Private Equity
Here’s a little timeline on Eddie Bauer, which filed for Chapter 11 bankruptcy protection a few hours ago: 2003: Eddie Bauer’s parent company, Spiegel Group, files for bankruptcy. 2005: Eddie Bauer becomes a publicly traded company. May 2006: Eddie Bauer puts itself up for sale. October 2006: Eddie Bauer is reported to receive a “below market” offer from Sun Capital and Golden Gate Capital, meaning the bid from the two firms was below its share price. November 2006: The company’s shares are driven down on news of the bid; Sun and Golden Gate agree on a deal at the same price (but no longer a “take-under”) for $614 million. February 2007: Eddie Bauer’s shareholders reject the agreed-upon deal. Sun Capital refuses to sweeten its offer. June 2009: Eddie Bauer loses money for nine quarters in a row. June 2009: Eddie Bauer files for bankruptcy. Again.* The company files with an agreement to sell to CCMP Capital Advisors for $202 million. Sun Capital and Golden Gate Capital have already done their diligence on Eddie Bauer. Could they plan a rival bid to CCMP?
2 min read · 17 June 2009
ZM Capital got off to a false start last year, when its first deal as a solo shop -- a buyout of media services company Greenfield Online -- fell apart. But the firm, an investment subsidiary of ZelnickMedia, prevailed this week in its acquisition of Cannella Response Television, a Wisconsin-based broker of infomercial spots. ZM Capital brought in Palladium Equity Partners to share the equity load. The deal included no senior debt, but did have mezzanine notes and a small equity slice from VSS Structured Capital II (first investment from Veronis Suhler Stevenson’s second mezzanine fund). ZM Capital purchased the privately-owned company from its founder Frank Cannella, who is credited with being “The Father of the Infomercial Industry,” according to ZM Capital’s Andrew Vogel. Management, which includes Cannella and CEO Robert Medved, has retained a significant stake. Petsky Prunier advised the seller on the transaction. Pricing terms weren't disclosed.
2 min read · 17 June 2009
1 min read · 17 June 2009
Intervention: The US State Department has asked Twitter not to undergo its planned service upgrade during the daytime hours in Tehran, and Twitter decided to delay the upgrade. (Reuters) Wall Street Gets Poetic: A hedge funder has penned a poem titled, "Green Shoots." Read it at Deal Journal. Is the SEIU To Blame? The villain in the remake of "The Taking of Pelham 123" is a private equity pro! It's a change from the original 70s version, since private equity wasn't exactly around then. (Dow Jones) Queens University B-School: Looking for more team players less divas. (BusinessWeek) Remember MBOs? What about FMBOs (Former Management Buyouts)? The former CEO of Children's Place Ezra Dabah (ousted in 2007 because of violating conduct codes) is still trying to buy the company. What about the children? (Dealbook)
1 min read · 16 June 2009
Tomorrow, President Obama will announce his proposal for financial regulation reform, which is expected to include elimination of the Office of the Thrift Supervision. So will the new financial regulations affect private equity? Technically, they won’t. Indirectly, they will. The Office of the Thrift Supervision (OTS) is the agency known for being more lenient on private equity investments in banks. It’s the agency responsible for approving acquisitions of both Indymac and BankUnited by consortiums of buyout firms. With the elimination of the OTS, it’s possible that approval for these types of transactions could fall to the Fed, which currently regulates bank holding companies. Notably, the Fed has yet to approve a bank buyout by private equity.
2 min read · 16 June 2009
Huntsman Gay Global Capital is a new fund in deal-doing mode during a painfully slow time for buyouts. How is the firm approaching the deal market? We’re busier now than we were a year ago. Right now M&A is more event-driven with business owners still out there wanting to diversify risk and take chips off the table. It seems sellers expectations are finally beginning to moderate on price a bit. In this unique environment,
3 min read · 16 June 2009
That’s what a new study from Thomson Reuters and JPMorgan is suggesting. You can view the entire study, titled "The Era of Globalized M&A: Winds of Change," after the jump. Pointing out that private equity has historically been a key driver of M&A, the study discusses what we know as the “dry power,” or “overhang” conundrum. The disparity between the sheer amount of money invested in buyout funds and their inability to deploy it, the study argues, reflects a true negative in the market. The robust fundraising market “demonstrates clearly an over exuberance in the boom market rather than any prophetic insight prior to the subsequent busts.” In other words, LPs didn’t see this coming.
2 min read · 16 June 2009
Fox Business: Not doing so hot. Not so surprising. (24/7 Wall Street) A Very, Very Thorough Liveblog: Huntsman Vs. Hexion, summarized, bottom-up. (Deal Professor) At Least Someone Did: Dell's making money from Twitter! (Bits) Lessons from the Meltdown: Rubenstein predicts that the U.S. economy will emerge from what he called "the great recession" at the end of this year or early next year. (BW) Meanwhile: Carlyle is setting its sights on the banks, with Sarkozy in the driver's seat. (WaPo) Graphics: The largest bankruptcies in history. (Good)
1 min read · 15 June 2009
Extended Stay went bankrupt, in part, because of its aggressive capital structure. The company was passed from one buyout firm (Blackstone) to another (Lightstone) at the top of the market. The deal, engineered by Wachovia's Rob "Large Loan" Verrone, took the company's debt-to-equity ratio to a crazy 12.7x from the already-high 11.1x at the time Blackstone Group bought it. Verrone got his nickname from his coworkers for obvious reasons. He was later named by the New York Times as part of the problem behind Wachovia's massive writedowns.
1 min read · 15 June 2009
Culled from regulatory filings, here are some recent private equity and venture fundraising updates, not reported elsewhere. Walton Street Real Estate Partners VI-FF LP has raised $22 million. Walton Street is based in Chicago. Richardson Capital Private Equity LP, a buyout firm based in Manitoba, Canada, has raised $277.35 toward its goal of $693 million. The fund has compiled commitments from 44 investors since launching fundraising in 2006. Dynamis Venture Partners LP has raised $9 million from 33 investors. Dynamis is based in Charlottesville, Va. Resource Capital Funds, a private equity firm based in Denver, Colo., and Perth Austrailia, seeks to raise $800 million for its fifth fund. The firm, which began marketing this fund in 2009, makes investments in mining companies and projects across a diversified range of commodities and geographic regions., according to its website.
1 min read · 15 June 2009
