The New York Times this morning has an article about Simmons Bedding Co., the mattress maker that has agreed to prepackaged bankruptcy that will transfer ownership from one private equity firm (THL Partners) to another (Ares Management). The main thrust is that THL made money on its original investment, in part via a dividend recap that ultimately helped drown Simmons’ balance sheet. Nothing we didn’t already know, but a good reminder that we really need to start discussing what the future of leveraged buyouts will look like in a (somewhat) recovered economy. Have PE pros been sufficiently chastened by past excess, and the intentional removal of “risk” from what used to be a “high-risk” asset class (as Steve Schwarzman once argued)? Will dividend recaps, IPO fees and the like be shunned as greed-driven cannibalism – or will they be emulated as proper tactics for protecting LP returns and ensuring PE firm survival? To begin, let me state that I do not believe there will be massive consolidation in the private equity market. Fund sizes may shrink from 2005-2007 levels – mostly corresponding to decreases in leverage availability – but I do not expect many notable buyout firms to fail. Lots of people point to the number of VC firms that disappeared following the dotcom bust, but few of those were VC firms of any significance (and today’s walking dead were felled by poor investing post-2001). As such
3 min read · 05 October 2009
1 min read · 05 October 2009
Ten years ago, Scott Connelly sold his bodybuilding supplement empire MetRx for $108 million. Now he's back with a new product and a pitchbook for potential investors. Connelley's latest effort is called Progenex Dairy BioActives Inc., which is developing a line of nonfat cow milk-based products aimed at accelerating wound healing and tissue regeneration. Its initial line is for athletes -- the company's advisory board includes ex-jocks like Joe Montana and Warren Moon, while Minnesota Vikings runningback Adrian Peterson and Chicago Bulls forward Luol Deng are beta clients -- and it hopes to later launch a medical division that would focus on such things as treating burn victims. According to documents obtained by peHUB, Progenex is looking to raise around $5 million in seed funding at a
1 min read · 02 October 2009
Battery Ventures is planning to target $750 million for its ninth fund, with a first close expected to occur in Q1 2010. No placement memoranda yet, just initial correspondence with prospective investors. This is the same amount of money Battery raised for its eighth fund in July 2007, but that fund was later supplemented with a $250 million “overage” fund. The idea was that Battery wanted the flexibility to do larger, non-syndicated growth equity or buyout deals – without destroying the
1 min read · 02 October 2009
1 min read · 02 October 2009
1 min read · 02 October 2009
3 min read · 01 October 2009
Wellington Management, one of the nine firms chosen in July to participate in the Treasury Department's toxic asset program (PPIP), is expected to close its related fund today, according to an investor. The firm had been targeting $1.1 billion and has said privately that it should be fully subscribed. This news comes just one day after Treasury announced the first two interim fund closings, from Invesco Ltd. and The TCW Group. No specific financial information for either fund was disclosed, except that each interim close was for more than $500 million in capital commitments. One interesting note from the Wellington investor is that these fundraisings are very different from typical private equity fundraisings, in that there is very little room for negotiation. "The government is basically an even partner, and it's set the ground rules," our source says. "It's mostly take it or
2 min read · 01 October 2009
We're now three quarters of the way through 2009, which makes it as good a time (as any) to look at the year's goriest PE-backed company collapses. This has been a particularly tough year for both buyout-backed and venture-backed companies, and it's showed in the number of bankruptcies and shutdowns. Well over 100 in all. Many buyout-backed companies have been drowned by their takeover-related debt, while VC-backed startups have struggled to secure customers at the same time that their investors have struggled to raise new funds. So, without further ado: 10 most expensive buyout-backed busts of 2009 10 most expensive VC-backed busts of 2009
1 min read · 01 October 2009
1 min read · 01 October 2009
