Envisioning the Turn -- June 23, 2009: June 23, 2009

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MacFadyen: Envisioning the Turn

Over the past few years I’ve had the chance to participate in numerous panels and roundtables focused on the distressed space. During the bubble, we’d usually discuss a few specific sectors, be it the airlines or auto parts, and then spend the rest of the conversation forecasting just how bad the fallout would be when the market finally collapsed. I’d note that even for the distressed crowd, a naturally pessimistic bunch, very few people expected things to be this bad. For the most part, though, they deserve credit for being remarkably accurate about the sequence of events.

I only bring this up because every deal over the past couple of weeks -- with very few, if any, exceptions -- could qualify as a distressed transaction. In a lot of cases, the targets are these serially troubled assets, such as Spiegel, acquired by Patriarch Partners last Friday, or Eddie Bauer, which filed for bankruptcy a day earlier. But even the “non-distressed” sales that aren’t part of a bankruptcy, seem to be motivated by a need, rather than a desire, to sell. It may be a private equity firm that has to show a return ahead of a fundraising or a company looking two years out and recognizing they may not be able to refinance their debt.

Amid all this, however, signs of progress have emerged. In fact, taken together, there is plenty of reason for optimism, but only for those predisposed to be patient.

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DEALS

Considering a Plan B
As deal fatigue sets in, sellers are realizing that the best answer to uncommitted bidders is flexibility, even if that means foregoing a sale.

Eddie Bauer Latest Retail Casualty
The generations-old clothing company files Chapter 11; CCMP Capital Advisors steps in as stalking horse.

Patriarch is Latest Spiegel Owner
The women’s brands company has changed hands several times in recent years, this time, to the Tilton portfolio.

Cannella Response Gets A Response
PE firms like ZM Capital and Palladium Equity Partners continue to chase after the infomercial segment, even as ad revenues decline.

Harbinger: Salton Not For Sale
The hedge fund owner disputed reports that the appliance marketer would sell, claiming that Salton is preparing for acquisitions.

Ready Mix Ready to Change Course
The concrete maker hires Lincoln International to help it weigh strategy as it considers selling in a down market.

Arcapita Unloads Church’s Chicken
The investment firm claimed it achieved an “attractive return” despite consumer belt-tightening.

Sparxent Braves The Russian Frontier
Despite a reluctance among many outside investors to engage in M&A in Russia, the IT company has cautiously acquired Moscow-based Arbyte Group.

Platinum Equity Buys Alcoa Unit
The natural resource companies expects the divestiture to be the first of a series of upcoming asset sales.

HM Capital Buys Portland Press Herald
The Dallas, Texas-based firm is betting on the turnaround efforts of newspaper veteran Richard Connor.

Filene’s Sold (Again)
Syms wins the right to buy the bankrupt retailer; former bidding partner Vornado Realty Trust’s role now unclear.

Tomorrow's Deals
Six Flags, Extended Stay Hotels and American Beverage Corp. are just the latest companies to go on the block in the past week.

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PEOPLE

Duff & Phelps Bolsters Corporate Focus
Michael Kelly, an E&Y vet, will serve as a managing director in the firm’s strategic value advisory practice.

Salem Partners Establishes A&D Practice
At a time when government contracting-supported businesses have been targeted for acquisition, a West Coast shop bolsters its team.

Mercanti Nabs Moelis CleanTech Pro
With a federal growth mandate in the US, cleantech is a burgeoning space and top talent is being tapped.

Cantor Names Leveraged Finance Head
Merrill vet David Stith is one of more than 125 new hires to join Cantor Fitzgerald this year.

JPMorgan Taps Rifkin as M&A Vice Chairman
Rifkin, who brings 30 years of transaction experience to his new position, will join the investment bank in September.

William Blair Builds in Asia
China, Japan seeing influx of professionals as M&A opportunities and growth plays have helped Asia’s rebound from the recession.

Centerbridge Corrals $467M for Credit Play
Centerbridge Partners held an interim close on a new debt fund, locking down commitments from 37 investors so far.

Aurora’s Distressed Fund Comes Together
Gerald Parsky’s Aurora Resurgence Fund has closed on nearly $500 million according to SEC filings.

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