Are Club Deals Back?
February 23, 2010
The Skillsoft deal brings together Boston's best. You've got Berkshire Partners, Advent International and Bain Capital. Dig a little deeper into the proxy statement, and you discover the relationships go even further than a shared affinity for the Red Sox.
On SkillSoft's board sits William Boyce, who has a daughter who works in Berkshire's marketing department, and Howard Edelstein, who was just engaged by Advent a month earlier to consult on a separate deal.
I don't think these kinds of disclosures necessarily point to any impropriety. Boyce, Edelstein and SkillSoft CEO Chuck Moran didn't participate in the special committee that considered the transaction.
At the same time, it reflects the coziness that probably concerns regulators about consortium bidding.
Moreover, in a club deal, it's that much easier to fall within six degrees of separation. SkillSoft's boardmember, William Meagher, for instance, did participate on the special committee. It wasn't disclosed in the proxy, but he sits on a separate board at Mac-Gray, where he is a director alongside Mary Ann Tocio, the president and COO of Bain-owned Bright Horizons.
It's been almost four years since the DOJ sent letters to PE firms probing into club deals. For a while, a lot of the bigger groups backed off. Then the collapse of the credit market basically wiped out the large deal market, eliminating the need to partner up on transactions.
Today, though, they seem to be coming back in vogue. Advent and Bain, according to Reuters, are reported to be teaming up again on a bid for Interactive Data Corp.
What's interesting about the SkillSoft deal is that the company fended off solicitations from other private equity firms in the prior 12 months. The transaction, meanwhile, included a three-week "go-shop" period, which is apparently the board's answer to its Revlon duties.
Chuck Moran, in a conference call after the deal was announced, brushed off questions about the lack of a formal process, pointing to Irish law for the decision to only negotiate with one bidder. But as other press reports and analysts have pointed out, three weeks hardly seems adequate for a go-shop. Berkshire, for instance, took more than three months after it signed its confidentiality agreement to come up with an offer for the company.
Who knows if regulators will ever follow up on their inquiries into consortiums. I talked to an ex-regulator late last year who insisted they would and specifically said that they'll be looking intently at any potential conflicts, perceived or otherwise.
Personally, I don't think the sponsors did anything wrong here. They're not supposed to consider shareholder interests. They have their own investors in mind, who benefit when they can buy a company on the cheap. Skillsoft, though, seems to be using Irish law to sidestep the intention of US laws. And by making it too easy on the buyers, it doesn't shine the best light on the clubbing up.
The 2009 Mid-Market Awards have been decided. The winners, however, won't be revealed until our April issue. I realize that's still a ways away, so I figured it might be worth assembling a People's Choice Awards of sorts.
If this were movies, these would be the awards that would go to Twilight or the latest Sacha Baron Cohen flick. They're kind of like the guilty pleasures of M&A. (Let the record show, I have never seen Twilight.)
Deal Fit for a President
Remember all of that goodwill in the wake of Barack Obama's election? Back when his image had yet to printed on basketballs at KMart or on the hats and other paraphenalia sold in Union Square? Research in Motion's acquisition of Certicom was able to play off of the Obama buzz.
The deal was announced shortly after it was revealed that the president would be able to keep his smart phone. Certicom isn't necessarily behind the souped-up, super-encrypted version, but analysts noted that the controversy around Obama's Blackberry underscored what Certicom meant for RIM.
Forget Culture
The truth is I can't stand the TV show Entourage. It had a great premise, and the first season built up my hopes, but it unraveled when all of the protaganists became charicatures of what made them originally made them compelling.
With that said, I still like the merger between the William Morris Agency and the Endeavor Talent Agency, which is run by the real life Ari Gold. This deal, if it succeeds, would undo decades of rhetoric around the importance of culture in M&A. There have already been internal lawsuits, although the New York Times reported yesterday that the LA Superior Court dismissed one claim related to contractual violations and defamation. This might be an instance where the reality is more interesting than fiction.
Deal We'd Do Ourselves
There are plenty of sports deals to choose from. The Ricketts Family's acquisition of the Cubs stands out because they picked the assets up from the ashes of Sam Zell's Tribune debacle and because it's the Cubs -- a franchise pretty much everyone outside of St. Louis and Chicago's Southside kind of likes.
They paid $900 million, which seems like a lot for a cursed franchise, but they're one of the few teams who can still ring up consistent profits without winning.
And One For the Kids
The joint venture between Hasbro and Discovery to form a TV network for kids was another winner in my mind. The Wall Street Journal reported that the JV put consumer groups in a tizzy, but I love the idea.
Anyone who grew up in the 80sm grew up watching cartoons centered around toys -- we just didn't realize it. Transformers, GI Joe, Mask, those were three of my favorites. With a daughter who is almost two, I'm getting a taste of the kind of programming today's youth are watching, and it's pretty scary.
I'll take a show about Mr. Potato Head any day over the Doodlebops.
Harvard Probably Won't Turn This Into a Case Study... But UNH Might
James Salter's purchase of Bob Marley's likeness -- I think the Onion says it best.
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Posted by: jon p | September 2, 2011 4:26 PM
I think the coming back and teaming up of Advent and Bain is a good thing and interesting factor. In this club deal, some members of SkillSoft was keeping themselves busy to avoid facing each other or want to totally neglect the deal and some have attended but not want to be mentioned in the proxy. My simple doubt about this is that how would the Chicago online payroll work in situations like this for workers payroll? I couldn't understand the reason behind this game. They have preplanned other deals and avoided such an important deal.
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