The Senate Committee on Commerce, Science and Transportation last week released a staff report on “aggressive sales tactics on the Internet.” The focus is on companies that essentially sign you up for paid services you didn’t realize you had purchased until the credit card bill comes due (often by pre-selecting an extras box during checkout of legit online retailers). To say the least, the report is not terribly kind to the three companies it focuses on: Affinion, Vertrue and Webloyalty. What do all three have in common, beyond corporate headquarters in Norwalk, Connecticut and sleazy business practices? They’re all owned (or partially owned) by private equity firms:
2 min read · 19 November 2009
Forbes will not publish its annual Midas List next year, peHUB has learned. A company spokeswoman confirmed the decision, saying that there are no current plans to revisit it. Really a shame, given that 2010 would have been the year in which Google's IPO would have no longer factored into the rankings. For the uninitiated, Forbes' Midas List is designed to "identify venture capitalists who generate profits for their investors and assist in building valuable, long-lived technology and life sciences companies." It's considered the bible for VC bragging rights, with firms quick to send out indulgent press releases when one of their partners makes the cut.
2 min read · 17 November 2009
Back in August, there was lots of talk about whether or not the public markets would accept a highly-leveraged IPO candidate like Avago Technologies. We then heard it again last week as Dollar General prepped its own offering. Avago did better than Dollar General in terms of its actual IPO pricing, but both companies have traded higher in the aftermarket. So have other leveraged companies like Vitamin Shoppe, Talecris Biotherapeutics and STR Holdings. Overall, PE-backed companies with hefty leverage closed trading yesterday up 6.65% from where their IPOs priced. The only two exceptions this year are RailAmerica (which has tanked) and Emdeon (which is down just a fraction of a percent). It's certainly reasonable to argue that many of these companies would trade even higher were they to have lighter balance sheets, but not that high leverage leads to doomed public offerings. This was the topic of my weekly video segment with Reuters, which you can watch after the jump...
1 min read · 17 November 2009
Update: Golden Gate will soon issue a brief statement over the wires, saying that it "is not and will not be involved in any way with any potential acquisition of Playboy Enterprises Inc.” Golden Gate Capital reportedly is mulling a bid for acquire Playboy Enterprises for approximately $300 million, in concert with former company executive Jim Griffiths. This is separate from Playboy's reported talks with Iconix Group, although the two sides might ultimately partner up. The possibility of this deal just goes to show that the private equity industry's antipathy toward "sin" investing is basically buried. It wasn't too long ago that many firms would avoid anything having to do with pornography, liquor or weapons. In fact, such restrictions were often includes in limited partnership agreements. But now we've got Golden Gate interested in Playboy, Cerberus taking a rifle maker public and just about everyone buying beer companies. A handful of LPs still insist on exemptions for such deals -- mostly small religious organizations -- but the other investors just pick up the difference. In short, sin is in.
2 min read · 16 November 2009
When HP recently agreed to buy 3Com for $2.7 billion, we learned two things: (1) The deal announcement was preceded by brazen insider trading, and (2) 3Com is one of few publicly-traded tech companies whose value has risen more than 20% since last fall's financial collapse (based on how much Bain Capital was planning to pay in 2007, before the feds intervened). Today we got updates on both issues. Bloomberg reports that the SEC is investigating the insider trading situation, in which trading volume on $5 strike calls grew by 40x just hours before HP sent out its press releases. It's obviously a welcome development, and perhaps signals that the SEC is finally getting tough on an illicit epidemic that has run rampant for years. Why it never did anything during the buyout boomtimes of 2006 and 2007 -- when option volume regularly bloomed before a take-private offer was made
2 min read · 16 November 2009
Earlier this year, Connie wrote about how TL Ventures was in the midst of litigation with three of its former staffers, including ex-partner Bob Fabbio. At issue was more than $2.3 million in clawbacks that TL claims is owed by Fabbio, former managing director Stan Tims and former principal Stephen Andriole. There is some dispute as to whether the clawbacks can even be requested before the funds are officially dissolved, but the larger issue is whether or not remaining TL Ventures partners used management fees to pay off part, or all, of their own clawback liabilities. As the trio’s attorney Cindy Olson Bourland told me: “I believe the evidence will show that certain partners… engaged in self-dealing by stashing away money for clawback instead of running TL Ventures in accordance with its investment strategies.”
2 min read · 16 November 2009
I actually think private equity registration would be more an irritant than a bullet for most PE firms, but also recognize that very few inside the industry see it my way. Here is a client alert on the matter sent yesterday from law firm Debevois & Plimpton
1 min read · 13 November 2009
Earlier this week, Google agreed to buy mobile advertising network AdMob for $750 million in stock. Huge deal, but not actually the year's largest sale of a VC-backed company (it's third). That's right, it's time for a list of the 15 largest VC-backed M&A exits of 2009. A deal needn't have closed yet to qualify, but the rankings only include up-front payments (e.g., EA deal for Playfish is considered $300m instead of $400m). Get them after the jump...
3 min read · 13 November 2009
Yesterday we wrote about August Ventures, a new cleantech investment shop based in Boise, Idaho. If the name sounds familiar, that may be because it's awfully close to that of August Capital, the Silicon Valley firm that's been making venture capital investments for the past 15 years. Not sure why everyone is hankering for the August moniker -- perhaps the double meaning -- but August Capital has no plans to share. Instead, it plans to ring up the Boise boys and request that they order new stationary. "I'm not sure why they think they can use it, but they can't," says David Hornik, an August Capital partner who currently teaches IP law at Stanford.
3 min read · 12 November 2009
3 min read · 12 November 2009
