Investment Bank Hired for GM IPO

There was good news for car carriers out of Washington and Wall Street late last week, as the Treasury department hired veteran investment banking firm Lazard Frères to oversee a potential public offering of General Motors stock.

Lazard will be earning a half-million a month for its services, but that is a modest initial floatation cost for a multi-billion dollar stock offering; the US government has $50 billion invested in GM and should expect to get roughly that much back. It seems unlikely that they’re just sending business to an administration-friendly investment bank (initial “car czar” Steven Rattner is a Lazard alumnus), but that GM is nearing the point where an IPO of its post-bankruptcy stock is due.

That will be good news for the car transport industry, for if GM is ready for critical inspection by would-be investors looking for actual profits, the GM that Uncle Sam sees going forward is one that would be profitable enough to earn a good price on the stock market. That will mean that there will be profits to potentially share with its suppliers when the next batch of contracts come up, including those of car haulers.

To warp the old phrase, “what’s good for GM is good for the American car hauling industry.” While it is possible to see a vibrant US car market without GM in it, such a market would entail a lot of creative destruction to get to that point, pain that the trucking industry would rather go without. Thus, seeing a GM IPO on the near horizon is a good sign.