Private Equity
Salt Lake City's vSpring Capital may be a venture firm, but its largest-ever investment looks a lot like a buyout. The firm has backed Sparxent, a comprehensive IT provider, to enact an aggressive roll-up strategy that will increase its revenue run rate to $100 million over the next six months. This afternoon, the company announced its third acquisition, XAware, a real-time data integration open source company. Prior to that, it acquired two companies called NetworkD Corporation and Arbyte Group. The company plans to announce more deals in May and June. As the Sparxent's only source of outside cash, vSpring Capital provides the company with
2 min read · 06 May 2009
Bankruptcy has been on the table for American Capital, the troubled BDC, since it went into default in March. Another possible shareholder nightmare has been a reverse stock split. The firm’s CEO Malon Wilkus today tried to quell investor fears about those possibilities on its Q1 earnings call, but judging by the company’s stock performance (it’s down 34.9% as I’m writing this), his best efforts weren’t good enough. In tandem with the company’s dismal earnings news, the firm said it hired Miller Buckfire to advise its restructuring efforts and Citigroup to help it sell European Capital, the Europe arm of its business that American Capital absorbed last year. The European Capital sale may be in pieces if it can garner the best price, Wilkus said.
2 min read · 06 May 2009
4 min read · 06 May 2009
Bankruptcy Sleuths Find Cash in Trader Receipts for Lap Dancers: "I call it leverage gone wild," Grede says. (Bloomberg) Bondholders The New Activist Shareholders: The trouble with coercive debt exchanges. (Dealscape) CNBC=Cranky Nasty Business Correspondent: In which Rick Santelli tells Steve Liesman he "sounds like Richard Nixon." Drought: Dan mentioned this earlier today, but failed to highlight in the FT report the part that says the firm considered more than 140 LBO deals and agreed to zero. "Cautiously optimistic" anyone? (FT) Stranded at the Alter: With walk-away deals, what's the best way to deal? (Deal Professor) Bears: Nouriel Roubini's op-ed in the Journal today says we shouldn't believe the stress tests. (WSJ)
1 min read · 06 May 2009
As the weather (slowly) warms up, plenty of M&A bankers are hoping the market for deals will as well. We've noticed a few more targets coming to market in recent weeks and have compiled a list of some of those we've come across. Our sources are various news reports and the Buyouts "Seeking Buyers" list. Midweek M&A Madness: The following companies (among many, many others) are either formally considering "strategic alternatives," reported to be on the block, or rumored to be in sale talks. I can't be comprehensive, but I can try. Send any additions my way. Granite City Food & Brewery: The company hired KeyBanc Capital Markets to sell itself in January. Corus Bankshares is exploring strategic alternatives including a sale. The company has more than $7 billion in assets. Church's Chicken: Arcapita put its portfolio company on the block a month ago after an unsuccessful go at it more than a year ago. Wabash National: BB&T Capital Markets has been retained as the company's financial advisor to assist in the consideration of various corporate strategic alternatives.
3 min read · 05 May 2009
Since Aldus Equity and its founder, Saul Meyer, was accused of paying kickbacks for private equity commitments last week, the firm has vehemently attacked the accusations, calling the SEC’s actions wrong, careless, and “an ambush lawsuit.” But the actions of Aldus Equity’s clients have spoken louder than the firm’s words. In the last week, four of the firm’s clients have severed their advisory relationships with Aldus Equity. Four more have announced they were in the process of evaluating such a move. Of Aldus Equity’s publicly disclosed clients, only one, San Antonio Firemen’s & Policemen’s Fund, has not made an announcement regarding its relationship with the firm. Here’s the breakdown of which pension funds have taken which action to date:
2 min read · 05 May 2009
Q4: Yeah the fourth quarter produced a -16.32% return according to new data. (P&I) Summing It Up: Running the numbers on Cerberus' loss. It's certainly the biggest collapse but no one is calling it the most foolish or surprising. (Dealbook) It is? Why life is still good for business school students ... in Wisconsin. (Moneybox) Hooray! Clusterstock reports that the S&P 500 is now officially up for the year. Next to, of course, a photo of happy traders. (Clusterstock)
1 min read · 04 May 2009
Here’s a look at the past week’s scoops, opinions and analysis from the peHUB blogging team. Housekeeping first: We launched the internship rodeo, so MBAs, check out this guide. Dan started out the week by telling venture capital investors to pay attention to ten-year performance numbers. While at the NVCA conference, he contemplated a prescription to fix VC-backed IPOs. Larry provided a Ph.D. analysis of the same problem. Joanna Glasner examined it, too. While at the conference, Dan liveblogged two panels: "Legends" and "Cleantech." At Nantucket, he liveblogged an interview with Rich Miner of Google Ventures. We reported Jay Koh is leaving R3 Capital Partners, among a number of staff changes at the firm. Connie wrote that one VC is feeling the effects of the real estate bubble. Also, Tac Anderson will leave Idaho. One more personnel change: Tom Crotty won't be in Battery Ventures' 10th fund. In a scandal unrelated to the New York Pension kickback scandal, we reported on Wilson Sonsini's conflict of interest case. But don't worry, there was plenty of pay-for-play news last week. On Thursday, Aldus Equity and co-founder Saul Meyer were charged as actors in the scandal. Dan posted the SEC and New York complaints here. Aldus' attorney spoke out, calling the charges "appalling and careless." And after some digging, we learned that Meyer's alma mater didn't have a spotless record, either. Lastly, we unearthed a few unfortunate quotes from Meyer in past interviews. On the lending side, Buyouts pointed out that leveraged lending in Q1 was so cold S&P couldn't even analyze it. But that won't stop one firm from trying to exit. We got wind that Arcapita is holding an auction for Church's Chicken. Dan asked if Chrysler was the Worst private equity deal ever (hint: probably not). We saw yet another LBO-backed bankruptcy and thought it looked familiar: Oh yes, it won a Buyouts Deal of the year award. Which prompted to me to examine other raspberry award winners and realize why we now focus awards on exits. Fresh off a secondaries conference, I provided a handy list of the 25 or so secondary funds in the market today. Beyond that, I wrote there are four real estate secondary funds in the market. That's as yet another buyout firm shelves its fundraising process, Bernard wrote. Meanwhile, TPG took home yet another top honor as the largest fee-paying private equity firm. One final secondaries note: Talk of negative premiums has come to the fore. Wilbur Ross declared his interest in toxic assets (not a secret, but the size of his interest was news). Speaking of distressed investing, Siguler Guff may begin distressed BRIC investing. Speaking of distress, psychologists to the rich have noticed some changes recently. Connie pointed out the limitations of startups like ReputationDefender. Meanwhile, Workday has now raised more than $150 million. Associated Content raised $6 million. Yet another entrepreneur has started a venture fund: The University Funds. In other VC news, Brad Feld acted as a guest chef at a french fry joint for charity. Also, after its surge of popularity and interest, we learn that Twitter has a quitter problem, and its been hacked again. In our Vox Populi section, Howard Anderson wrote, "The Management Gospel According to The Godfather." Jeff Bussgang looked at Obama's first 100 days and declared D.C. to be the New New York. And of course, First Read and Second Opinion covered lots of ground, including the MBA support system, the return of Gordon Gekko, the VC math problem, shiny happy Dow predictors, confusion over whether a firm actually owns its own portfolio companies, bloggers uncovering ponzi schemes, and the end of dumb money. Previous Weeks: peHUB Rewind April 17, peHUB Rewind April 10peHUB Rewind April 27
3 min read · 03 May 2009
PE Distress: Instead of distressed PE, we're seeing firms like American Capital and Candover really struggle. (Reuters) Also: Heads up, American Capital's earnings call is next Tuesday after the market closes. Adapt To Thrive: The future of private equity. (McKinsey Quarterly) There's No End To Dumb Money: Just less of it. Daniel Gross writes that Chrysler symbolizes the end of dumb money. I'm not sure Chrysler symbolizes a lot for private equity, because, as Dan said this morning, it was a long shot to begin with. (Tech Ticker) Meanwhile: The Deal calls Cerberus' failed attempt to save Chrysler valiant but vain. (But only valiant if the firm had succeeded, I suspect). (The Deal)
1 min read · 01 May 2009
A Buyouts colleague unearthed a very interesting Dallas Business Journal Q&A with accused fraudster Saul Meyer. The founder of Aldus Equity was arrested yesterday for his connection in the New York pension fund pay-for-play scandal. Evidenced by the photos, the interview is from a much more comfortable time for Meyer. It yielded an unfortunate, ironic quote from the financial adviser: Q. What sets Aldus apart from other private equity firms? A. The degree of governance and transparency that provides us with an added degree of integrity that others can’t match. We create innovative ways to look at things. Everything we come up with is customized. It isn’t just business as usual. Just as quote-worthy is a comment included in the New York Attorney General's complaint.
1 min read · 01 May 2009
