Analyst Seeks to Avoid Jail by Testifying in SAC Trial

The star witness in the federal government’s insider trading prosecution of Michael Steinberg, once a senior trader at SAC Capital Advisors, told a federal jury on Tuesday why he was cooperating with prosecutors and testifying at the trial.

“I hope to avoid jail time,” said the witness, Jon Horvath, who worked for five years as a technology stock analyst at SAC, where Mr. Steinberg was his boss. Mr. Horvath pleaded guilty to insider trading charges in September 2012 and agreed to help prosecutors in the investigation that led to Mr. Steinberg’s indictment this spring.

Mr. Steinberg’s trial comes on the heels of SAC Capital’s guilty plea on Nov. 8 to securities fraud charges and its agreement to pay $1.2 billion in fines and restitution to federal prosecutors, in addition to a penalty of more than $600 million the firm agreed to pay to the Securities and Exchange Commission this year. Judge Laura Taylor Swain of Federal District Court is reviewing the firm’s guilty plea and has deferred a decision on whether to accept it. The firm’s founder, Steven A. Cohen, has not been charged.

Mr. Horvath, who took the stand late in the day on Tuesday, did not get far into his testimony before court was adjourned for the day by Judge Richard Sullivan of Federal District Court. But prosecutors set the stage by going over his career background and getting Mr. Horvath to divulge some negative information about his childhood in Canada.

Mr. Horvath, who was born in Sweden but grew up in Canada, testified that he did not disclose on a visa application that as a teenager in Canada he was charged with stealing some prescription drugs from a pharmacy where he was working. He said the matter was expunged several years later and he did not think it needed to be disclosed on the visa application when he later came to the United States as a graduate student.

It’s not clear why prosecutors had Mr. Horvath testify about the prescription drug theft, but prosecutors often have cooperating witnesses voluntarily disclose any negative information about themselves to avoid giving the defense a chance to discredit the witness.

The Steinberg trial has lost a bit of its tension because it comes after SAC’s guilty plea and the firm’s agreement to stop managing money for outside investors. But the case remains an important one for prosecutors because Mr. Steinberg was one of the closest employees to Mr. Cohen to get caught up in the insider trading scandal.

In its indictment of SAC Capital in July, the government named seven people, including Mr. Steinberg and Mr. Horvath, who had either been charged or convicted of insider trading while working at the firm.

The 41-year-old Mr. Steinberg, who is technically on leave from his job at SAC, is charged with using insider information to make trades in shares of Dell in August 2008 and a few months later to make trades in shares of Nvidia Corporation. The authorities say that Mr. Horvath passed on the inside information to Mr. Steinberg.

Mr. Steinberg’s defense team is expected to argue that he did not know the information passed on by Mr. Horvath had been improperly obtained.

Mr. Horvath said his job at SAC Capital was to have a “deep fundamental understanding” of the technology companies he covered and to “make recommendations to Mike as to whether to invest in the stocks or not.”

Before Mr. Horvath took the stand, a compliance officer for SAC Capital, John Casey, testified about the training session the firm held for employees about what constituted insider training. The government introduced evidence showing that both Mr. Horvath and Mr. Steinberg attended those sessions.

Mr. Horvath’s testimony will continue Wednesday morning before the trial breaks for the Thanksgiving holiday. Mr. Horvath, who could face more than 40 years in jail, also faces potential deportation.

New Boom in Subprime Loans, for Smaller Businesses

A small, little-known company from Missouri borrows hundreds of millions of dollars from two of the biggest names in Wall Street finance. The loans are rated subprime. What’s more, they carry few of the standard protections seen in ordinary debt, making them particularly risky bets.

But investors clamor to buy pieces of the loans, one of which pays annual interest of at least 8.75 percent. Demand is so strong, some buyers have to settle for less than they wanted.

A scene from the years leading up to the financial crisis in 2008? No, last month.

The company involved was Learfield Communications, of Jefferson City, Mo., which owns multimedia rights to more than four dozen college sports programs and which made just under $40 million last year in a common measure of earnings. But its $330 million loan package from Deutsche Bank and GE Capital on Oct. 9 highlights how five years after a credit bubble burst, a new boom is taking shape.

Companies like Learfield are the belles of the ball this year. Wall Street and private equity firms, hedge funds and other opaque financing pools have grown frustrated by low returns on other forms of debt and turned instead to riskier but more lucrative bets on ever-smaller companies. The Learfield case is notable for the leverage involved â€" the company was able to borrow more than eight times its earnings â€" and that has raised eyebrows in some credit circles.

“Weaker credit is traveling down to smaller companies that ordinarily would not have this kind of leverage,” said Barbara M. Goodstein, a banking and finance lawyer at Mayer Brown in New York who is knowledgeable about the industry.

The loans to the privately held Learfield came in the form of what is known in Wall Street parlance as a leveraged loan, a lightly regulated stepsibling to junk bonds, another species of below-investment-grade debt. Such loans go to companies that often already have a lot of debt or are otherwise considered speculative bets.

Leveraged loans became popular before the 2008 collapse but nearly disappeared afterward, regarded as a symbol of unbridled lending. But they started to return in 2010 and are now back in force, with volumes of $548.4 billion this year through Nov. 14, already exceeding the precrisis level of $535.2 billion in 2007.

The type of leveraged loans that Learfield took out are known as covenant-lite, financial lingo for loans that lack the tripwires that could alert investors to any potential financial troubles at the company that could affect repayment. More than half of all leveraged loans issued this year have been the so-called cov-lite types, double the level seen in 2007 on the eve of the credit crash.

Dell said in September that it would use a $9.1 billion cov-lite loan to help finance the $24.9 billion buyout by its founder, Michael Dell, and the private equity firm Silver Lake.

Learfield, however, is only a small fraction of the size of Dell.

Matthew O’Shea, a credit analyst at Covenant Review, a research firm, noted that smaller companies historically had more volatile earnings. “The increasingly lackadaisical tolerance for cov-lite drifting further down into the middle market,” he said, “increases risk for lenders to the smaller, less resilient borrowers in that space.”

Regulators, finance lawyers and even the ratings agencies have also grown increasingly uneasy about the return to credit risk. In March, the Federal Reserve, the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency, in a note on the boom, said, “Prudent lending practices have deteriorated” and urged lenders to tighten their standards. The agecies cited cov-lite loans, in particular, as having “additional risk” and called the loans one of their “primary issues of concern.”

In May, Moody’s wrote that signs of a “covenant bubble” were emerging. (Christina Padgett, a senior vice president at Moody’s, said that assessment still stood.) When Learfield announced its loans, Standard & Poor’s noted that the company was among the first with less than $50 million in earnings to take such loans and said the loans signaled “increasingly aggressive” lending.

The lending boom underscores a sea change in financing practices since 2008. In the face of regulatory restrictions put in place since then, banks are ceding much of their precrisis role in bankrolling and owning leveraged loans. That role has been taken up by private equity firms and investment funds, which slice up the loans and then pool them for sale to other investors. Those shadow banking players, which are typically more aggressive than banks, now make up 60 percent of new cov-lite loans, according to the Loan Syndications and Trading Association, the trade group and lobby for the leveraged loan industry. “Most funding is from nonbank lenders,” said James Parchment, a senior director at Standard & Poor’s.

Companies use leveraged loans primarily to bankroll acquisitions of other companies, to enter into private equity deals or to refinance debt. Documents for loans to private companies are generally not publicly disclosed, giving investors little insight on how they are structured.

Learfield has let Providence Equity Partners, a private equity firm that bought the company, use the proceeds of the loan to pay Shamrock Capital Advisors, another private equity firm, for its stake in Learfield. Providence Equity said in September that it planned to buy Learfield for an undisclosed amount.

The $330 million package consists of a $215 million loan, an $85 million loan and a $30 million line of credit.

Providence Equity, Learfield, Deutsche Bank and GE Capital declined to comment on the deal or the loans.

Unlike leveraged loans with covenants, or protections, cov-lite loans contain few or no pledges by a company to keep its debt below certain levels or even to report quarterly financial results in a timely fashion. But investors like these loans because, unlike bonds, their payouts “float” in tandem with the global benchmark interest rate in London, thus protecting them against rises in interest rates set by the Federal Reserve. Cov-lite loans are secured by a company’s assets, and they give lenders priority over bondholders and stockholders if the company goes bankrupt. But that does not mean an investor will actually get paid if the company goes bankrupt.

“You are relying on the cash flows of the company, so if earnings go down, you don’t have the cash flow and may not see a dime,” said Ronald A. Kahn, a managing director at Lincoln International, an investment bank in Chicago that underwrites leveraged loans to smaller companies.

The loans have their advocates. Companies that issued cov-lite loans from 2005 to 2007, the height of the credit bubble, defaulted at a rate of 7.8 percent compared to a rate of 10.45 percent for companies that issued loans of all types, including those with tripwires, according to Moody’s. Loans that came due in 2009, a year after the financial crisis, fared well, as did other types of loans, because of the infusion of cash from the nation’s central bank.

“When you examine underlying factors, such as historical default and recovery data, you’ll find that covenant-lite loans actually may be a better bank loan investment than many loans containing covenants,” Kevin Egan, a senior portfolio manager at Invesco, a fund management company, wrote on the company’s investing blog in July.

But at the leveraged loan industry’s annual conference on Oct. 17, nearly one in four participants voted to label cov-lite loans “the devil incarnate.” A senior banker who sells leveraged loans said cov-lite loans were “more like purgatory, because you can watch your company degrade but not trip any covenants that allow you to call a default.” Some 61 percent, the largest group of participants, said they “don’t love them, but can live with them.”

James H. Gellert, the chief executive of Rapid Ratings, an independent ratings firm, said the danger was that smaller companies with cov-lite loans could find it tough to refinance those loans in coming years if interest rates rise, credit tightens and lenders seek to bankroll larger, more stable companies. “You risk a higher default cycle,” he said. “This is something to pay attention to.”

Risky Investment Vehicle With High Yields Gains Prominence

Congress and investors seem to love investment firms known as business development companies.

The appeal is that this kind of vehicle may be the new private equity, one that is open to the small investor. But are business development companies simply too risky for the public markets?

Despite being around for years, these companies are suddenly hot. They are essentially publicly traded private equity vehicles, but they are different than companies like the Blackstone Group or the Carlyle Group, where investors own shares in the management companies and not in the funds themselves. Instead, with business development companies, investors get to buy a piece of the fund reaping the full returns of its investments instead of simply the management company’s share.

The reason Blackstone and Carlyle are public but their funds are not is the Investment Company Act of 1940, which prevents private equity funds from listing on exchanges. The law prohibits publicly traded investment funds from charging incentive compensation, taking on excessive leverage and investing in illiquid assets, all things that private equity funds do. The result is that the average investor has no ability to access the higher historical returns of private equity funds and is stuck investing in mutual funds.

That is, until Congress enacted an exception to these rules with the Small Business Incentive Act of 1980. That law allowed the public listing of what were then known as venture capital companies, which Congress renamed business development companies.

These publicly listed companies could do all the things that private equity funds could not do as public funds, provided they bought securities issued mostly by private and small companies. In connection with these investments, business development companies were also required to provide managerial advice to the companies in which they invested.

Some regulatory requirements still apply, such as a limit that no more than 5 percent of the business development company’s funds can be in any one investment and a requirement that for every dollar borrowed, the company must have $2 of assets. Over all, though, these companies were liberated from the Investment Company Act’s more copious regulatory requirements.

In the years after passage of the Small Business Incentive Act, business development companies largely flew under the radar. Their numbers were few and they were mostly known because of David Einhorn’s 2008 book, “Fooling Some of the People All of the Time: A Long Short Story.” The book detailed his campaign, starting in 2002, against the business development company Allied Capital.

While Mr. Einhorn was battling Allied, something funny happened. Private equity and other financiers began to see the business development business as a chance to replicate their compensation and support their business model. Financiers could set up a captive business development company and provide it management services in exchange for their incentive fee of up to 20 percent of the profits.

The biggest business development company these days is Ares Capital, an affiliate of Ares Management, the alternative investment firm that recently bought Neiman Marcus. Another is KCAP Financial, formerly Kohlberg Capital, which was started by an affiliate of the private equity firm Kohlberg & Company. Today, there are more than 40 business development companies with $40 billion in assets and $25 billion in market capitalization.

But the business development company has changed from Congress’s original vision. Instead of investing in equity, the companies invest largely in the debt of private companies. Different companies specialize in different kinds of debt, but the mainstay has been mezzanine debt and collateralized loan obligations (pools of leveraged loans). This debt is often issued in connection with private equity buyouts and is of the riskier ilk.

This makes business development companies a friendly cousin to true private equity funds, investing in their debt and earning high-dividend yields that average 7 to 8 percent and can run into the double digits. The dividends are a result of tax requirements. Business development companies are required to pay out 90 percent of their income every year to keep their tax-free status. The company does not pay taxes, but investors pay at their own individual rate.

It is this phenomenal yield that is driving growth. In the last three years, there have been 15 initial public offerings by business development companies, raising $1.47 billion, according to Dealogic. After all, where else can you earn this type of money?

There is no free lunch on Wall Street, however.

Business development companies have been criticized for being too risky, a fact reflected in the high yield. Let’s face it: Leveraging a portfolio even modestly to invest in illiquid debt securities of businesses is bound to be risky. During the financial crisis, the stocks of business development companies cratered, and dividends were slashed. Many of these companies were forced into workouts with their lenders. Still, despite the turmoil, no business development company went bankrupt.

Because of the risks, the Financial Industry Regulatory Authority placed the business development company on its list of potentially unsuitable investments for 2013, along with leveraged loans and municipal securities.

The investment vehicles still have fans in Congress. Congressional hearings were held this month on legislation that was characterized as a JOBS Act 2.0. Congress is considering freeing the business development companies from further regulation. Leverage ratios would be relaxed to allow more borrowing and allow the companies to invest in a broader array of companies.

The legislative turn would make these companies riskier, but their executives have also learned from the financial crisis. They have tried to stop depending on warehouse loans from banks that can be cut off at any time. The consequence is that many are issuing so-called baby bonds, which is longer-term financing that can’t be ended immediately in a crisis. Ares Capital recently closed on a $600 million five-year bond issue, showing the incredible potential of these companies to access the financial markets.

Business development companies are at a fork in the road. They are not only pushing for new legislation but working on new vehicles that actually invest in venture capital equity.

All of this raises the issue of risk and what is appropriate for the retail investor. Small investors can’t put money in true private equity funds but can invest in business development companies. The wealthy, however, can invest in private equity funds and hedge funds across the board.

One thing that is clear, though, is that if another financial crisis were to erupt, business development companies would be on the front line. These companies may also be subject to huge interest rate fluctuations in ways that make them even riskier than private equity funds. That’s one reason Finra says this is not for the average investor.

If this is true, why even allow them to be listed? Or, alternately, why not allow the funds of private equity companies to be listed if business development companies are acceptable?

Business development companies are clearly on the rise, but before Congress begins to loosen regulation, it might do better to think about the bigger question: How much risk should common investors be allowed to take?

Alfred Feld, Goldman’s Longest Serving Employee, Dies at 98

Alfred Feld, the longest serving employee at Goldman Sachs, with more than 80 years of service at the Wall Street bank, died on Monday in Palm Beach, Fla. He was 98.

Mr. Feld was listed as a Goldman employee up until his death, although in recent years he came to work infrequently. Earlier this year, he was honored by Goldman in a celebration at the firm.

His eight decades at Goldman spanned enormous change.  When he started at the firm, in 1933, the country was still feeling the effects of the Great Depression. At the time,  he said in a Wall Street Journal interview in 2003, his boss told him: “Things are so bad here there is only one way they can go, and that is up.”

Mr. Feld started out at Goldman as a messenger in the mail department making $624 a year. He was quickly promoted to office boy for the five partners of the firm. In 1936 he was promoted to research analyst, covering the railroad industry and 12 years later he came a stock broker.

He worked for a number of Goldman chiefs, from Sidney Weinberg to Gus Levy and in later years, Henry M. Paulson Jr. During his years at Goldman, the firm grew from a place known primarily for giving advice on mergers and acquisitions to companies like Ford Motor and Sears to a trading power house. It went public in 1999 and weathered the financial crisis better than most of its rivals, despite widespread criticism it did so at the expense of its clients, an allegation it denies.

While the financial markets grew immensely complicated in Mr. Feld’s lifetime, he tended to keep his investment advice simple, favoring single-name stocks, clients say. “I never understood tech,” he said in the 2003 article.

“His reputation for sound and conservative client coverage was widely known, and he advised some of the firm’s most significant relationships, many of whom have transitioned through multiple generations,” said Lloyd C. Blankfein, the firm’s chief executive officer, and Gary D. Cohn, Goldman’s president, in a memo sent today to employees.

Mr. Feld is survived by a daughter, Marjorie, and a son, Arthur  - both of whom work in the financial services industry. He also has grandchildren and a sister, Dorothy Fishman. His wife, Mildred,  died in 1983.

Here is a copy of the memo from Mr. Blankfein and Mr. Cohn:

We are deeply saddened to inform you that Alfred Feld passed away last night at the age of 98, in Palm Beach. Al was our longest-serving employee, having recently celebrated his 80th year with the firm.

Al joined Goldman Sachs on July 10, 1933 in the firm’s offices at 30 Pine Street, as an office boy. He was 18 years old. At the time, the firm comprised 200 people, including five partners. Al attended night school to earn his BS in accounting in 1936 and his MBA in 1939 from New York University, and joined the Research Department, covering the mining industry initially and then the railroad industry.

In 1942, Al was called to serve in the US Army in World War II and returned to the firm in 1948 to join our first retail securities sales group, selling stocks and bonds to individual and institutional clients. In the mid-1950s, when Goldman Sachs became the first firm on Wall Street to set up a sales group dedicated to institutional investors, Al continued to focus on individual clients, becoming part of what is now Private Wealth Management.

Al was a participant in over half of our firm’s 144-year history and witnessed some of our most important developments, including the codification of our Business Principles in 1979. He embodied many of these principles, especially the first one which states that our clients’ interests always come first. His reputation for sound and conservative client coverage was widely known, and he advised some of the firm’s most significant relationships, many of whom have transitioned through multiple generations. He was also an active and tireless mentor to our people, and we have been privileged to benefit from his wisdom, leadership and perspective over the last eight decades.

Al is survived by his daughter Marjorie and son Arthur. His wife Mildred passed away in 1983.
A funeral will be held tomorrow at 10:00 a.m. at Star of David Funeral Chapel of the Palm Beaches, 9321 Memorial Park Road, West Palm Beach, Florida, 33412. Charitable donations in Al’s memory can be made to The Mission Continues.

Please join us in recognizing Al’s remarkable service to Goldman Sachs, its clients and people, and in extending our deepest condolences to his family.

Lloyd C. Blankfein
Gary D. Cohn

S.E.C. Takes Aim at Swiss Company and Detroit Money Market Fund

The Securities and Exchange Commission announced a pair of enforcement actions on Tuesday, accusing a Swiss company of bribery and a Detroit money market fund of fraud.

In the bribery case, the S.E.C. filed civil charges against Weatherford International, an oil field services company in Switzerland with a significant presence in Houston. To resolve the case, Weatherford struck a $250 million settlement with the S.E.C. as well as with the Justice department’s fraud section and other government agencies.

The authorities accused the company of wide-ranging business violations overseas, including bribing officials in Africa and the Middle East to win lucrative business contracts there. Weatherford made more than $59.3 million in profits from business obtained through the improper payments, according to the S.E.C.

The misconduct came in many forms and occurred from “at least” between 2002 and 2011, according to the agency.

Weatherford, for example, offered “kickbacks in Iraq” to obtain United Nations Oil-for-Food contracts, a humanitarian program that was rife with corruption.

The company also covered travel and entertainment expenses for potential clients, including a soccer World Cup trip for two Algerian officials and a religious trip taken by a Saudi Arabian official and his family. In one instance, Weatherford picked up the tab for the honeymoon of an Algerian official’s daughter.

“Whether the money went to tax auditors in Albania or officials at the state-owned oil company in Angola, bribes and improper payments were an accustomed way for Weatherford to conduct business,” Kara N. Brockmeyer, an S.E.C. official who helped oversee the case, said in a statement. “While the profits may have seemed bountiful at the time, the costs far outweigh the benefits in the end as coordinated law enforcement efforts have unraveled the widespread schemes and heavily sanctioned the misconduct.”

To cover up various payments, the S.E.C. said, Weatherford falsified its internal records and used code names like ‘Dubai across the water,’ imitating tactics from Hollywood dramas. The S.E.C. also accused Weatherford of hiding transactions with Cuba, Iran and Syria â€" dealings that violated United States sanctions laws but earned the company more than $30 million.

In a statement, Weatherford’s chairman, president and chief executive, Bernard J. Duroc-Danner, said the company was moving forward “fully committed to a sustainable culture of compliance.”

The case relies on the Foreign Corrupt Practices Act, a 1977 law that prohibits United States companies from improperly greasing the wheels to gain overseas business. The S.E.C. has increasingly enforced the law in recent years, and created a unit dedicated to F.C.P.A. cases. Ever since, there has been an influx of investigations, including an inquiry into JPMorgan Chase’s decision to hire the sons and daughters of China’s ruling elite.

The S.E.C. also announced civil fraud charges against Ambassador Capital Management, a money market fund based in Detroit, and Derek Oglesby, a portfolio manager, for failing to fully disclose and limit portfolio risk.

The agency argued that Ambassador misled the trustees of its main money market fund about the credit worthiness of its securities. Those securities, the S.E.C. said, frequently exceeded Ambassador’s own guidelines for credit risk.

In addition, the S.E.C. says that Ambassador misled the trustees about exposure to institutions in the countries using the euro. Many money market funds in the United States experienced redemptions of 20 percent or more during the sovereign debt crisis in the summer of 2011, according to the agency.

Money market funds are considered fairly stable because they only invest in highly safe securities that typically yield low interest rates. The performance of Ambassador’s main fund consistently exceeded the market average, alerting regulators that there could be too much risk in the company’s portfolio.

“Money market fund managers must not hide the ball from a fund’s board,” George S. Canellos, co-director of the S.E.C.’s enforcement division, said in a statement.

Marshall S. Sprung, co-chief of the S.E.C. unit that oversaw the case, added that “deviations can have serious consequences for pricing of fund shares and how the fund markets itself to investors.”

Ambassador and Mr. Oglesby did not respond to requests for comment.

In Silicon Valley, Partying Like It’s 1999 Again

PALO ALTO, Calif. â€" These are fabulous times in Silicon Valley.

Bill Gurley's Benchmark is the venture capital darling of the moment. Ten of its companies have gone public in two years, with another half-dozen on the way.

 Mere youths, who in another era would just be graduating from college or perhaps wondering what to make of their lives, are turning down deals that would make them and their great-grandchildren wealthy beyond imagining. They are confident that even better deals await.

“Man, it feels more and more like 1999 every day,” tweeted Bill Gurley, one of the valley’s leading venture capitalists. “Risk is being discounted tremendously.”

That was in May, shortly after his firm, Benchmark, led a $13.5 million investment in Snapchat, the disappearing-photo site that has millions of adolescent users but no revenue. Snapchat, all of two years old, just turned down a multibillion-dollar deal from Facebook and, perhaps, an even bigger deal from Google. On paper, that would mean a fortyfold return on Benchmark’s investment in less than a year.

Benchmark is the venture capital darling of the moment, a backer not only of Snapchat but the photo-sharing app Instagram (sold for $1 billion to Facebook), the ride-sharing site Uber (valued at $3.5 billion) and Twitter ($22 billion), among many others. Ten of its companies have gone public in the last two years, with another half-dozen on the way. Benchmark seems to have a golden touch.

That is generating a huge amount of attention and an undercurrent of concern. In Silicon Valley, it may not be 1999 yet, but that fateful year â€" a moment when no one thought there was any risk to the wildest idea â€" can be seen on the horizon, drifting closer.

No one here would really mind another 1999, of course. As a legendary Silicon Valley bumper sticker has it, “Please God, just one more bubble.” But booms are inevitably followed by busts.

“All business activity is driven by either fear or greed, and in Silicon Valley we’re in a cycle where greed may be on the rise,” said Josh Green, a venture capitalist who is chairman of the National Venture Capital Association.

For Benchmark, that means walking a narrow line between hyping the future â€" second nature to everyone in Silicon Valley â€" and overhyping it.

Opinions differ here about exactly what stage of exuberance the valley is in. “Everyone feels like the valley has been in a boom cycle for quite some time,” said Jeremy Stoppelman, the chief executive of Yelp. “That makes people nervous.”

John Backus, a founding partner with New Atlantic Ventures, believes it’s more like 1996: Things are just ramping up.

The numbers back him up. In 2000, just as the dot-com party was ending, a record number of venture capitalists invested a record amount of money in a record number of deals. Entrepreneurs received over $100 billion, a tenfold rise in dollars deployed in just four years.

Much the money disappeared. So, eventually, did many of the entrepreneurs and most of the venture capitalists.

Recovery was fitful. Even as the stock market soared since the recession, the number of venture deals done and money invested fell in 2012 from 2011, and then fell again in the first half of this year. Predictions of the death of venture capital have been plentiful.

For one thing, it takes a lot less money to start a company now than it did in 1999. When apps like Instagram and Snapchat catch on, they do so in a matter of months. V.C.’s are no longer quite as essential, and they know it. Just last week, Tim Draper, a third-generation venture capitalist with Draper Fisher Jurvetson, said he was quitting to devote his time to his academy for young entrepreneurs.

But there are signs of life. Funding in the third quarter suddenly popped, up 17 percent from 2012. “I think this is the best time we’ve seen since 1999 to be a venture capitalist,” Mr. Backus said. He expects the returns on venture capital, which have been miserable since the bust, to greatly improve this year.

“Everyone talks about the mega-win â€" who was in Facebook, Twitter, Pinterest,” he said. “But the bread and butter of venture firms is not those multibillion exits but the $200 million deals, and there are a lot of those.” As an example he pointed to GlobalLogic, which operates design and engineering centers. It was acquired in October in a deal that returned $75 million on New Atlantic’s $5 million investment.

Better returns would influence pension firms and other big investors to give more money to the V.C.’s, which would in term ramp up the number of deals.

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A More Sensible Suit Deal

Turning a suit deal inside out has revealed a silver lining. After fending off a hostile bid from Jos. A. Bank Clothiers, Men’s Wearhouse is now proposing to buy its smaller rival for $1.2 billion. The estimated cost savings could cover nearly the entire purchase price, and the combined company would be less indebted. Structured this way, the transaction is more sensible.

Jos. A. Bank, an American purveyor of formal, business and casual clothing, put forward a $2.3 billion unsolicited offer for Men’s Wearhouse in early October, just months after its quarry had ousted its founder, George Zimmer. To finance the deal, Jos. A. Bank needed an outside investor and heavy borrowing that would have left the merged entity with debt equal to 4.5 times earnings before interest, taxes, depreciation and amortization. The company withdrew the offer last week after meeting heavy resistance.

With Men’s Wearhouse as the buyer, the deal takes on a completely new look. For starters, it would require less leverage â€" something closer to 2.8 times Ebitda. That is partly feasible because Men’s Wearhouse will use some $300 million in cash and equivalents on Jos. A. Bank’s balance sheet to pay for the merger.

Second, while Jos. A. Bank didn’t detail synergies, Men’s Wearhouse reckons they can be worth at least $100 million and as high as $150 million a year thanks to efficiencies in purchasing power, marketing practices and management structures. Taxed and capitalized, at the upper end of the range those would be worth about $1.1 billion, or just shy of Jos. A. Bank’s enterprise value.

Both sides clearly think they’d look better paired. In fact, the chairman of Jos. A. Bank Robert Wildrick told the Wall Street Journal last month that he’d even be receptive to being acquired if Men’s Wearhouse would pay the same 42 percent premium as his company was offering. The table-turning bid does that, sort of.

Men’s Wearhouse is offering a 32 percent premium to Jos. A. Bank’s closing share price on Oct. 8, the day before Jos. A. Bank proposed to buy Men’s Wearhouse. But the offer is a 45 percent premium to its enterprise value. There’s at least enough to work with to sew up a deal soon.

Jeffrey Goldfarb is an assistant editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

A More Sensible Suit Deal

Turning a suit deal inside out has revealed a silver lining. After fending off a hostile bid from Jos. A. Bank Clothiers, Men’s Wearhouse is now proposing to buy its smaller rival for $1.2 billion. The estimated cost savings could cover nearly the entire purchase price, and the combined company would be less indebted. Structured this way, the transaction is more sensible.

Jos. A. Bank, an American purveyor of formal, business and casual clothing, put forward a $2.3 billion unsolicited offer for Men’s Wearhouse in early October, just months after its quarry had ousted its founder, George Zimmer. To finance the deal, Jos. A. Bank needed an outside investor and heavy borrowing that would have left the merged entity with debt equal to 4.5 times earnings before interest, taxes, depreciation and amortization. The company withdrew the offer last week after meeting heavy resistance.

With Men’s Wearhouse as the buyer, the deal takes on a completely new look. For starters, it would require less leverage â€" something closer to 2.8 times Ebitda. That is partly feasible because Men’s Wearhouse will use some $300 million in cash and equivalents on Jos. A. Bank’s balance sheet to pay for the merger.

Second, while Jos. A. Bank didn’t detail synergies, Men’s Wearhouse reckons they can be worth at least $100 million and as high as $150 million a year thanks to efficiencies in purchasing power, marketing practices and management structures. Taxed and capitalized, at the upper end of the range those would be worth about $1.1 billion, or just shy of Jos. A. Bank’s enterprise value.

Both sides clearly think they’d look better paired. In fact, the chairman of Jos. A. Bank Robert Wildrick told the Wall Street Journal last month that he’d even be receptive to being acquired if Men’s Wearhouse would pay the same 42 percent premium as his company was offering. The table-turning bid does that, sort of.

Men’s Wearhouse is offering a 32 percent premium to Jos. A. Bank’s closing share price on Oct. 8, the day before Jos. A. Bank proposed to buy Men’s Wearhouse. But the offer is a 45 percent premium to its enterprise value. There’s at least enough to work with to sew up a deal soon.

Jeffrey Goldfarb is an assistant editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

In Silicon Valley, Partying Like It’s 1999 Again

PALO ALTO, Calif. â€" These are fabulous times in Silicon Valley.

Bill Gurley's Benchmark is the venture capital darling of the moment. Ten of its companies have gone public in two years, with another half-dozen on the way.

 Mere youths, who in another era would just be graduating from college or perhaps wondering what to make of their lives, are turning down deals that would make them and their great-grandchildren wealthy beyond imagining. They are confident that even better deals await.

“Man, it feels more and more like 1999 every day,” tweeted Bill Gurley, one of the valley’s leading venture capitalists. “Risk is being discounted tremendously.”

That was in May, shortly after his firm, Benchmark, led a $13.5 million investment in Snapchat, the disappearing-photo site that has millions of adolescent users but no revenue. Snapchat, all of two years old, just turned down a multibillion-dollar deal from Facebook and, perhaps, an even bigger deal from Google. On paper, that would mean a fortyfold return on Benchmark’s investment in less than a year.

Benchmark is the venture capital darling of the moment, a backer not only of Snapchat but the photo-sharing app Instagram (sold for $1 billion to Facebook), the ride-sharing site Uber (valued at $3.5 billion) and Twitter ($22 billion), among many others. Ten of its companies have gone public in the last two years, with another half-dozen on the way. Benchmark seems to have a golden touch.

That is generating a huge amount of attention and an undercurrent of concern. In Silicon Valley, it may not be 1999 yet, but that fateful year â€" a moment when no one thought there was any risk to the wildest idea â€" can be seen on the horizon, drifting closer.

No one here would really mind another 1999, of course. As a legendary Silicon Valley bumper sticker has it, “Please God, just one more bubble.” But booms are inevitably followed by busts.

“All business activity is driven by either fear or greed, and in Silicon Valley we’re in a cycle where greed may be on the rise,” said Josh Green, a venture capitalist who is chairman of the National Venture Capital Association.

For Benchmark, that means walking a narrow line between hyping the future â€" second nature to everyone in Silicon Valley â€" and overhyping it.

Opinions differ here about exactly what stage of exuberance the valley is in. “Everyone feels like the valley has been in a boom cycle for quite some time,” said Jeremy Stoppelman, the chief executive of Yelp. “That makes people nervous.”

John Backus, a founding partner with New Atlantic Ventures, believes it’s more like 1996: Things are just ramping up.

The numbers back him up. In 2000, just as the dot-com party was ending, a record number of venture capitalists invested a record amount of money in a record number of deals. Entrepreneurs received over $100 billion, a tenfold rise in dollars deployed in just four years.

Much the money disappeared. So, eventually, did many of the entrepreneurs and most of the venture capitalists.

Recovery was fitful. Even as the stock market soared since the recession, the number of venture deals done and money invested fell in 2012 from 2011, and then fell again in the first half of this year. Predictions of the death of venture capital have been plentiful.

For one thing, it takes a lot less money to start a company now than it did in 1999. When apps like Instagram and Snapchat catch on, they do so in a matter of months. V.C.’s are no longer quite as essential, and they know it. Just last week, Tim Draper, a third-generation venture capitalist with Draper Fisher Jurvetson, said he was quitting to devote his time to his academy for young entrepreneurs.

But there are signs of life. Funding in the third quarter suddenly popped, up 17 percent from 2012. “I think this is the best time we’ve seen since 1999 to be a venture capitalist,” Mr. Backus said. He expects the returns on venture capital, which have been miserable since the bust, to greatly improve this year.

“Everyone talks about the mega-win â€" who was in Facebook, Twitter, Pinterest,” he said. “But the bread and butter of venture firms is not those multibillion exits but the $200 million deals, and there are a lot of those.” As an example he pointed to GlobalLogic, which operates design and engineering centers. It was acquired in October in a deal that returned $75 million on New Atlantic’s $5 million investment.

Better returns would influence pension firms and other big investors to give more money to the V.C.’s, which would in term ramp up the number of deals.

Men’s Wearhouse Dusts Off the Pac Man Defense

Deal aficionados have a Thanksgiving present. Men’s Wearhouse has turned the tables on Jos. A. Bank Clothiers, offering to acquire the company, which had previously bid to acquire Men’s Wearhouse. What fun!

Men’s Wearhouse’s Pac Man defense is a beloved tactic that first arose in the 1980s during the legendary Martin Marietta-Bendix battle. Since then, the Pac Man defense has occasionally been employed by the targets in hostile battles. It was last seen more than 13 years ago and involved a counteroffer by Elf Aquitaine for Total Fina S.A. in 1999 and a counteroffer by the Chesapeake Corporation for Shorewood Packaging in 2000. The typical result of these battles is a combination of the warring companies. The only question is who becomes the management and which set of shareholders, if any, receive a premium.

In this vein, Men’s Wearhouse’s bid is an acknowledgment that the two companies should be combined. And like other Pac Man situations, the question is who is the better acquirer, and perhaps even more important, which management team should run the combined operation.

A Pac Man defense has loomed in the background since Jos. A. Bank first bid. At the time, Jos. A. Bank’s chairman, Robert Wildrick, told The Wall Street Journal that Jos. A. Bank would be “receptive to being bought instead by Men’s Wearhouse if it would pay the same 42 percent premium Jos. A. Bank says it is offering.” Even Ricky Sandler, the chief executive of Eminence Capital, which owns 9.8 percent of Men’s Wearhouse and is agitating for a deal, has stated that the companies are a natural fit that could create up to $2 billion of value. Shares of Men’s Wearhouse are already up nearly 10 percent, perhaps in support of this argument, and those of Jos. A. Bank are up 11 percent.

The bid by Men’s Wearhouse is an acknowledgment of this fact and highlights that Men’s Wearhouse is arguably better positioned as the acquirer. Men’s Wearhouse is bigger, with a market capitalization of $2.4 billion compared with $1.57 billion for Jos. A. Bank. Men’s Wearhouse’s bid also knocks Golden Gate Capital out of the bidding. Golden Gate was Jos. A. Bank’s co-bidder, which agreed to put up $250 million in additional financing. And the cost to Men’s Wearhouse to finance a Jos. A. Bank offer would be lower because of decreased leverage and less borrowing. Men’s Wearhouse highlighted this point in its press release, noting that its bid was not contingent on financing.

So given Men’s Wearhouse’s better footing, how does this play out?

Jos. A. Bank has no choice but to talk to Men’s Wearhouse, given that the company has acknowledged that a combination is a good idea. This is also not a case where either company goes hostile; the pressure from shareholders will be on both to reach a deal. The question thus becomes whether this turns into a merger of equals, in which the companies combine through a stock-for-stock exchange with a premium. But Men’s Wearhouse will most likely resist such a maneuver because it is the bigger company.

These negotiations will turn on which company is the better acquirer and which management team will prevail. Men’s Wearhouse acknowledged this in its press release, stating that “our experienced management team is best positioned to execute the integration of our companies” but that the exact management of the companies was up for discussion.

Going forward, the questions of management and allocating a premium will become paramount. No doubt Eminence will want to have a say about this, but there is substantial overlap in the shareholdings of each company. According to Capital IQ, BlackRock owns about 9 percent of each company and Vanguard about 6 percent. For the institutions that own shares in both companies, a high premium may actually be a disadvantage. In either case, it is also another reason for a combination, particularly with up to $2 billion of value that can be unlocked.

Let the negotiations commence.

Take-Two Interactive Software Buys Back Icahn Stake

Take-Two Interactive Software announced on Tuesday that it had bought back the stake held by Carl C. Icahn, compelling the resignations of three board members he was allowed to appoint.

Take-Two, the video game publisher behind the “Grand Theft Auto” series, agreed to purchase 12.02 million shares from Mr. Icahn at $16.93 each, the closing price on Monday, for a total of $203.5 million. According to Mr. Icahn’s purchase covenants, the three board members designated by Mr. Icahn â€" Brett Icahn, Mr. Icahn’s son; Jim Nelson; and SungHwan Cho â€" stepped down on Tuesday. The board now comprises five members.

Mr. Icahn, the activist investor who has rattled the boards of companies including Lions Gate Entertainment and Apple, disclosed a stake of more than more than 11 percent in Take-Two in 2009. That investment fueled speculation that Mr. Icahn might push for a sale of the company.

“I think the logical jump is that there’s not an M.&A. transaction in Take-Two’s future,” Todd Mitchell, an analyst with Brean Capital, said of the development. “I think that when investors saw Icahn get involved, they thought he would do something that would actually lead to the sale of the company, and I don’t think that’s the case.”

Take-Two bought out Mr. Icahn’s stake as part of its continuing share repurchase program, according to a company statement on Tuesday. The company has already repurchased 4.2 million shares of stock as part of a 7.5 million share buyback plan.

“This share repurchase reflects our confidence in the company’s outlook for record results in fiscal 2014 and continued non-GAAP profitability every year for the foreseeable future,” Strauss Zelnick, the chairman and chief executive of Take-Two, said in the statement.

A spokesman for Take-Two declined to comment beyond the press release.

Mr. Icahn paid just less than $8 on average for his original purchase of 9.15 million shares in 2009. His stake peaked in 2010 at 11.58 million shares, but he sold some of that down in subsequent months. Mr. Icahn made his last big purchase of Take-Two stock at the end of last year, buying 4.4 million shares for about $11 each. On those shares, he would have made about $26 million from Tuesday’s sale.

Mr. Icahn did not return a call seeking comment.

LionTree Advisors and Willkie Farr & Gallagher L.L.P. advised Take-Two.

Activist Funds and Board Influence

“As activist hedge funds continue to get more of their preferred candidates on the boards of companies, some of the hedge funds are angling for certain directors to be paid twice: once by the company, and once by the hedge funds that supported their candidacy,” DealBook’s David Gelles reports.

“In two efforts earlier this year, dissident candidates up for election at the Hess Corporation and the Canadian fertilizer company Agrium â€" two companies targeted by activists â€" were offered large bonuses by the hedge funds that nominated them. At Hess, Elliott Management nominated five candidates to the oil company’s 14-member board, saying current management had underperformed. And at Agrium, Jana Partners nominated five directors to a 12-person board. In both cases, the directors nominated by the hedge funds would have received their bonuses only if the companies’ stock rose sharply.

“None of the activist directors joined the boards with such arrangements in place. The dissident slate at Agrium was rejected, and while some new directors joined the board at Hess, they did so without the extra compensation. Nonetheless, the prospect of such incentives upset the stuffy world of corporate governance. And the simmering dispute around director compensation from third parties is the latest front in the growing war of influence being waged between activist hedge funds and corporate boards.”

THE PARIS HILTON OF CURRENCY  | “How can bitcoin be anything but a passing fad? It seems you can’t open a newspaper or read a website these days without hearing about the super-yet-mysterious virtual currency known as bitcoin,” Andrew Ross Sorkin writes in the DealBook column. “Today bitcoin goes for $800 each, depending on the day. And the value can swing by more than $100 a day, if not more.”

“If it all feels a bit like a 1999-style craze, that’s because it is. Peter Leeds of the Penny Stock newsletter put it to me this way: ‘In a matter of months you won’t be hearing about it. It will go the same way of Paris Hilton. People will move on to the next thing.’” Mr. Sorkin continues: “There seems to be a disconnect between the idea of what makes a great investment â€" or a great speculation â€" and a new currency that will be universally accepted.”

ON THE AGENDA  |  Data on housing starts in October is released at 8:30 a.m. The Standard & Poor’s/Case-Shiller home price index for September is out at 9 a.m. Barnes & Noble and Tiffany & Company report earnings before the market opens, while Hewlett-Packard reports earnings this evening. Alan Greenspan is on Fox Business Network at 11 a.m.

CLIENT CONFLICTS UNDERMINE MERGER OF 2 LAW FIRMS  | Orrick, Herrington & Sutcliffe and Pillsbury Winthrop Shaw Pittman were in advanced merger talks that would have created one of the country’s 10 largest firms with about 1,700 lawyers â€" in the biggest law firm merger of the year. But on Monday, the firms issued a joint statement that the deal was off, DealBook’s Peter Lattman reports.

“We mutually determined that we will not be able to proceed due to prospective client conflicts that we have not been able to resolve, notwithstanding each firm’s best efforts,” the statement said. Mr. Lattman writes: “Client conflicts often scuttle deals between large law firms. With Orrick and Pillsbury, there were a number of issues that the two firms were unable to resolve. Orrick, for example, has a large public finance practice, and some of those representations clashed with Pillsbury’s corporate clients.”

Mergers & Acquisitions »

Bayer in Bid to Acquire Norwegian Cancer Drug Firm  |  The offer by Bayer of Germany is 27 percent above Algeta’s closing share price on Monday. The companies are partners in a new prostate cancer drug. DealBook »

Jones Energy Buys Assets in Anadarko Basin  |  The deal comes as exploration and production companies are snapping up assets amid a new energy boom. It is the largest deal yet for Jones Energy, which went public earlier this year. DealBook »

Intel Looking to Sell Pay-TV Unit  |  Bloomberg News reports: “Intel Corp. is asking about $500 million for OnCue, the online pay-TV service that the world’s largest chip maker developed before dialing back its ambitions, according to people with knowledge of the process.” BLOOMBERG NEWS

BlackBerry Chief Removes Some Senior Executives  |  The New York Times reports: “Gone from the company are Kristian Tear, the chief operating officer, and Frank Boulben, the chief marketing officer. In addition, Brian Bidulka has been replaced as chief financial officer, although he will remain with BlackBerry for the balance of its fiscal year as an adviser.” NEW YORK TIMES

Apple Buys 3-D Sensor Company PrimeSense  |  PrimeSense’s innovations contributed to the early development of Kinect, Microsoft’s motion-sensing camera, and Apple has demonstrated interest in the technology. DealBook »

INVESTMENT BANKING »

How the Pritzker Empire Broke Up  |  “We didn’t do it perfectly. It wasn’t Camelot,” Thomas Pritzker told The Wall Street Journal of the yearslong breakup of his family’s business empire. WALL STREET JOURNAL

Standard & Poor’s Ratings Names President  |  Neeraj Sahai, who has been head of Citigroup’s securities and fund services business since 2005, will succeed Douglas Peterson, who became president and chief executive of McGraw Hill Financial. DealBook »

Final Bidders Line Up for Societe Generale Unit in Asia  |  DBS Group Holdings of Singapore and ABN Amro are among the parties placing final bids for the Asian private bank unit of Société Générale, in a roughly $400 million deal, Reuters reports. REUTERS

Bank of Cyprus Hires a Former R.B.S. Executive  |  Euan Hamilton is the second former executive of the Royal Bank of Scotland to help lead the restructuring of the Bank of Cyprus. REUTERS

PRIVATE EQUITY »

Bain Capital Is Said to Be Looking to Sell Applied Systems  |  Bain Capital “is in talks with other private equity firms to sell its insurance software provider Applied Systems Inc. for more than $1 billion, three people familiar with the matter said on Monday,” Reuters reports. REUTERS

Carlyle Raises $13 Billion for U.S. Buyouts  |  The Carlyle Group said on Monday that it had raised its sixth fund dedicated to buyouts in the United States - its first such fund since the dark days of 2008. DealBook »

HEDGE FUNDS »

At an SAC Parade Party, All Blown Up but Nowhere to Go  |  At a balloon-inflation party sponsored by SAC Capital Advisors on Saturday before an annual parade in Stamford, Conn., the mood was decidedly low-key. DealBook »

Former Goldman Trader Plans Hedge Fund Focused on Asia  |  Reuters reports: “Former Goldman Sachs Group Inc. trader Andrew Wang is preparing to launch an Asia hedge fund that will bet mainly on the coveted combination of Chinese and Japanese shares, people familiar with the matter said.” REUTERS

I.P.O./OFFERINGS »

Chrysler’s Stock Sale Is Delayed Until 2014  |  The initial stock offering for Chrysler could take place in the first quarter of 2014, but it is complicated because of negotiations by Fiat to buy a 41.5 percent stake held by the health care trust of the United Automobile Workers. DealBook »

In Delay of Chrysler I.P.O., Fiat May Have Gained Upper Hand  |  The autoworkers’ union probably needs Chrysler to be valued at $18 billion to make an initial public offering worthwhile, but recent price talk has fallen short of that, Antony Currie of Reuters Breakingviews writes. REUTERS BREAKINGVIEWS

A Top Nasdaq Executive Steps Down  |  Eric Noll, who oversaw Nasdaq’s trading operations in the United States, was seen as one of the leading candidates to succeed Robert Greifeld as chief executive. DealBook »

VENTURE CAPITAL »

F.D.A. Demands a Halt to a DNA Test Kit’s Marketing  |  In a crackdown on genetic testing offered directly to consumers, the agency is demanding that 23andMe immediately cease marketing its main DNA service until it receives marketing clearance, reports Andrew Pollack for The New York Times. DealBook »

LEGAL/REGULATORY »

China Plans to Limit Lending Among Banks  |  The Financial Times reports: “Chinese regulators are set to place new limits on interbank loans after banks exploited a loophole to ratchet up leverage in the financial system, according to draft rules.” FINANCIAL TIMES

Two Reports Assail R.B.S. Lending Practices  |  One report said the bank had pushed some companies into serious financial difficulties, while the other said it was not doing enough to lend to small businesses. DealBook »

When Good People Do Bad Things  |  Judge Alvin Hellerstein of Federal District Court has raised the issue of why successful people act in ways that put their careers at risk, Peter J. Henning writes in the White Collar Watch column. DealBook »

What the Convertible Debt Boom Means for Bankruptcy  |  Distressed companies will be able to coast for a while on their existing funding. But eventually all that debt will come due, and then we’ll find out what happens, Stephen J. Lubben writes in the In Debt column. DealBook »

Carlyle to Buy Investor in Hedge Funds

The Carlyle Group said on Tuesday that it would acquire the Diversified Global Asset Management Corporation, an independent hedge fund manager, the latest push by Carlyle into areas beyond its core leveraged-buyout business.

Carlyle will pay $33 million upfront and up to $70 million over the next seven years, depending on performance, according to a filing the company made with the Securities and Exchange Commission.

Diversified Global handles more than $6.7 billion in assets, according to a statement announcing the acquisition on Tuesday, and will become Carlyle’s fund of hedge funds platform.

The deal is expected to close in February 2014.

“We are focused on providing fund investors with a broad suite of investment options under one roof,” David M. Rubenstein, Carlyle’s co-founder and co-chief executive, said in the statement. “With the D.G.A.M. partnership, Carlyle’s solutions platform is now positioned to offer investors the ability to allocate across alternatives in hedge funds, private equity and real estate.”

News of the purchase came one day after Carlyle announced it had raised a $13 billion fund aimed at leveraged buyouts in the United States. Still, the firm has increasingly diversified into areas beyond traditional private equity. Speaking at DealBook’s recent investment conference, Mr. Rubenstein said more than 15 percent of the company’s staff was now based in China, and the firm has experimented with new business models.

“I think increasingly firms like ours recognize that the classic buyout model isn’t as easy to do as it used to be,” Mr. Rubenstein said. “Virtually every deal we’ve done in China has been a noncontrol deal.”

Of all the private equity firms that have gone public, Carlyle has been one of the most aggressive in adding assets under management through the acquisition of other money-management businesses. This month, Carlyle acquired Metropolitan Real Estate, a global real estate investor. It agreed in 2011 to purchase AlpInvest Partners, a private equity management firm.

The moves have expanded Carlyle’s efforts to provide more customized services to investors, according to a Carlyle spokesman. Diversified Global serves institutional clients with custom-built platforms and tailored advisory and other services.

George Main, Diversified Global’s chief executive, and Warren Wright, its chief investment officer, will remain in their positions after the deal. Mr. Main, Mr. Wright, F. Graham Thouret and Jeff Lucassen founded the firm, which is based in Toronto, in 2004.

Goldman Sachs advised Diversified Global.

Men’s Wearhouse Offers to Buy Jos. A. Bank

Men’s Wearhouse, which had rebuffed takeover efforts by Jos. A. Bank Clothiers, abruptly turned the tables on Tuesday and bid $55 a share in cash to acquire its one-time suitor.

The offer values Jos. A. Bank at $1.5 billion, an 8.7 percent premium over its closing stock price on Monday and 32 percent above its price in October, when it bid for Men’s Wearhouse.

The deal represents the latest effort to combine the two companies but comes after relations have frayed in recent weeks.

“Following Jos. A. Bank’s unsolicited public proposal to acquire Men’s Wearhouse, our board of directors evaluated a number of alternatives to deliver value to our shareholders,” William Sechrest, lead director of the board of Men’s Wearhouse, said in a statement. “After a thorough review, our board concluded that an acquisition of Jos. A. Bank by Men’s Wearhouse has strategic logic and the potential to deliver substantial benefits to our respective shareholders, employees and customers.”

But rather than be bought, it is Men’s Wearhouse and its management team that want to do the shopping.

“We believe we are the right acquirer for this combination and that our experienced management team is best positioned to execute the integration of our companies and achieve the synergies that would result,” Mr. Sechrest said. “We are ready to engage with the Jos. A. Bank’s board immediately.”

Jos. A. Bank made an unsolicited $2.3 billion bid in early October for Men’s Wearhouse, which rejected the offer as highly conditional and said it believed that its own turnaround plan would be better for shareholders.

Jos. A. Bank indicated later that it would consider raising its $48-a-share offer if it were allowed confidential access to Men’s Wearhouse’s books. Men’s Wearhouse again rejected the offer, and Jos. A. Bank withdrew its bid this month, but left the door open for possible talks in the future.

The Men’s Wearhouse offer is not contingent on any financing and will not require additional costly third-party equity commitments, the company said.

Bank of America and JPMorgan Chase are advising Men’s Wearhouse, and Willkie Farr & Gallagher is providing legal advice.

Bain to Sell Insurance Software Company

Applied Systems, a software company that focuses on the insurance industry, said on Tuesday that it had agreed to be acquired by the private equity firm Hellman & Friedman in a deal valued at $1.8 billion.

The company is being acquired from Bain Capital, which purchased it for about $675 million in 2006.

JMI Equity, a private equity firm that focuses on software and technology services businesses, will be investing along with Hellman & Friedman, the company said in a statement. Under the terms of the agreement, members of Applied Systems’ senior management will continue to maintain a significant ownership stake, the statement said.

“All of us at Applied are pleased to be partnering with H&F and JMI Equity as they share our commitment to revolutionize the global business of insurance by investing behind the company’s unique product vision for the benefit of our customers,” Reid French, the chief executive of Applied Systems, said in the statement. “Our senior management team and I are extremely appreciative of Bain Capital’s unwavering support in executing our growth mission over these past seven years. This acquisition represents an endorsement of Applied Systems’ talented employee base, strategic plan and product vision that have made the growth of our company possible.”

Applied Systems, which was founded in 1980 and is based in University Park, Ill., makes software for 12,000 insurance agencies and brokerages and 350 insurers in the United States, Canada and Britain.

“We believe Applied Systems is a uniquely positioned company in the global insurance software market,” David R. Tunnell, managing director of Hellman & Friedman, said in the statement. “It combines the largest user base in the industry with Applied Epic, the fastest growing new agency management system, to be the market leader in insurance technology for deployments both on premises and in the cloud.”

The transaction is expected to be completed in early 2014.

Bayer in Bid to Acquire Norwegian Cancer Drug Firm

LONDON - The Norwegian cancer drug maker Algeta said Tuesday that it has received a preliminary offer to be acquired by the German drug giant Bayer for about $2.4 billion.

In a statement, Algeta said that Bayer had offered to pay 336 Norwegian kroner, or about $55.03, a share and the “discussions are at an early stage.” The offer would represent a 27 percent premium over Monday’s closing price of 264.60 kroner.

“There is no certainty that this preliminary acquisition proposal will lead to a transaction or as to the terms of any such transaction,” the company said.

The companies already are partners in selling the prostate cancer drug Xofigo, which was approved for use by the United States Food and Drug Administration in May. The companies have worked together on developing the drug since 2009.

To combat the rising costs of developing new blockbuster drugs, larger pharmaceutical firms are increasingly entering collaboration agreements or acquiring smaller companies shortly after their drugs are approved for use on the market.

If a deal with Algeta is reached, it would be one of a series of small- to medium-sized acquisitions that Bayer has made in the past year to grow its business.

In June, the company acquired Conceptus, the United States maker of the Essure birth control product, for $1.1 billion. In July, it completed its acquisition of Steigerwald Arzneimittelwerk GmbH, a family owned company that specializes in pharmacy-only herbal medicines.

Shares of Algeta were up 30.3 percent to 344.80 kroner in trading on Tuesday morning.