Will Cerberus’ reputation be damaged, as the firm has now had two deals fall apart in the past month alone? The answer is, probably, no.
    
Certainly a company’s board will raise the issue of loyalty at future meetings. But will they slam the door shut when Cerberus shows up offering a 20 % plus premium to an undervalued company? Unlikely.
    
On Tuesday, Cerberus’ Option One deal with H&R Block was officially called off, to the surprise of very few. Unlike United Rentals, a deal that Cerberus pulled last month to the shock of the market (and frankly, a lot of top folks at the company), the Option One agreement had been unraveling since the subprime mortgage meltdown took hold this summer. The original majority buyout was toast as of a few months ago, and all that was left was the possibility of Cerberus scooping up some servicing units. So much for that idea.

Oh and by the way, Cerberus’ portfolio company Aegis Mortgage Corp. filed for bankruptcy in August.

A blow to their image? Maybe. But Cerberus will still be getting plenty of business, bankers and investors say.
  
Folks on Wall Street say that Cerberus’ behavior in the United Rentals deal is hardly exemplary in terms of painting buyout firms as the friendly, faithful-to-the-end buyer–or, if you will, the “white knight” swooping in to fend off angry shareholders and tired management teams.  Buyout firms typically seal deals with a “you can count on us,” kind of handshake.
 
The buyout industry has tried very hard in the last year to boost its image from the “asset stripper and flipper” reputation that has clung to it. Cerberus’ decision to walk from United Rentals without even citing a material adverse change in the business certainly hasn’t painted a pretty picture of the industry.
    
But there is one thing that so many on Wall Street point out. Under the leadership of the legendary Stephen Feinberg, Cerberus is seen more as a trading shop, as opposed to a nuts and bolts buyout firm.
    
Indeed, they are the only major buyout player with such a sophisticated hedge fund operation. To be fair, Cerberus is very much concerned about its image after the United Rentals dust up, and has ramped its public relations effort since the mud-slinging began.
    
So with a United Rentals decision yet to be determined, and with Option One deal behind it, Cerberus will keep treading through the market searching for targets in need of capital and industry insight. And they’ll find them, and will likely keep minting money and raising loads more of it. 
     
(Image credit. Cerberus, three-headed dog. Alison Smith.  http://www.amosink.com)