Trump Entertainment Resorts Inc (NASDAQ: TRMP), Donald Trump's casino company, this morning said that following a three-month search, it would conclude its strategic review. Although it has held talks since March with groups of investors that included former Trump Taj Mahal manager Dennis Gomes and Boyd Gaming Corporation (NYSE: BYD), the company said the offers it has received "weren't likely to lead to a transaction."

It seems a little strange that Trump Entertainment couldn't find a buyer, particularly because the market for casinos and their assets is hot. Recent examples of casino sector activity include the in-process $17B acquisition of Harrah's Entertainment Inc (NYSE: HET) and the announced $6.1B acquisition of casino and racetrack operator Penn National Gaming Inc (NASDAQ: PENN) by Fortress Investment Group LLC (NYSE: FIG), a U.S. hedge fund and private-equity firm.

What gives? Why hasn't Trump found a buyer? Sources have speculated that its casinos, located in Atlantic City, NJ, have been struggling in comparisons to Las Vegas "entertainment destinations," a partial smoking ban and competition from new gaming venues in Pennsylvania and New York. Additionally, the announcement that the company would end its efforts to sell comes weeks after CEO James Perry said he would retire and, effective yesterday, would be replaced by COO Mark Juliano.

Trump's Atlantic City casinos are still working on a $250M project to update its gaming floors and add new restaurants, although it hasn't seemed to help. The company posted losses in earnings per share loss and revenue when it reported Q1 results in May. The Trump Taj Mahal Casino Resort, its largest casino, with 786 rooms, is set to open next summer.

The casino company said that while it was ending the initiative to sell the company, it would continue to review other strategic alternatives, including a cost cutting effort. The company laid off Chief Information Officer Virginia McDowell and executive vice president of design and construction, Paul Keller. It doesn't plan to fill these positions.

Trump shares fell nearly 18% this morning.

Late last year, Penn National Gaming (NASDAQ: PENN) tried to buy Harrah's (NYSE: HET). But, in the end, private equity firms TPG and Apollo Management won the deal.

Ironically enough, now Penn has decided to go private. The deal is valued at about $5.73 billion and the buyers include Fortress Investment Group LLC (NYSE: FIG) and Centerbridge Partners LP. There will also be a repayment of $2.8 billion in existing debt.

While casinos generate lots of cash flows, it's still not easy to pull off a buyout deal. A big problem is dealing with the mind-numbingly complex gambling laws. In other words, it should take at least a year to close the Penn transaction.

Although, at 10 times EBITDA, the deal has a reasonable valuation.

On the news of the transaction, Penn's stock climbed 21.92% to $62.35. The buyout offer is $67.

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

DOW JONES & COMPANY (NYSE: DJ)

Could it happen? Could News Corporation (NYSE: NWS) pull its offer? They could, and the fear is absolutely there. That's why the stock has fallen. For one, the Bancroft family, which controls the majority of Dow Jones' shares, hasn't formally accepted Rupert Murdoch's $5B, $60 a share offer. And no one else has come forward with a competing bid. But it does seem that both sides are moving together in the same direction. Okay, but somebody should make up their mind -- either way -- and stop fiddling around.

EXPEDIA INC (NASDAQ: EXPE), IAC/INTERACTIVECORP (NASDAQ: IACI)

Barry Diller is back at it. The chairman and CEO of IAC/InteractiveCorp, who is also chairman of the board and a senior advisor to Expedia, is working to take online travel firm Expedia private at $30 a share. Part of any deal will involve Expedia's TripAdvisor being spun off with about 400 jobs being lost in that shuffle.

PENN NATIONAL GAMING INC (NASDAQ: PENN)

After many, many laps around the track, this race is over, as race track and casino operator Penn agreed to be acquired today by Fortress Investment Group LLC (NYSE: FIG) and private equity firm Centerbridge Partners. All cash, baby, in a deal worth $8.9B that includes $2.8B of assumed debt. Everyone to the Winner's Circle.

Earlier this year, private equity firm Fortress Investment Group (NYSE: FIG) had an IPO. Blackstone is also preparing its own offering and even got China to invest in its firm.

More and more, private equity firms are taking money off the table. The latest? It's Ares Management. The firm sold a minority interest for $375 million this week.

Who was the buyer? Well, Ares didn't disclose that. But, according to a press release, the buyer was a "long-standing client."

And Ares has some biggie clients. Examples include the Canada Pension Plan Investment Board and California Public Employees' Retirement System (CalPERS).

Based in Los Angeles, Ares manages has about $13 billion under management and has been in operation since 1997. The firm invests in a variety of areas, such as high-yield bonds, mezzanine debt, and bank loans.

Like other private equity firms, Ares has been growing at a staggering rate over the past few years. So, why not take some money?

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

A few months ago, Fortress Investment Group (NYSE: FIG) was the first alternative investment fund to go public in the US (the firm has $35.1 billion in assets under management). Well, it's starting to flex its muscles.

Today, the firm said it will shell out $62.50 per share or $2.2 billion for Florida East Coast Industries (NYSE: FLA). Keep in mind that there is a special $21.50 special dividend due – so the ultimate price tag is $84 per share. If you throw in the debt, the transaction comes to $3.5 billion.

FLA has two major divisions. There's Flagler Development that focuses on commercial real estate and has 8.6 million square feet of Class-A office and industrial space. Next, there is the Florida East Coast Railway, which is a regional player in hauling freight (that covers about 351 miles or so).

In 2006, revenues increased from $362.3 million to $458.2 million.

I think it's a good bet that Fortress will split up the company so as to realize more value. For example, Fortress recently purchased RailAmerica.

On the news of the FLA deal, the stock traded up 11.97% to $83 per share.

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

Decisions, decisions.

Suppose you have a wildly successful business in an ultra hot market. Time to sell?It's probably something to consider. Well, that's certainly the state of affairs in the private equity world.

According to the Wall Street Journal, the founder of Apollo Management LP, Leon Black, is mulling these kinds of cash-out issues [subscription required]. His private equity firm is one of the largest and has done deals such as for Harrah's Entertainment Inc. (NYSE: HET), Realogy Corp. (NYSE: H), and Nalco Holding Co. (NYSE: NLC).

Based on the market multiples -- such as for Fortress Investment Group LLC (NYSE: FIG) -- it looks like he can take home about $1.5 billion selling a minority stake of 10% but still keeping control of his destiny. To me, this is having your cake and eating it too.

What's more, by selling the stake to private investors, there's no need to go through the hassles of the IPO process. In other words, Black has more time to do deals. Although, if the Apollo stock is registered – which is likely to happen – it will become publicly traded within the year.

It's an interesting structure and is typical for small companies. As for Black, he does think out of the box and the back-door IPO does make a lot of sense.

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

It must be something in the water, but Blackstone Group LP's workers produce nine times the profit as their counterparts at Goldman Sachs Group Inc. (NYSE:GS), according to an analysis by Bloomberg News.

Blackstone's 770 workers produced an average of $2.95 million in net income last year compared with $360,000 at Goldman Sachs which has about 31,000 workers, Bloomberg says. This raises some interesting questions about how the market will value the New York-based hedge fund company.

If investors value it like Goldman, it will trade at about 10 times earnings with a market capitalization of $23 billion while a Fortress Investment Group LLC (NYSE:FIG) multiple would value Blackstone at about $29 billion, Bloomberg News says. Goldman's market capitalization is $87 billion and Fortess Investment Group's is $37 billion.

Blackstone, though, will trade at a premium to both companies -- at least at first -- because its performance has been amazing over the past few years.

Since the story of private equity firm The Blackstone Group's potential initial public offering has been out only a couple hours, it is still very much developing. With so few details out, the implications are as yet unknown. Here is Tom Taulli's earlier piece on the subject.

From CNBC's Faber (you can watch the video here, partial transcript's here) we know that the Goldman Sachs Group Inc. (NYSE:GS) and Blackstone attorneys are preparing a prospectus. Preparing is one thing and filing is another, and yet Faber is quite adamant in his belief Blackstone will file within two weeks or by the end of March. Also, the decision to go public rests on Chairman and Chief Executive Stephen Schwarzman. Once again, an adamant Faber says "the decision has been all but made."

While Faber said that Blackstone's market value could be easily in excess of $20 billion according to bankers, MarketWatch points out that it isn't clear yet what kind of an IPO this would be. The shares could represent

CNBC's deal reporter David Faber who got the scoop on the TXU Corp. (NYSE: TXU) buyout has another big one. Apparently, the big-time private equity firm, The Blackstone Group, is planning to file for an IPO within the next couple weeks.

Funny enough, Blackstone's CEO, Stephen Schwarzman, has indicated -- on many indications -- that an IPO was not in the cards. Why deal with all the hassles? Well, I guess Schwarzman could not ignore the huge $10.4 billion IPO of Fortress Investment Group (NYSE: FIG).

Faber thinks a Blackstone offering could fetch a valuation at least twice that. It's stunning considering that it was in 1985 that Schwarzman, who owns about 40% of Blackstone, invested $200,000 to start the company. How about that for an ROI?

I think it's a good bet that other premier private equity firms are preparing for IPOs. Yes, things are going to get very interesting – very soon.

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

Investors in Rail America, (formerly NYSE:RRA), got a Valentine's Day present in the form of a buyout offer of $16.35 for each share of Rail America stock owned. Rail America is a short-line rail service provider operating 42 railroads over 7,800 miles of track, primarily in the United States, but also operating in Canada and, until recently, in Australia. Rail America was bought by several private equity funds managed by affiliates of Fortress Investment Group LLC (NYSE:FIG). Over 74% of shares held voted in favor of the acquisition. Fortress Investment Group began trading on the NYSE on 9 February 2007. Its IPO began at $18.50 per share. FIG stock closed on Friday, 2 March 2007, at $27.75.

With over $1.2 billion in assets, Rail America was an attractive buy for Fortress Investment Group. No one commodity comprises more than 16% of Rail America's shipping business. It interchanges with several Class I railroads throughout the country and has one of the strongest safety records in the rail transportation industry. Rail America is poised to grow in terms of carload volume but needed access to more funds to do so. With over $30 billion in assets under management, Fortress Investment Group can provide that access. As part of the buyout, Rail America CEO Charles Swinburn will retire. He will be replaced by John E. Giles, who brings 35 years of experience in railroads and the transportation industry to the CEO suite.

It's not often that the principals of a firm have a big-time cash-out before an IPO.

But, this is what happened with the Fortress Investment Group (NYSE: FIG) IPO.

How much? It's about $409.2 million. The break-down (which come from the IPO filing with the SEC):

• Peter Briger - $98.1M
• Wesley Edens - $95.1M
• Robert Kauffman - $63.8M
• Randal Nardone - $59.4M
• Michael Novogratz - $92.8M

Oh, and these guys also had large distributions during 2006. They include:

• Peter Briger - $97.2M
• Wesley Edens - $109.2M
• Robert Kauffman - $66.4M
• Randal Nardone - $69.7M
• Michael Novogratz - $104.4M

Kind of makes the former CEO of Home Depot Inc. (NYSE: HD), Robert Nardelli, look like a piker. He only got $210 million for six year's of work.

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

Founded in 1998, Fortress Investment Group (NYSE: FIG) has quickly become a big force in alternative investments – such as private equity and hedge funds. The firm's team has posted standout investment results.

It's a very profitable business, with net income of $192.7 million in 2005.

However, for the most part, top-notch alternative investment firms are private (only available to the wealthy and institutions). So, why go public?

After all, a public company is subject to rigorous disclosure requirements. There is also the substantial potential liability of Sarbanes-Oxley.

Well, in Fortress's SEC filing, the company does provide some reasons:

People: The alternative investment business is a intellectual capital business. That means, you need very smart investment pros.

It canbe tough to attract such talent. By having public stock, it is easier to structure improved compensation packages (ie, by offering stock options and other equity grants).

Permanence: Every three to four years, a fund must do a capital raise. This is time-consuming and is distracting.

By accessing capital from the public, Fortress now has a permanent source of funding. Interestingly enough, this is essentially what Warren Buffett has done with Berkshire Hathaway (NYSE: BRK).

Currency: Fortress can use its stock as a way to buy other funds. It's a source of leverage.

Oh, and of course, a public offering can make the main shareholders very rich. This is certainly the case at Fortress, where several of its principals are now billionaires.

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

Today's news contains two stories that highlight our barbell economy -- wealth is accelerating at the extreme top end and the less fortunate are in worse shape as they fall behind on their debt payments. Meanwhile the middle class is treading water. The barbell depicts this swelling at the extremes.

According to Bloomberg, today's oversubscribed Initial Public Offering (IPO) of Fortress Investment Group (NYSE: FIG) gives Fortress's five principals control of $7.4 billion. Meanwhile, as reported in TheStreet.com, the subprime mortgage market meltdown continues.

Earlier this week, I posted some evidence of the swelling of extreme wealth. And with the savings rate at lows not seen since 1933, -0.7%, people at the low end are really hurting. And those at the bottom are getting by on debt to a greater extent than the wealthy. Specifically, the top 1% of householders hold 30% of the assets and 7% of the debt, while the bottom 50% hold a mere 6% of assets but a disproportionate 24% of the debt.

For those who hold subprime mortgages, the impact of their default on the middle and extreme wealthy classes is significant for three reasons:

• Subprime is very heavily indebted -- just as the housing cycle is turning down. Loan-to-value ratios have risen from about 78% in 2000 to 86% today.
• Subprime is more exposed to borrowers who misrepresent their income to get a loan. Low-documented loans have doubled to 42% of subprime loans over the last six years.
• Creative loans -- non-interest paying, option ARMs, etc. -- represented nearly 50% of all loans made over the last 12 months. In 2000 these loans represented less than 2% of total mortgage loans.

Since institutions buy the securities backed by the subprime mortgages, it remains to be seen whether the extremely wealthy will emerge unscathed from the woes of the overextended.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches Management at Babson College and edits The Cohan Letter.

Wall Street's equity market maintains full-power boosters next week, with no less than 14 IPOs on the docket.

LM = The firm(s) lead managing the deal.
PD = The day of the week the deal is expected to price.

Those deals tentatively scheduled to price include:

IPOs:

Accuray (ARAY), a 13.3M-share IPO for this robotic radio-surgery device manufacturer. ARAY has $14.00-$16.00 filing range. LM: JP Morgan Chase & UBS Bank. PD: Thursday.

Cellcom Israel (CEL), an 18.975M-share IPO for this Israel-based cell phone service provider. CEL has a $16.00-$18.00 filing range. LM: Goldman Sachs, Citigroup, & Deutsche Bank. PD: Tuesday.

Fortress Investment Group (FIG), 34.3M-share IPO for this hedge fund. FIG has a $16.50-$18.50 filing range. LM: Goldman Sachs. PD: Friday.

JA Solar (JASO), a 15M-share IPO for this China-based solar cells manufacturer. JASO has a $12.50-$14.50 filing range. LM: CIBC World Markets & Piper Jaffrey. PD: Wednesday.

Mellanox Technologies (MLNX), a 6M-share IPO for this semiconductor manufacturer. MLNX has a $12.00-$14.00 filing range. LM: Credit Suisse & JP Morgan Chase. PD: Thursday.

The much anticipated IPO of Fortress Investment Group -- a mega hedge fund and private equity firm -- now has a price range: $16.50-$18.50. With 34.29 million shares to be issued, it could mean a capital raise of $750 million.

Key employees will still have 77.7% voting control of the company.

Fortress is certainly doing well. As of the first three quarters of 2006, net income surged from $32.7 million to $158.7 million. The company manages close to $30 billion.

Generally, it's mostly institutions and wealthy individuals that can participate in hedge funds. But, now with the Fortress IPO, just about anyone can get a piece of the action.

The proposed ticker symbol is FIG and the IPO filing is at the SEC web site.

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