Poor Timing For Deutsche Bank’s Purchase of MortgageIT

November 13, 2006

Deutsche Bank LogoDeutsche Bank AG’s (DB) purchase of mortgage originator MortgageIT Holdings (MHL) could be another disaster waiting to happen if Deutsche’s prior record for acquisitions in the US is any guidance.

MortgageITMortgageIT went public only two years ago as a mortgage REIT, and in light of industry consolidation, decided there was not much hope to remain independent for much longer. Unlike most other buyouts, this transaction is surprisingly clean without significant conflicts of interest or excessive payoffs to management. Of course, there are the usual vesting acceleration and golden parachutes, but the amounts involved are modest by the standards that we have become accustomed to in today’s buyouts.

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