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As the IPO market winds down for the year, activity has mostly been lackluster. Just take today's offering from KAR Auction Services.With an initial price range of $15-$17, KAR was only able to get its deal done at $12. In all, the company sold 25 million shares. The lead underwriters on the deal included Goldman Sachs (GS) and Credit Suisse (CS).
Then again, KAR is in a challenging business; that is, auctions for used and damaged vehicles. The company does this through 214 locations as well as a website.
Despite the economic headwinds, KAR still has been able to post decent numbers. For the year ended September 30, revenues reached $1.7 billion and adjusted EBITDA was $383.7 million. Moreover, if the economy improves in 2010, this should help pump-up revenues and profits for KAR.
True, the company has $2.5 billion in debt (a big reason is the buyout from a group of private equity firms). But with the IPO proceeds, this burden will be less of a problem.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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