Despite all the gloomy talk about private equity, we are still seeing deals. For example, today Deb Shops (NASDAQ: DEBS) announced that it is selling out for $27.25 or $395 million. The buyer is Lee Equity Partners and the debt financing will come from Barclays Capital.

Deb Shops is a specialty retailer with a focus on juniors (both regulator and plus sizes). There are 337 stores across 42 states.

And it looks like a good deal. After all, the valuation is about one times revenues.

What's more, Lee Equity is bringing Allen Questrom on as the non-executive chairman. He is a highly experienced retail executive and was formerly the CEO of J.C. Penney (NYSE: JCP).

Lehman Brothers (NYSE: LEH) advised Deb Shops on the transaction. As for Lee Equity, it used the services of Bear Stearns (NYSE: BSC).

In today's trading, Deb Shops' shares are up only $0.18 to $26.86.

To see some other recent M&A deals, click here.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

MOST NOTEWORTHY: Four specialty retailers initiated at FTN Midwest were today's most noteworthy moves in the market:

• FTN Midwest initiated shares of Ethan Allen Interiors Inc (NYSE: ETH), Pier 1 Imports (NYSE: PIR) and Bed Bath & Beyond Inc (NASDAQ: BBBY) with Neutral ratings and Williams-Sonoma Inc (NYSE: WSM) with a Buy rating.

OTHER INITIATIONS:

• BMO Capital started Bronco Drilling Co (NASDAQ: BRNC), Pioneer Drilling Co (AMEX: PDC) and Union Drilling, IncNASDAQ: UDRL) with Outperform ratings.

• CIBC started Chemtura Corp (NYSE: CEM) with a Sector Underperformer rating and $11 target on valuation.

• C.E. Unterberg started Altus Pharmaceuticals Inc (NASDAQ: ALTU) with a Buy rating and $12 target, believing the company's efforts to develop the first juvenile formulation of a pancreatic enzyme will be a key growth driver.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).