At the same time, Dell’s debt was downgraded to junk status on Wednesday by Standard & Poor’s, amid concerns about loading up the company with leverage.

VERIZON LEADS THE WAY IN SELLING DEBT  |  It seems no sum is too large for companies looking to raise money through the debt markets â€" and bankers are egging them on, DealBook’s David Gelles writes. The $49 billion sale of investment-grade corporate debt by Verizon Communications on Wednesday caught even longtime market participants by surprise. The offering, to finance Verizon’s $130 billion deal to take full control of its wireless venture, fed speculation that more companies might tap the debt markets before interest rates begin to rise.

“We’re starting to see the animal spirits pick up again,” said Kathy Jones, a fixed-income strategist at Charles Schwab. “Usually, once it gets going, it doesn’t let up.” One banker involved in the offering said he was advising corporate clients that now was an ideal time to raise more money for acquisitions, Mr. Gelles reports.

NEW YORK REGULATOR SEES MORE ABUSE UNDER NEW INSURANCE RULES  |  “Several big life insurers are going to have to set aside a total of at least $4 billion because New York regulators believe they have been manipulating new rules meant to make sure they have adequate reserves to pay out claims,” Mary Williams Walsh reports in DealBook. The rules are a framework being tested by regulators who have struggled to find a solution that all 50 states can agree on. Insurance companies claim the state regulations are forcing them to hold too much money in reserve.

“On Friday, New York State plans to drop out of that agreement, according to a letter from Benjamin M. Lawsky, the financial services superintendent, to his fellow state insurance regulators,” Ms. Walsh reports. “In the letter, which was reviewed by The New York Times, Mr. Lawsky said the test, which started in 2012, showed that the new framework did not work and was, in fact, making the ‘gamesmanship and abuses’ in the industry even worse.”

ON THE AGENDA  |  Mark Carney, the new governor of the Bank of England, is appearing before British Parliament. Henry M. Paulson Jr., the former Treasury secretary, is on Bloomberg TV at 4 p.m.

PAULSON REFLECTS ON THE CRISIS  |  Five years after the financial crisis, Henry M. Paulson Jr., who was the Treasury secretary at the time, is still troubled by the bailout of Wall Street. He recounts those dark days in an extended interview with Bloomberg Businessweek and expresses his misgivings. “I knew Americans were angry when they thought the banks were hoarding and not lending as much as they would have liked. But how does the government make the banks lend? Even if you nationalize the banks, which we didn’t, do you want the government making lending decisions for the banks? That’s a recipe for disaster,” he says.

The bonuses paid to bank executives, he says, “infuriated me â€" the sheer cheekiness of it. Forget whether they were legally entitled to their bonuses, it was such a graceless lack of self-awareness and a total lack of understanding about how the rest of the world and the rest of America looked at them.”

Mergers & Acquisitions »

Tina Brown to Leave The Daily Beast  |  Ms. Brown, the editor in chief of the Web site The Daily Beast, is departing to start her own conference company, a move that will end her publishing partnership with her financial backer, Barry Diller, the chairman of IAC/InterActiveCorp.
NEW YORK TIMES

Umpqua to buy Sterling Financial for $2 Billion  |  The parent of Umpqua Bank agreed to buy the Sterling Financial Corporation, a private equity-backed lender, for $2 billion in cash and stock, the companies announced.
REUTERS

Societe Generale Said to Consider Sale of Asia Private Bank  |  The French bank Société Générale is exploring a sale of its private banking arm in Asia, a business that could fetch about $600 million, Reuters reports, citing unidentified people familiar with the matter.
REUTERS

Money Manager Takes Big Stake in News Corp.  |  Southeastern Asset Management, the money manager that fought the buyout of Dell, has taken a 12 percent voting stake in the News Corporation, making it the second-largest investor behind Rupert Murdoch.
DealBook »

Vodafone’s Bid for Kabel Deutschland Awaits Shareholder Approval  |  The offer has the backing of Kabel Deutschland’s board, but Vodafone appeared to be far short of the 75 percent of shareholder votes required before Wednesday’s deadline.
DealBook »

Slim Can Afford to Raise Bid for Dutch Firm  |  There should be room for the billionaire’s América Móvil to pay more for the Dutch telecommunications firm KPN, even if his company is insisting it will not budge, Quentin Webb of Reuters Breakingviews writes.
REUTERS BREAKINGVIEWS

INVESTMENT BANKING »

9/11 Through the Emotional Lens of Cantor Fitzgerald  |  “Out of the Clear Blue Sky” weaves together interviews with Howard Lutnick, the chief executive of Cantor Fitzgerald; family members of those who were killed on Sept. 11; home video; and rarely seen clips of Cantor executives from the months after the attacks.
DealBook »

After Goldman and a Book, Greg Smith Emerges to Aid Regulators  |  Greg Smith met with officials at the Securities and Exchange Commission in August to talk about the Volcker Rule. Some commentators have expressed skepticism about the value he could add to the debate.
DealBook »

Deutsche Bank Plans to Extend Contract of Co-C.E.O.  |  Deutsche Bank announced on Wednesday that it planned to extend the tenure of its co-chief executive, Jürgen Fitschen, in a move aimed at pre-empting leadership questions at Germany’s largest financial institution.
DealBook »

Promontory Financial Hires Another Government Official  |  The consulting firm Promontory Financial Group hired Mark Levonian, who previously was the top economist at the Office of the Comptroller of the Currency, Bloomberg News reports.
BLOOMBERG NEWS

Advanced Micro Devices to Be Removed From S.&P. 500 Index  | 
ALLTHINGSD

PRIVATE EQUITY »

Buyout Firms Said to Consider Bid for Jones Group  |  K.K.R. and Sycamore Partners “are considering a joint bid” for the Jones Group, a footwear and apparel company that is looking to sell itself, The Wall Street Journal reports, citing unidentified people familiar with the matter.
WALL STREET JOURNAL

Dole Says It Received No Offers to Challenge Buyout  |  Dole Food said the “go-shop” period connected to its $1.2 billion agreement to be sold to its chief executive ended without any rival offers. The deal is expected to close in the fourth quarter.
WALL STREET JOURNAL

HEDGE FUNDS »

Ackman Questions Impartiality of Herbalife’s Auditor  |  William A. Ackman expanded his campaign against Herbalife on Wednesday, questioning the independence of its auditor, PricewaterhouseCoopers, and warning of “serious accounting” issues at the company.
DealBook »

Under Investor Pressure, Sotheby’s Weighs Changes  |  The company said that it was considering moves like a share repurchase or raising its dividend, taking into account a number of factors, including taking on new debt, the value of its real estate and possible tax issues.
DealBook »

I.P.O./OFFERINGS »

In Offering I.P.O. Advice, Zuckerberg Speaks From Experience  |  It took more than a year for Facebook’s stock to climb back up to its initial public offering price. But now, with the stock reaching new highs, Mark Zuckerberg, the chief executive of the social network, is feeling relatively upbeat about the public markets.

“Having gone through a terrible first year, it made our company a lot stronger,” he said at a TechCrunch event on Wednesday, according to AllThingsD. “I’ve been very outspoken about staying private as long as possible,” Mr. Zuckerberg said. “But in retrospect, I was too afraid of going public. I don’t think it’s necessary to do that.”
ALLTHINGSD

Britain Prepares I.P.O. for Postal Service  |  The British government has confirmed plans to sell a majority stake in Royal Mail, the country’s postal service, over the coming weeks in Britain’s largest privatization since the 1990s.
DealBook » | Post a Comment | Read

Vivendi to Weigh Splitting Up  |  The French conglomerate Vivendi said on Wednesday that its board was considering cleaving itself in two, months after it struck deals to sell big holdings in the video game maker Activision Blizzard and a Moroccan phone company.
DealBook »

Former Ad Executive is Named Next Leader at Pandora  |  Brian P. McAndrews, a technology and digital advertising executive, was named the next chief executive and chairman of Pandora Media, succeeding Joseph J. Kennedy, who announced his resignation in March.
NEW YORK TIMES

VENTURE CAPITAL »

Morgenthaler Partners Hang Out a Shingle With $175 Million Fund  |  Three partners at the venture capital firm Morgenthaler Ventures are forming the Canvas Venture Fund, a new fund to make early-stage investments in software companies.
DealBook »

Mark Cuban Invests in Start-Up to Connect Companies to M.B.A.’s  |  The billionaire Mark Cuban is investing in a start-up that offers companies consulting services by M.B.A. students and graduates.
DealBook »

LEGAL/REGULATORY »

Control of Libor to Stay in London  |  “Brussels has ditched its plan to put the scandal-mired Libor lending rate under the direct control of a European supervisor in Paris, in a concession that removes a serious political nuisance for Britain,” The Financial Times reports.
FINANCIAL TIMES

New Chapter in a Clash Over Bonds in Argentina  |  The United States Supreme Court is meeting on Sept. 30 to decide whether to hear an appeal of a ruling favoring bondholders who refused to join a deal on defaulted bonds from Argentina.
DealBook »

Google’s Stock Settlement May Not Do Much for Shareholders  |  Google’s settlement of a shareholder lawsuit will most likely clear the way for the company to issue new nonvoting Class C shares. The move will perpetuate the control of Google by its co-founders, Sergey Brin and Larry Page, but may not be in shareholders’ best interests, Steven M. Davidoff writes in the Deal Professor column.
DealBook »

Indian Tribes Press Their Online Loan Case Against New York  |  Two tribes are arguing in Federal District Court in Manhattan that New York’s top financial regulator overstepped his jurisdictional bounds in his efforts to end their online lending operations in the state.
DealBook »

Morgenthaler Partners Hang Out a Shingle With $175 Million Fund

Three partners at the venture capital firm Morgenthaler Ventures are striking out on their own, with a new fund to make early-stage investments in software companies.

The new fund, known as the Canvas Venture Fund, has attracted $175 million, the partners plan to announce on Thursday. It is the first fund raised by a company they recently formed, the Morgenthaler Technology Investment Company.

For Morgenthaler Ventures, the offshoot represents another step in the evolution of one of Silicon Valley’s oldest firms. The three partners - Gary Little, Rebecca Lynn and Gary Morgenthaler - will remain partners at Morgenthaler Ventures even as they run their new fund.

Founded 1968 by David Morgenthaler, who is Gary’s father, Morgenthaler Ventures has moved from a generalist approach to one of greater specialization. Last year, the firm’s life sciences group joined with partners from Advanced Technology Ventures to form Lightstone Ventures, which invests in medical device and biotechnology companies.

The move toward becoming a boutique was motivated in part by pressures in the broader venture capital market, Mr. Little said.

“The landscape has evolved into the global brand V.C.’s that have multiple funds in multiple countries, and then the specialist boutique firms,” he said. “It’s been challenging for those that are in the middle.”

Based in Menlo Park, Calif., the Canvas fund plans to make early investments - known in the industry as Series A and Series B - in software firms serving businesses and other information technology companies. There is a “good chance” that one of the first investments will be in the financial technology area, Mr. Little said.

To raise their fund, the Canvas team turned to investors that had previously committed money to the latest Morgenthaler Venture funds. Though the new fund had an initial target size of $150 million, the partners allowed the size to climb to $175 million amid strong demand.

At least one investor had concerns about the fund growing that large.

“On balance, we would have preferred them not to have done that,” said Ashton Newhall, a co-managing general partner at Greenspring Associates, a fund near Baltimore that invested $10 million to $20 million in Canvas. “But I think there’s a rather cohesive argument for why, and what they’re planning to do.”

Canvas said it planned to take a selective, thoughtful approach to investments by focusing on large stakes ranging from $5 million to $15 million. Mr. Little contrasted his strategy with that of other investors that make a lot of smaller investments and then nurture the ones that do well.

In the past, the Morgenthaler name has been behind some big successes in technology, including Apple. Its portfolio also includes Evernote and the Lending Club.

For another investor in the Canvas fund, Industriens Pensions, a private pension fund in Denmark, investments in the Morgenthaler funds have been among its best performers, according to Soren Thinggaard Hansen, the pension’s head of private equity.

When it came to investing in Canvas, the specialized focus was a selling point, said Mr. Hansen, who committed $20 million.

“Software and services is quite an attractive area,” he said. “That’s one of the areas where it actually pays out to be an early mover.”

Morgenthaler Partners Hang Out a Shingle With $175 Million Fund

Three partners at the venture capital firm Morgenthaler Ventures are striking out on their own, with a new fund to make early-stage investments in software companies.

The new fund, known as the Canvas Venture Fund, has attracted $175 million, the partners plan to announce on Thursday. It is the first fund raised by a company they recently formed, the Morgenthaler Technology Investment Company.

For Morgenthaler Ventures, the offshoot represents another step in the evolution of one of Silicon Valley’s oldest firms. The three partners - Gary Little, Rebecca Lynn and Gary Morgenthaler - will remain partners at Morgenthaler Ventures even as they run their new fund.

Founded 1968 by David Morgenthaler, who is Gary’s father, Morgenthaler Ventures has moved from a generalist approach to one of greater specialization. Last year, the firm’s life sciences group joined with partners from Advanced Technology Ventures to form Lightstone Ventures, which invests in medical device and biotechnology companies.

The move toward becoming a boutique was motivated in part by pressures in the broader venture capital market, Mr. Little said.

“The landscape has evolved into the global brand V.C.’s that have multiple funds in multiple countries, and then the specialist boutique firms,” he said. “It’s been challenging for those that are in the middle.”

Based in Menlo Park, Calif., the Canvas fund plans to make early investments - known in the industry as Series A and Series B - in software firms serving businesses and other information technology companies. There is a “good chance” that one of the first investments will be in the financial technology area, Mr. Little said.

To raise their fund, the Canvas team turned to investors that had previously committed money to the latest Morgenthaler Venture funds. Though the new fund had an initial target size of $150 million, the partners allowed the size to climb to $175 million amid strong demand.

At least one investor had concerns about the fund growing that large.

“On balance, we would have preferred them not to have done that,” said Ashton Newhall, a co-managing general partner at Greenspring Associates, a fund near Baltimore that invested $10 million to $20 million in Canvas. “But I think there’s a rather cohesive argument for why, and what they’re planning to do.”

Canvas said it planned to take a selective, thoughtful approach to investments by focusing on large stakes ranging from $5 million to $15 million. Mr. Little contrasted his strategy with that of other investors that make a lot of smaller investments and then nurture the ones that do well.

In the past, the Morgenthaler name has been behind some big successes in technology, including Apple. Its portfolio also includes Evernote and the Lending Club.

For another investor in the Canvas fund, Industriens Pensions, a private pension fund in Denmark, investments in the Morgenthaler funds have been among its best performers, according to Soren Thinggaard Hansen, the pension’s head of private equity.

When it came to investing in Canvas, the specialized focus was a selling point, said Mr. Hansen, who committed $20 million.

“Software and services is quite an attractive area,” he said. “That’s one of the areas where it actually pays out to be an early mover.”

Mark Cuban Invests in Start-Up to Connect Companies to M.B.A.’s

It started with a cold call: an e-mail in July to the billionaire investor Mark Cuban, asking him for money.

The company seeking the financing, HourlyNerd, had a payment due to its development firm, so it ruled out applying to appear on “Shark Tank,” the venture capital reality show starring Mr. Cuban, because that would take too long.

To the surprise of Robert D. Biederman, a co-founder of HourlyNerd, Mr. Cuban responded about 15 minutes later. He was in.

After some back-and-forth with Mr. Cuban’s lawyers, Mr. Biederman received word that the billionaire would commit $450,000, far more than the company’s founders had expected.

“My heart kind of stopped,” said Mr. Biederman, 27, who was at the gym when he received the news. “It was definitely the most exciting moment of my business career.”

Granted, Mr. Biederman’s business career is still getting going. He and his co-founders started the company in a class at Harvard Business School, where he is in his second year.

The seed financing, which the company is announcing on Thursday, totals $750,000 and includes investments from Accanto Partners and Connect Ventures. That compares with the $5,000 that the company received initially through a class at Harvard.

In connection with the investment, Robert Doris, the founding partner of Accanto, is joining HourlyNerd’s board.

Through its online marketplace, HourlyNerd puts companies in touch with M.B.A. students and graduates looking to offer consulting services part time. The company says it can offer businesses high-quality consultants at a low price, typically $25 to $75 an hour.

“I invested because I saw the value the service offered to many of my portfolio companies,” Mr. Cuban said in an e-mail. “For any number of reasons, it’s hard for start-ups and early stage companies to hire great brain power. HourlyNerd allows these companies to bring in affordable expertise and pay for it only as long as you need it.”

After starting in February, HourlyNerd says it has grown to include more than 300 companies on its platform, with more than 900 M.B.A.’s from a number of business schools.

The company - whose founders include Peter Maglathlin, Joe Miller and Patrick Petitti - grew out of Harvard’s Field 3 course, which requires students to start a company. It placed second out of 150 companies in a competition at Harvard in May.

Harvard Business School recently faced controversy when Jodi Kantor of The New York Times wrote about an experiment in gender equity at the school. The article referred to Section X, a secret society of ultrawealthy students known for decadent parties.

DealBook couldn’t help asking whether Mr. Biederman is a member.

“Unfortunately,” he said, “I’m not cool enough.”

Britain Prepares I.P.O. for Postal Service

LONDON - The British government confirmed plans on Thursday to sell a majority stake in Royal Mail, the country’s postal service, in an initial public offering.

The I.P.O., which is expected in the coming weeks, would be one of the largest British offerings in recent years, and mark the end of public ownership for Royal Mail, whose roots date back to the court of Henry VIII in the 16th century. The privatization also would be the largest in Britain since the country sold its railroads to private investors in the 1990s.

The offering is part of the British government’s ongoing efforts to offload state-owned assets as part of a wide-ranging deficit reduction plan, but it has faced vocal opposition from Royal Mail workers and some local politicians.

The government said on Thursday that 10 percent of the offering would be set aside for Royal Mail employees, while the remaining undisclosed stake would be sold to institutional investors. The government had already announced that it would give some shares free to employees in any I.P.O. of the mail service.

The size and timing of the deal were not announced, but analysts expect that the share sale could reach up to £3.5 billion, or $5.5 billion.

“This is an important day for the Royal Mail,” Vince Cable, the British business secretary, said in a statement on Thursday. “These measures will help ensure the long term sustainability of the six days a week, one-price-goes-anywhere universal postal service.”

Royal Mail has faced stiff competition from private companies like DHL and TNT of the Netherlands, and has been forced to close rural post offices and increase the cost for delivering mail. The number of parcels and letters that the centuries-old company delivers on a daily basis has fallen around 30 percent, to 58 million, over the last 5 years, according to the company’s website.

Despite Royal Mail’s troubled financial position, union leaders remain opposed to the share sale, and have vowed to look for other ways to keep the postal service in public hands.

“This company is a valued national asset,” said Billy Hayes, general secretary of the Communication Workers Union, which represents many of Royal Mail’s staff, as he delivered a petition opposing the privatization plans to the British prime minister, David Cameron, earlier this month. “There are plenty of options for keeping Royal Mail a successful, publicly-owned company and we hope that the Prime Minister will take on board the views of significant numbers of British people.”

Goldman Sachs, UBS, Barclays, Bank of America Merrill Lynch, Invectec and RBC are coordinating the Royal Mail I.P.O, while Lazard is advising the British postal service on the offering.