Buyout Firms See Big Bucks in Some Small Companies
Small companies with swooning stocks sometimes are called Roach Motels -- you know, shareholders can check in, but not out, except at huge losses.</br></br>But some buyout firms now are asking this: Where can I get a room?</br></br>With the Russell 2000 index of smaller stocks having plunged 16.1% since its peak a year ago, a gap has emerged between the market valuations of small and large companies. So buyout firms are starting to pore over financials of distinctly unglamorous small concerns with beaten-down stocks, then bidding to take them private.</br></br>Recently, buyout firms have offered to take private this group of seemingly humdrum stocks: an office-furniture maker, an outdoor-apparel concern, a small hotel company, a furniture-rental firm and a human-resources outsourcing firm.</br></br>Huh? Didn't Wall Street buyout firms make their names a decade ago from glamour buyouts of large conglomerates (see: Kohlberg Kravis Roberts & Co.'s acquisition of RJR Nabisco)?