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One Step Forward
Before I moved to New York, almost a decade ago, I wanted to unload my truck. I spent the better part of an entire day cleaning the vehicle. I washed it, waxed it, touched up various small scratches, Armour All’d the tires and the bed cover. On the inside I vacuumed, scrubbed out the coffee stains, cleaned the windows, Febreze’d the fabric and spent an hour removing an old fraternity sticker. It was spotless. In fact it was so clean that I felt justified falsely advertising it as a “one owner, non-smoker.” (I don’t think Carfax was around back then). Since I was moving, I left the truck in my sister’s care to handle the sale. She lived in Maine, on a fairly busy street. If she was banker, you might say she had direct access to a key market of possible buyers. It also didn’t hurt that she could handle the sale after I moved, removing any pressure to just hand over the keys to the first bidder. What I wasn’t counting on was that she would use the truck to move dirt piles and tree stumps. It was also better on gas than her husband’s Bronco, so it could be used on long trips to the dump. And the dog seemed to like it for drives around town. (In all fairness, I actually have no idea what she did with the truck during that week.) When I saw it, however, a mere five days later, it was a muddy mess, inside and out. So what does this have to do with M&A? If there’s a gripe I’m hearing from deal pros recently it’s that transactions are still falling apart. It’s not the credit crunch necessarily that’s putting the kibosh on the closings and it’s not necessarily the cold feet that undid a lot of the large market transactions still being litigated today. Rather, after LOI, it might be a slump in a target’s business or various questions raised throughout the due diligence or even a strategic swooping in to steal a company at the eleventh hour. In speaking with Churchill Financial’s Randy Schwimmer last week, for example, he noted that any one of these occurrences would not be considered an isolated event today. The annoyance, of course, is that roughly as much work goes into a stalled deal as a transaction that actually closes. So for some dealmakers, that may mean months wasted on a transaction that doesn’t even happen. And what choice do they have, really? Perhaps it’s a reach, but it reminded me about my truck. For what it’s worth, I cleaned it up again and managed to find a buyer. Ken
MacFadyen 
The Leading Authority on Corporate Growth.
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DEALSVSP Buys MarchonThe eyewear insurance company, has crossed over into the manufacturing sector in its latest acquisition of Marchon Eyewear. Patriarch Completes Beverage InvestmentPatriarch Partners, a New York private equity firm, has completed its investment in Beverage Marketing USA. Although financial transaction terms were not disclosed, Patriarch purchased the stake from co-founder John Ferolito, which gives it a “significant equity interest” in Beverage Marketing. A company established by Ferolito and his partner Don Vultaggio almost 35 years ago, Beverage Marketing launched its AriZona Ice Tea beverage brand in New York in 1992. The Lake Success, NY-based company, which sold its tea in tall 24 ounce cans, subsequently launched various ice teas. Patriarch, an eight-year-old investment firm, manages more than $6 billion in assets, has investments in more than 70 companies. Rabobank International served as financial advisor to Ferolito, who relied on DLA Piper for counsel. Hughes Hubbard & Reed provided legal advice to Patriarch. WL Ross Investment Ready For TakeoffWL Ross & Co., the New York-based private equity arm of Invesco which is run by financier Wilbur Ross, has agreed to invest up to $100 million in Indian airline SpiceJet Ltd. As part of the deal WL Ross was joined by Dubai private equity firm Istithmar World Capital and SpiceJet director Ajay Singh as investors in the two-tranche transaction. In addition, Goldman Sachs will receive equity warrants in the company, which did not disclose further details about the capital structure of the transaction. The deal calls for SpiceJet, a New Delhi-based business operating 94 flights daily from a 15-aircraft fleet, to receive its first funding within the next two weeks followed by the remainder upon shareholder approval. ThermaSource Raises PE CapitalThermaSource, a Santa Rosa, Calif.-based energy consulting company has raised $41.5 million in new private equity. An investor group comprised of Riverstone Holdings, US Renewables Group and Rustic Canyon Partners provided the investment, which will be used to fund purchases of geothermal drilling rigs and related drilling activities. As part of its growth initiatives, ThermaSource expects to increase its workforce to more than 420 employees by year-end, compared with its current 210 workers.
Please contact Naz Bayazit to inquire about advertising opportunities with this e-newsletter. Naz.Bayazit@sourcemedia.com.
FIRMSApollo, Lazard Launch Joint PE VentureAsset managers push to invest in Europe follows heightened interest in the continent from blank check companies. Zuckerman Buys East Side OfficesMortimer Zuckerman's real estate investment trust, Boston Properties, Inc., acquired two properties on the East Side of midtown Manhattan for $705 million. Zuckerman is the editor-in-chief of U.S.News & World Report and the former publisher and owner of the New York Daily News. His firm, Boston Properties, acquired the two properties, 540 Madison Avenue and Two Grand Central Tower, through a venture agreement with US Real Estate Opportunities I, L.P. and Meraas Capital LLC. US Real Estate Opportunities I is a partnership managed by Goldman Sachs and Meraas Capital LLC is a private equity firm based in Dubai, United Arab Emirates. Boston Properties owns a 60% stake in each venture. The Boston, Mass.-based property developer’s latest acquisition brings with it $309.9 million in debt. The two properties were purchased from Macklowe Properties, a development and management company owned by real estate magnate Harry Macklowe. PEOPLEHeadwaters MB Hires PrincipalPeter Nam will join the firm’s expanding Orange County, California office. Investec Hires New DirectorsInvestec Investment Bank and Securities, a mid-market investment bank, has hired Gareth Taylor as a director of the firm’s private equity practice. Previously, Taylor was director of corporate finance for Deloitte. While at Deloitte, he advised Deutsche Bahn on its acquisition of Chiltern Railways in January and Close Brothers Private Equity on its sale of Fisher Holdings to Bank of Scotland Integrated Finance. Prior to joining Deloitte, he worked at Barings and Merrill Lynch, and was head of corporate development at National Express PLC. In addition, Matthew Wesley, a former vice president of Lazard’s Debt Advisory Team, also joined Investec. In his new position, he will function as an associate director for Investec’s debt advisory team. Wesley was at Lazard from 2004 until this earlier year. Previously, he was part of the Citigroup's corporate and investment banking team in London. Duff & Phelps Bolsters Due Diligence TeamDuff & Phelps Corp. poached Kenneth Halperin from American Capital Strategies, installing him as a managing director in the firm’s Washington, DC office, where he will be work in the due diligence practice. Halperin had been a vice president of due diligence at American Capital, working on both pre-investment and post-investment mandates. He previously worked at PricewaterhouseCoopers as a director in the firm’s transaction services group. At Duff & Phelps, Halperin will be expected to assist on transaction structuring, negotiation support and mergers and acquisitions. While other banks have been cutting back amid the weak credit environment, Duff & Phelps has been actively building out certain areas of its business. In August alone, the firm acquired intellectual property specialist Lumin Expert Group and bought boutique advisory Kane Reece Associates, bolstering its valuation consulting capabilities. | |||||||||||
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