Monday, February 28, 2011

Industry Thoughts | Private Equity and the Oscars

What a night for the Oscars. James Franco acts like, well, James Franco, Anne Hathaway continues to show why she's awesome and extremely gorgeous, and Inception didn't get Best Original Screenplay (though hats off to The King's Speech for winning it). While watching the show (and switching between it and the awesome Knicks-Heat game), I realized that, like how I mentioned in my Fashion Week post, private equity firms have significant stakes in film studios!
I thought I'd share a few of them, with the help of Pitchbook:
  • MGM (through Spyglass Entertainment/Cerberus Capital Management)
  • Miramax (through Colony Capital among other firms)
  • Spyglass Entertainment (through Cerberus Capital Management)
  • Legendary Pictures (through ABRY Partners, Ridgemont Equity Partners, Falcon Investment Group, and a few others)
  • Village Roadshow Pictures (through Tailwind Capital, among other firms)
  • RealD (formerly through Shamrock Capital) - great piece from WSJ PE Beat here
It's important to note that you'll see private equity firms put stakes into stronger film production studios in general; MGM, Miramax, Spyglass, Legendary, and Village Roadshow all have strong films within their portfolios. I haven't seen PE interested more in the independent film studios, but it's always good to keep an eye there.

Let's end with a hat tip to Kirk Douglas in light of his amazing appearance at yesterday's Oscars.

Thursday, February 17, 2011

Industry Thoughts | Private Equity and Fashion Week

Yikes, sorry for the delay in posts, guys. With our clients keeping us ridiculously busy coupled with lots of deal flow, it's been tough to get a chance to put in a post. Luckily, the wonderful week of color, style, and design known as Fashion Week came to New York, but it didn't slow down deals either.

More importantly, during Fashion Week, two fashion houses were acquired by PE firms: Sun Capital Partners (through Kellwood Co.) acquired Rebecca Taylor, and Castanea Partners acquired Donald J. Pliner. It's no surprise which firms ended up buying the storied houses; Sun Capital has a strong consumer division and Castanea happens to own a few other recognizable fashion labels, including Urban Decay, Ippolita, and Betsey Johnson.
Also, take a look at the WSJ's blog Private Equity Beat on a post-deal interview with Castanea partner Troy Stanfield on Donald J. Pliner.

Fashion and luxury apparel are popular sectors with PE. Margins are very high, brand reputation is getting stronger, and it's not difficult to grow a label if you have the right team behind the brand. Many fashion labels have been PE-owned before, including:
  • Stuart Weitzman (Irving Place Capital at one point)
  • Jimmy Choo (TowerBrook Capital Partners)
  • Harry Winston (Fenway Partners at one point)
  • Rafaella (Cerberus at one point)
  • J. Mendel (The Gores Group)
It's always exciting to me when a recognizable consumer goods company is acquired by a private equity firm, as brand strength and reputation are powerful keys to a company's growth. It'll be interesting to see if more fashion houses are on the way to going to buyout shops.

Friday, February 4, 2011

Industry Thoughts | The PEGCC's Report On Buyout Activity...And Why I'm Worried

The PEGCC (Private Equity Growth Capital Council) released their 2010 buyout activity report today, and the title says it all: Buyout Activity Returns to 2008 Levels.

This is scary.

I remember at the ACT CT PE Expo late last year that multiples for many deals were going between 9x and 12x, scaring away many of the mid-market private equity firms. Did firms forget what happened a few years ago? I'm hoping that the leverage ratios that buyout shops are using involve a significantly more amount of equity, because this data will not help PE, both with regards to setting the industry up for another dip down as well as how the industry looks in the eyes of Congress.

The link to the article is here (get a free subscription to read it), but here are the key passages below:

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Private equity-based buyout volume for all of 2010 reached $221 billion, according to the report, the highest figure since 2008. The 96 private equity-backed initial public offerings that took place over the course of the year raised over $35 billion globally, up from 32 IPOs that raised $12.7 billion in 2009, the PEGCC said. Exits in the US during 2010 totaled in excess of $110 billion, more than double the value of exits in 2009.

Total fundraising in 2010 reached roughly $104.4  billion, compared to $100.3 billion in 2009 and $99.8 billion in 2004. As of January 2010, buyout dry powder stood at an estimated $446 billion globally.

The PEGCC’s index measures global private equity activity based on total direct investment, buyout transaction volume, fundraising and the dollar value of private equity exits. The index reaches 100 when all four components are at their 10-year moving average. As of the end of 2010, the index stood at 115.3, its highest level since the fourth quarter of 2007.
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Let me know what you guys think in the comments!