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Net EffectEarnings. How unusual it felt to have a different culprit to blame for yet another shellacking on Wall Street. Last Wednesday's pullback, painful (and routine) as these sessions have become, lacked a distinct element of previous unravelings: there was no talk of convulsing credit markets. Instead, it was the more mundane issue of soft corporate earnings. Not a good sign, to be sure--earnings are and always will be the straw that stirs the stock-market drink--but at least declining profits are something we've dealt with in the past. TARP, we have not. Now, at the end of the day it doesn't really matter how you got there; a 6% drop is a 6% drop. And, of course, the fiasco we've been dealing with for the past year-and-a-half is a major contributor to why corporate earnings may soon be falling off a cliff. But, as the TV tells us, we need change, so if the laser-like focus on every aspect of the credit storm is diminished a bit maybe that's a good thing. The problem is that there's essentially zero chance of that happening. Indeed, it's this new-found focus on earnings that once again brings us back the insidious nature of our crisis. Credit markets may be in the initial phase of re-opening, and Wachovia's $24 billion loss may have only looked so bad in preparation for its move into the Wells Fargo family, but plenty of reasonable folks think we're still closer to the beginning than the end of this storm. In other words, the damage is done, but it's not done. One of the masterminds of our meltdown, Alan Greenspan, said late last week that it'll take many months and much higher unemployment to get out from under it, and while plenty of his assumptions made as Fed chief turned out to be wrong, he's probably right about this call. There's so much energy spent lamenting the seizing-up of the credit markets that some out there may just be coming to grips with what awaits us even when the spigots of lending are flowing freely. But while that next portion of our recessionary journey isn't going to be pretty, either, it probably beats where we're coming from. Tom Granahan thomas.granahan@sourcemedia.com
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DEALSPNC Equity Partners Buys Orthotic GroupMTN Capital joins in deal. Sterling Acquires FCX PerformanceSterling Investment Partners has completed the acquisition of FCX Performance, Inc., a U.S. specialty flow control distributor and solutions provider serving the industrial valve and automation, and process instrumentation markets. Founded in 1984 and headquartered in Columbus, Ohio, FCX serves over 50,000 customers across growing end markets, including the chemical, food and beverage, personal care, pharmaceutical, power generation, pulp and paper, petroleum and steel industries, as well as original equipment manufacturers. Terms of the transaction were not disclosed. Summer Street Gets EducatedSummer Street Capital Partners has acquired the Tulsa Welding School, the largest accredited private welding school in the United States, which trains students for welding and inspection careers in a multitude of welding specialties and applications. This transaction is Summer Street’s first investment in the for-profit post-secondary career school industry. Terms of the transaction were not disclosed, though Summer Street uses its $300 million of managed capital to make equity investments that typically range from $5 million to $30 million in companies with annual revenues of $20 to $100 million. Altus Adds OnAqua-Chem, Inc., a supplier of water purification systems to the offshore oil and gas, pharmaceutical, beverage and military markets, has acquired the product lines and certain other assets of Matrix Utilities Inc., a leader in reverse osmosis desalination systems for marine and land-based applications. Altus Capital Partners, Aqua-Chem’s largest investor, advised on the transaction. Terms of the transaction were not disclosed. EDP Acquires EDCareEDP Investment Holdings, LLC, a portfolio company of Beecken Petty O’Keefe & Co., has acquired EDCare Management, Inc. EDCare provides emergency hospital staffing and management needs. EDP Investment Holdings was formed by Beecken Petty O’Keefe & Co. to make acquisitions in the hospital-based physician staffing and management sector. J.H. Whitney Purchases Wellman’sWellman Inc. has completed the sale of Wellman’s Engineering Resins business to a new company backed by an investor group led by J.H. Whitney & Co. and management. The new company will be known as Wellman Plastics Recycling and will operate businesses under both the Wellman Plastics Recycling and Wellman Engineering Resins names. Terms of the transaction were not disclosed. MTS Health Investors Acquires DNA DiagnosticsMTS Health Investors LLC has purchased DNA Diagnostics Center, Inc. from founder Dr. Richard Lee. Golub Capital provided a GOLD facility for the acquisition of DNA Diagnostics Center, Inc. Terms of the transaction were not disclosed. DDC, based in Fairfield, Ohio, is one of the largest and most reputable DNA testing laboratories worldwide and the dominant market leader in human DNA identification testing for the private sector. The company provides a wide array of DNA testing services in the fields of biological family relationships, forensics and veterinary genetics. DDC has earned a reputation for world-class quality results and customized service and is fully accredited by all leading accreditation organizations. DDC has achieved national recognition serving as the laboratory of choice for many national media programs including Dateline, 48 Hours and Dr. Phil, and has provided the DNA testing for numerous high-profile legal disputes, including the landmark paternity suit that identified Larry Birkhead as the biological father of Anna Nicole Smith’s daughter. Bayside Capital Buys AkrionBayside Capital has purchased Akrion Inc., a provider of surface preparation systems to the semiconductor and solar industries. The transaction includes a major investment from Bayside and positions the company for growth in both the semiconductor and solar cleaning equipment markets. Customers will benefit from the transaction through new product introductions, enhanced service levels and expanded R&D.
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