Outsized PE Deals = Troubled PE Deals
When writing about the Elevation Partners portfolio last month, I gave particular attention to its investment in Palm. As one source summed it up: “As goes Palm, as goes Elevation.” The reason, of course, is that Elevation has invested just over 25% of its $1.8 billion fund in Palm, via a series of commitments. Such over-allocation apparently was permitted by the fund’s LPA, but it is leading Elevation down a path well-worn by other private equity firms. Basically: If you invest 15% or more of your portfolio in a single company, you are just begging to be knocked to the ground. Remember these moldy oldies: Forstmann Little pumping $1 billion into McLeod USA (not to mention its big bet into XO Communications)? Or how about Parthenon Capital plugging around 20% of its second fund into
