PE Forecast for 2007

"Where PE once focused more on smokestack industries, now any company with high cash flows and low valuations will be in play. Sectors mentioned by multiple dealmakers include health care, pharma, financial services, and homebuilding. Giants such as Dell, Gap, Home Depot and Unilever are now routinely bandied about as potential targets.

"Price inflation is acute in middle-market transactions. That suggests there will be pressure on mid-sized PE firms. In the end, says Goldman Sachs co-head of private equity Charles Baillie, 'we're headed for a downturn--the question is when.' But the giant private equity firms are so larded with cash that even when one or two gets singed, and the inevitable credit pullback occurs, they'll still have the means to make deals. This is one bubble that may end with a whimper, not a bang."

Exerpts from "Private-Equity Forecast," by Nicholas Varchaver, FORTUNE Jan. 22, 2007

Climbing Back Up The Mountain

"Brands mired in the middle have faced similar dilemmas for years, of course -- think network TV, or Sears. But the continuing triumph of omnivorous big-box retailers such as Wal-Mart and Target has made the challenge particularly acute for specialty retailers such as EMS, says Larry Selden, a Columbia marketing professor and author of Angel Customers & Demon Customers (Portfolio, 2003). The specialists simply have to intensify their focus to stay alive, offering products and services that mass merchants cannot. And that often means leaving some customers behind. The wrong customers can cost retailers time and resources, often for little or no revenue. Good ones -- passionate ones -- are less work, drive more profits, and help shape the image of the brand. Last year, for example, Toys 'R' Us let slip that it may leave the toy market altogether in order to focus on its more targeted Babies 'R' Us properties. And Best Buy made headlines this winter when the CEO revealed he was abandoning the company's 'devil' customers in the unprofitable middle -- the sale- and rebate-chasing crowd -- and retooling its 670 stores to cater to its high-end 'angel' clientele."

Applying Lean Manufacturing To Six Sigma - A Case Study By Niraj Goyal

There are continuing questions about the relationship between Lean Manufacturing and Six Sigma techniques. This relationship has been expressed as follows:

* Stretch the process applying Lean techniques
* Solve the problems of deviation from the standards
* Ensure maintenance of the improved status using Six Sigma techniques
* However, if the system and processes are too poor, stretching it could break it. In this case Six Sigma techniques should be applied to solve some of the top line problems before stretching it."

Bob Crants Pulls Back the Private Equity Curtain

"I think that the current perceived `bubble' in private equity is unlikely to burst anytime soon."