This morning I'm driving to the Cotswolds in the West of England for a meeting with colleagues to discuss the future of scholarly publishing and how best to prepare for it. I guess the conversations will be about technology, changing business models, globalisation, threats to copyright, changing academic research priorities and methods, and budgets. The surroundings will be rather different and rather less contemporary - but none the worse for that. England can be very beautiful.
Last week I wrote about the takeover of Houghton Mifflin by Riverdeep. The pretty obvious headline (variations on the Ike and Tina Turner/ Phil Spector song) was used by just about all the commentators. The best analysis, in my view, was by Luke Johnson in the Telegraph. I think this sums up Mr Johnson's views:
'Riverdeep has been a whirlwind buy-and-build in the educational software field. It went public on Nasdaq in 2000, went private in controversial circumstances after three years, and just a year later its private equity backers were bought out for more than twice their entry price.
Its worth appears to have risen from €349m, to €850m, to now perhaps €1.1bn, although underlying growth of the business has failed to match the vertiginous climb in valuations. Prior to this deal it had at least $380m debt of its own, much of it expensive notes at 9.25 per cent. To help fund the project, Davy is offering 200 of its high net worth clients a piece of the action, and have also brought in $200m of Middle Eastern money. Nevertheless, it sounds like the enlarged group will not cover its interest bill twice – wild stuff.
The entire tale has so many characteristics of our times: two companies with years of reported net losses – but no one seems to care; endless refinancings at higher values, while private equity firms book huge cash profits in record time; a very young Irish financier turning into an incredibly bullish industrialist; lucrative fees ($91m on this deal alone) at every turn for the advisers; and a financing structure built on mountains of debt, all at stratospheric multiples, with no hope of ever paying off the principal through operations.'
Incidentally, I first heard River Deep Mountain High in a sleazy and wondeful pub called The Criterion in the centre of Cambridge and it's never sounded better since. Unfortunately the Cri went bust and closed.