Notes from Interview with Peter Nolan of Leonard Green
Yesterday I interviewed Peter Nolan, managing partner of Los Angeles-based PE firm Leonard Green & Partners, as part of Buyouts East in New York City. He was pretty candid -- perhaps emboldened by his firm’s seeming lack of recent scandal or massive portfolio company collapses (amazing, really, given its heavy emphasis on retail). Some takeaways: • There had been some trade reports that the firm was raising an annex its fourth fund ($1.85b, 2004), but what it’s technically done is to get a recycling provision. This still could present similar legal conflicts inherent in an annex or cross-fund investing – LPs who don’t participate could have their initial investments diluted – but it’s a bit easier for LPs to sign off on because it doesn’t require new capital commitments. • Leonard Green is concentrating on PIPE deals (i.e., Whole Foods) and bank debt purchases right now. It just doesn’t believe that leveraged buyouts can work in this market, in large part because of seller expectations. • Nolan doesn’t shy away from the “financial engineer” label. Remember, this is a firm without “operating partners.”
