Bainbridge News

Bainbridge Featured in Plastics News Magazine: Analysts say deal-making slow, but not in Dumpster

Mon, 26 Jan 2009 18:30:49 GMT

By Dan Hockensmith
January 26, 2009
PLASTICS NEWS STAFF

KRON, OHIO (Jan. 26, 10:15 a.m. ET) -- After a decline in the fourth quarter of 2008 that coincided with the main part of the global economic slump, the mergers and acquisitions outlook for plastics processors is pretty slim for the first half of 2009.

Several analysts interviewed by Plastics News said that the deepening global recession and credit crunch, combined with uncertainty over the future of the U.S. automotive industry, make this an uncertain time for those interested in deal making.

“Our view is that we’re going to have a lower level of activity because there are fewer buyers and people who are going to sit on the sidelines and not sell their companies because they’re not performing well or they view the market as being down,” said John Hart, director of P&M Corporate Finance LLC’s plastics and packaging group in Southfield, Mich., in a Dec. 24 telephone interview.

“On the flip side, I think what’s going to fuel M&A activity in the near terms will be corporate divestitures [as well as] private equity groups that have a certain cycle that they have to hit in order to make money; and I think you’re going to see a lot of distress deals,” Hart said.

According to P&M’s review of the year in plastics, M&A deals fell about 23 percent in the second half of 2008 vs. 2007 — from 166 to 128 transactions. In all, P&M recorded 295 plastics deals in 2008 compared with 326 in 2007, about a 10 percent drop.

While most industry watchers continue to sound alarm bells about the state of the economy, some, including President Tom Blaige of Blaige & Co. in Chicago, insist that globalization and strategy will get deals done.

“It’s like kids in school: Everybody is doing their homework,” Blaige said. “It’s not like the market’s dead and nobody can sell,” Blaige said in a Jan. 9 telephone interview.

“There’s a market for really good, high-performing companies, because there are fewer of them,” he said.

Blaige urges customers to take the long view of plastics, as a relatively stable boat in stormy economic seas. In a seven-year study prepared for Plastics News, Blaige argues that the global M&A trend for plastics continued to rise in 2008 (447 deals) and that the number of deals has remained above 400 annually since 2005.

“To say that there are going to be 400 deals in 2009 … maybe knock 10-20 percent of the deals out of the picture. If you look at plastics, I think it’s not as bad as other sectors,” he said.

But even an optimistic Blaige recorded a who’s who of failed deals in 2008, including the ongoing saga of Akron, Ohio-based Meyers Industries Inc., and Montreal-based Rio Tinto Alcan’s lack of success in finding a buyer for its Alcan Packaging unit.

Headline bankruptcies affected several large packaging companies in 2008, including Atlantis Plastics Inc. of Atlanta; Hilex Poly Co. LLC of Hartsville, S.C.; Constar International of Philadelphia; and Chesapeake Corp. of Richmond, Va.

“If you look at all of those situations, there were buyers for all of those assets, all of the debt, so those companies weren’t liquidated, they were restructured,” said Will Frame, managing director in Chicago for the paper, plastics and packaging unit of Deloitte & Touche Corporate Finance LLC of Detroit.

Frame said that because of the credit crunch, private equity groups are less likely to be active in M&As during the first half of 2009.

“I suspect we shall see a clear difference between the private equity groups that understand the sector and want to keep investing in the sector than the pure financial players who were more interested in putting money to work than in the long-term dynamics of packaging,” Frame said.

But perhaps nothing worries analysts more than the future of the Big Three automakers — and the near-term prospects for a revival of the U.S. housing market.

“There are 300,000 direct employees in the Big Three, but about 3 million employees who represent the suppliers at the Tier 1, Tier 2 levels,” said Bill Ridenour, owner of Polymer Transaction Advisors Inc. of Newbury, Ohio.

“Irrespective of the government bailout and looking at the forecast at vehicles for 2009 and if you look at the way Bush has structured the loans, one way or the other, there’s going to be a huge shrinkage in the industry and that can only lead to more foreclosures and bankruptcies in the supplier base,” he said.

“In the recession that lasted from 2000-03 — which was far milder — we saw a reduction of M&A in plastic deals of about 40-45 percent. I expect that to happen this time,” Ridenour said. “I expect a lot of those deals to be consolidations … I expect the rest of them to go after the specialty businesses to try and rejigger their customer base into businesses that aren’t as volatile and affected as those tied into the construction and the automotive markets.”

Ridenour said some deals that closed in 2008 and were valued at 3 to 3.5 earnings before interest, taxes depreciation and amortization would have been valued at up to 5 times EBITDA in 2007.

Greg Myers, managing director of buyout funds at Milwaukee-based private equity group Mason Wells, said his firm, which advises in middle-market deals of under $200 million, has seen valuations steadily slide through the second half of 2008.

“If you can get — on a good deal, not a troubled one — 2 to 2.5 times senior debt, that’s pretty good, and maybe 3 to 3.5 overall total leverage, that compares to two years ago [when] you were seeing things done at 6 times total debt,” he said. Myers blamed the credit crunch — which was not alleviated by the late-year release of $700 billion in Troubled Asset Relief Program funds to banks — for stalling much of the midmarket and private equity action.

“On a good deal, we used to call three or four players, and were very confident we’d get it financed. And now, you’ve got to call 20-plus, just to find the ones who are open for business,” he said.

Nick Chini, managing principal at Bainbridge Inc. in San Diego, said deals should pick up in the second half of 2009.

“Those deals that were based on unrealistic multiples, those are not going to come back soon. But those deals that were sidelined due to credit availability, give those a couple of months, and assuming the fundamentals are there, they’ll happen,” he said.

All of the analysts agreed that medical devices and aerospace will be growth sectors for plastics processors in 2009 and deals in those spaces will fetch better prices. Amid all the uncertainty, several industry watchers said their firms either had been consulted or were in the process of arranging deals for Asian and European buyers in North America.

Read the article on Plastics News.com: http://www.plasticsnews.com/headlines2.html?cat=1&id=1232983027

Bainbridge speaks at Buyouts West

Tue, 18 Nov 2008 21:00:19 GMT

Nick Chini, Managing Principal, Bainbridge will be speaking at the 5th Annual Buyouts West conference in Los Angeles, CA November 18-19, 2008. Mr Chini will be moderating a special roundtable focusing on: Quality deal flow--is it attainable? Bainbridge is also proud to be a Gold Sponsor of the conference. For more details, please visit BuyoutsWest.

Bainbridge Announces Merger of Leading HVAC Companies

Fri, 19 Sep 2008 22:55:11 GMT

A New York private equity firm, with more than $1 billion dollars under management, engaged Bainbridge Capital Advisory earlier this year to source M&A opportunities for its portfolio company, a leading HVAC Company. Working as an extension of the firm's business development team, Bainbridge developed a comprehensive database of companies in the HVAC market via secondary and primary-source research. Through its investigative research, the Bainbridge process revealed multiple proprietary opportunities that fit with the firm's acquisition criteria.

The first of several pending deals closed in June 2008, creating a gateway for larger expansion opportunities for the portfolio company, through the merger of two leading HVAC companies. The deals are outside of the auction environment and have a win-win approach to develop post-deal buy-in with sellers. Bainbridge Capital Advisory led the M&A sourcing effort and continues to fuel the private equity firm's pipeline with quality deals. The amount of the transaction and client names remain undisclosed to protect client confidentiality.

Economic Pressures Driving Innovation

Wed, 10 Sep 2008 16:09:56 GMT

During the economic downturn, it's time to focus on the business basics, starting with your customers. Here are tips to mitigate the downside.

Economic pressures are forcing businesses to use innovative solutions to stay afloat in today's stagnant marketplace. A recent article in The New York Times explored the question of how to raise prices on products or services to meet the higher costs of running a business without losing existing customers. That question is not an easy one to answer, especially in the current economy, and making the wrong move could be devastating to your business.

It is absolutely to know your customers' pain points, as well as establish the degree of loyalty they will have to your company if prices increase. To determine this information, businesses need to delve into their customers' minds and acquire in-depth insight on how they think, feel and behave when selecting products, services and vendors. With this information, businesses can confidently embark on new sales initiatives with fresh intelligence their competitors don't have.

An article by Chris Philippi, president of Philippi Marketing and Associates, noted that the No. 1 reason businesses lose customers is because these consumers feel unappreciated. Indeed, 68 percent cited this as the main reason they stop using a product or service. Additionally, research has found it is five to eight times more costly to gain a new customer as opposed to retaining an existing when factoring in the cost of advertising, internet marketing, mailers, etc. to reach out to new business.

Lastly, while many organizations are decreasing marketing and business-development budgets to help the bottom line, during an economic downturn is actually the most important time to stay fresh in the minds of your customers, and to develop and strengthen existing relationships. To help stay ahead in today's market, here are five tips:

Give customers what they want.

Implement client surveys, informal or formal to poll your customers for their feedback. It can be as simple as making phone calls personally to key clients to find out where there is room for improvement.

Dig deeper into existing client relationships. Initiate client retention programs to help build deeper relationships, while also exploring further business opportunities by introducing them to additional services that you offer. Suggestions might be to take clients for coffee or lunch or golfing, as your budget allows.

Stay in touch.

Stay present with your clients by sponsoring client-appreciation events such as an informative speaker and networking gatherings. To cut costs, partner with other business associates or other resources such as your chamber of commerce to host the event.

Leverage outside resources.

Particularly for small businesses with limited marketing budgets, there are many invaluable outside resources to increase marketing reach. An example is the variety of easy-to-use online tools for email marketing such as Constant Contact, which has tools to create and deploy monthly client newsletters without design know-how. For higher strategy and research needs, consider bringing in an expert.

Develop relationships for future business.

Take advantage of this time to cultivate contacts and build new relationships. A monthly newsletter is a simple way to stay top of mind with contacts even if they aren't clients yet.

Along with the customer-retention initiatives described above, many forward-thinking companies are looking outside domestic boundaries for ways to find new customers. Recently, CNBC reported on HSBC Bank's inaugural "Financial and International Survey" of middle-market companies, which surveyed companies that are exploring global growth opportunities. Importantly, the middle-market represents $6 trillion in sales and employs 32 million Americans. Findings from the survey show that two-thirds of senior executives within this pool say sales abroad are growing faster than U.S. sales, and nearly half of these executives are currently evaluating international sales targets. Executives cited China, Brazil and India as the countries with the most opportunity for growth over the next year.

As the world develops into a true global economy, expanding their business overseas will be inevitable for many companies. To aid in this process and ensure a proper entry into the global marketplace, there some essential tools, such as market feasibility studies, benchmarking, customer analysis, competitor analysis, etc.

Though it may be a tough time for the U.S. economy, there are creative and innovative ways that can help large and small businesses mitigate the common pitfalls. By utilizing some of the tips and tools available to keep and grow customer accounts, a firm can not only make it through the slow times, but be even that much farther ahead when things turn around.

Nick Chini is a managing principal at Bainbridge, a San Diego boutique firm specializing in strategic consulting and capital advisory.

(as published in Financial Executives International Online Magazine)

Small and Middle-Market M&A Deal Activity Steady

Fri, 05 Sep 2008 22:40:04 GMT

According to the Association for Corporate Growth (ACG) and Thomson Reuters Mid-Year 2008 Dealmakers Survey, overall merger and acquisition (M&A) deals are down 36 percent for the first half of 2008, but middle-market deals are seeing less of a decrease. Middle-market deals are classified as any deal under $500 million. According to the Dealmakers Survey, these types of deals have only declined by 18.2 percent from 2007's record breaking first half. While it may be that mega deals, ones that are defined as exceeding $10 billion, may be the ones that make headlines, MoneySoft M&A Outlook 2008 points to the reality that small undisclosed deals actually make up two-thirds of all M&A activity. Additionally, PricewaterhouseCoopers LLP released a series of second-quarter M&A reports earlier this month stating that the overall average deal value is down largely due to the lack of mega-deal transactions - but the report doesn't take into consideration the smaller and middle-market deals alone.

With tighter underwriting, credit availability and covenants, the larger deals are much less appealing. As the size of the deal increases, so does the difficulty of the transaction, including the structuring of the deal itself and the eventual post-deal integration process. M&A is one of Wall Street's most important business practices, and investors are looking to get a deal done wherever and whenever they can. While Wall Street typically stays out of the smaller, less lucrative deal pool, investors have begun focusing on smaller deals. So far this year, 70 percent of the deals Credit Suisse has advised on have been under $1 billion, which is significantly up from 49 percent last year. At Goldman Sachs, deals under $1 billion make up 55 percent of their total transactions, which is compared to 39 percent one year ago.

Investors polled in a recent Thomson Reuters survey said securing debt for transactions was the biggest concern in today's market. Other difficulties that topped the list were winning and closing good deals, identifying good investments, fundraising and exiting investments.

High-quality, small companies are always in demand. For this reason, MoneySoft's Outlook 2008 states that M&A advisory firms, such as Bainbridge Capital Advisory, stimulate M&A activity in a slow market. Bainbridge's unique approach draws upon its deep consulting roots, and thorough primary-source research, to cultivate hidden deals that have yet to be discovered by large investment banks. As the state of the economy remains unstable, it is imperative to find creative routes to source deals. For instance, Bainbridge's strategy can result in getting even the most reluctant seller to the table; companies can negotiate deals without ever having to experience the burden of going through auction.

Many experts, such as those surveyed by Thomson Reuters, believe that the pace of deal-making may have hit bottom and could even be up a little for the second half of the year. Binky Chadha, a strategist at Deutsche Bank recently said "though financial market concerns continue, the value of announced M&A deals has been recovering notably in recent weeks."

The bottom line: there are still great deals to be done with money to be put to work and high-quality companies in need of investors.

Media Contact:

Bainbridge Media Relations
858-410-0922

Bainbridge Featured in Industry Week Magazine: Capital Challenges

Fri, 01 Aug 2008 21:24:37 GMT

Oh, the toll the subprime mortgage crisis has taken. Not only on the former home owners who defaulted on their subprime mortgages when the housing market took a dive, or on the financial institutions that suffered huge losses as people grew unable, or unwilling, to make housing payments, but also on manufacturers and other businesses in need of capital.

That's because the subprime mortgage crisis, combined with an already stagnant U.S. economy, has resulted in a credit crunch that has made obtaining capital for plant expansion, for equipment purchases and for acquisitions a much different ballgame than it was even 12 months ago.

"It's like night and day," says Nick Chini, director and principal with Bainbridge, a management consulting and mergers-and-acquisitions advisory firm. "We are in a tenuous, dynamic capital market environment" that is constantly changing, he says, depending on the industry, the capital structure, the news. "The need for real-time information is more critical than ever," he states.

"[Investors] are looking at the P&L and the projections for companies with a very different set of projections and assumptions about the future than before," he continues. "You have to work harder to .......

Please click here to read the entire article at IndustryWeek.com

Businesses Seek New Ways to Stay Ahead In Tough Economic Times

Tue, 22 Jul 2008 22:40:57 GMT

Economic pressures are forcing businesses to use innovative solutions in today's marketplace

Economic pressures are forcing businesses to use innovative solutions to stay afloat in today's stagnant marketplace, and in fact, a recent New York Times article explored the question of how to raise prices on products or services to meet the higher costs of running a business without losing existing customers. That question is not an easy one to answer, especially in the current economy, and in making the wrong move it could be devastating.

Financial writer for Entrepreneur.com and CEO of The Internet Marketing Center, Derek Gehl is convinced one of the best strategies for businesses to make it through tough economic times is to strengthen relationships with customers. He says the key to strengthening those relationships is finding unique ways to set your company apart from the competition. While most companies will slash their marketing budgets in a down economy, according to Jeff Cornwall of Belmont University Center for Entrepreneurship, it is now more than ever critical to stay in the minds of customers.

This week CNBC reported on HSBC Bank's inaugural "Financial and International Survey" of middle market companies, that another initiative companies are taking advantage of is identifying international growth opportunities. In fact, this initiative represents six trillion dollars in sales and employs thirty-two million Americans. Findings of the survey show that two-thirds of senior executives say sales abroad are growing faster than U.S. sales, and nearly half are targeting international sales targets currently. Executives cited China, Brazil and India as the countries with the most opportunity for growth over the next year.

Bainbridge is a boutique management consulting firm that has been helping Fortune 1000 businesses since 1975 to develop strategic initiatives to address both customer and competitor analysis as well as growth opportunities. Bainbridge offers a unique proprietary service they call the Customer Account Vulnerability Assessment (CAVA) which provides in-depth insight on how customers think, feel and behave when selecting products, services and vendors. Utilizing a service such as Bainbridge's CAVA provides a third-party perspective with an unbiased and objective scope on what a customer's needs are and how well a customer feels their needs are currently being met. With this information businesses can confidently embark on new sales initiatives with fresh customer intelligence the competitors do not have. This type of information can lead to increased revenue even during tough times when businesses are cutting back.

Bainbridge's expertise also has helped businesses identify, benchmark and enter new markets. Before exploring global potential for a product or service, extensive research must be done. Bainbridge is well versed in conducting market assessments domestically as well as abroad. Using primary-source research, Bainbridge is able to assess the sales processes, sales strategies and overall strengths and weaknesses of key market players to help clients develop international go-to-market strategies.

Media Contact:
Bainbridge Media Relations
858-410-0922

Time to Buy, Tight credit markets plus a down economy add up to a buyer’s market.

Mon, 02 Jun 2008 20:54:59 GMT

Bainbridge featured in CFO Magazine June 2008 issue

Kate O'Sullivan, CFO Magazine

June 1, 2008

Economic gloom abounds these days, but there is one ray of sunshine: the mergers-and-acquisitions market. Companies have more acquisition opportunities now than a year ago, when deep-pocketed private-equity firms dominated the scene and steep valuations kept many companies on the sidelines. "For a strategic buyer, this is the best time in two years to be buying," says Nick Chini, managing principal at Bainbridge, a consulting and M&A advisory firm.

Valuations are returning to earth as the economy slows and private-equity buyers retreat, says Chini. True, the deep freeze in the credit markets has sharply curtailed deals north of $1 billion or so. But for transactions under $500 million, "there is plenty of capital, especially for strategic acquisitions," says Chini. Moreover, companies that can access the debt markets will enjoy favorable interest rates, thanks to the Federal Reserve's many rate reductions in the past year.

Not all industries have bargains, though, and not all sellers will be eager to settle for lower prices. And given the uncertain economic outlook, companies must proceed with caution. Acquirers should evaluate their own financing needs before embarking on a shopping spree, making sure they can fund their operations even if traditional financing becomes difficulty to find, warns Jeff Horwitz, partner at law firm Proskauer Rose LLP. "Liquidity is king now," he says.

Smart Shopping

As any savvy shopper knows, just because something is cheap doesn't mean it's a worthy purchase. A target's strategic fit with the acquirer is as important as ever, says J.D. Sherman, CFO of Akamai Technologies, a Cambridge, Massachusetts-based Web infrastructure company. "Don't let bargain-basement prices change the fundamentals of your acquisition strategy," he says.

"The trick is in understanding what you need, and at what price you will walk away," says S.L. Narayanan, finance chief at Symphony Services, a provider of software engineering services based in Palo Alto, California. This may be standard advice, but it is particularly germane now, he says, because "when valuations are down, it can be especially tempting to look around."

Thorough due diligence and rigorous downside-scenario planning are also critical in a market where some sectors have yet to touch bottom. "CFOs have to be prepared for a deeper downturn than they may currently be expecting," says Robert Filek of PricewaterhouseCoopers's transaction-services group. "You don't want to make a major strategic move and be surprised by a worse short-term economic picture than anyone expects." Given the dwindling competition for deals, acquirers may be able to negotiate longer time frames for due diligence than before, when auctions dictated strict timetables.

In their due diligence, finance teams should put assumptions about synergies to the test and understand the target business from an operational perspective, not just from a financial viewpoint, says David Williams of Deloitte's Financial Advisory Services practice. "Many companies approach due diligence by dotting the i's and crossing the t's," he says. "Instead, I would focus all of my time making sure the strategic value is there."

Tough market conditions will be unforgiving of deals that are a bad strategic fit, making it hard for buyers to successfully integrate them or realize the projected benefits. As an extra precaution against an ongoing down market, Narayanan suggests building in a "margin of safety": a 3 to 5 percent premium over the target hurdle rate.

Holding Out for More

Despite the severity of the downturn, not all industries are witnessing sinking valuations. In some, like health care and energy, deal multiples are still climbing. Chini cites a recent deal in the energy business that closed at a multiple of nine and a half times earnings before interest, taxes, depreciation, and amortization (EBITDA); a year ago, he says, it would have sold at eight or nine times EBITDA.

Richard Arnold, chief operating officer and CFO at Phoenix Technologies, says the portable-computer market, which is the company's largest customer segment, is growing at a compound annual rate of 30 percent. "We don't see any weakness at all in our market," he says. Still, Phoenix was recently able to buy a portfolio company from a venture-capital firm even as the target was in the middle of raising a new round of financing from its backer.

"Three or four years ago, those VCs would never have let go of this asset," says Arnold. "In today's environment, they are just a little more willing to take the risk out of their portfolio by cashing out." Indeed, strategic buyers might consider approaching attractive targets that have turned down offers in the past; this time around, they could receive a warmer reception.

But many prospective sellers, conditioned by years of deal mania, haven't adjusted their valuations to the new market conditions, observes Akamai's Sherman. Indeed, some may decide to hold out for a higher price when the market improves, says Narayanan. "I think you'll see a lot of overtures by potential buyers," he says. "But what is realistic and what is doable is driven by the seller's level of desperation - or the lack of it."

Foreign Competition

Although many private-equity buyers have moved to the sidelines, U.S. companies face competition from overseas. Spurred on by the dollar's weakness, many international companies are looking to expand their stateside presence through acquisitions. "Foreign buyers are saying, 'Hey, the United States is on sale,'" says attorney Horwitz of Proskauer Rose.

Some foreign companies are getting what amounts to a 10 to 20 percent discount on deals simply because of their currency's relative strength against the dollar, which has sunk to record lows against the euro in recent months. Bainbridge's Chini says he has seen numerous Indian and Chinese companies enter the market for U.S. deals, particularly in the technology and health-care sectors. Sovereign wealth funds, pools of investment capital managed by governments, could also play a role, although they typically tend to focus on large targets, according to Chini.

Tight credit, shaky markets, and new competitors notwithstanding, the current M&A market may provide companies with an opportunity to emerge from the downturn stronger than before, particularly if they focus on less-risky small and midsize deals that build on their core businesses. "There are hidden gems out there that they can get on the cheap," says Deloitte's Williams. Finally, a silver lining.

Click here for a link to the article at CFO.com

Bainbridge Capital Advisory Group Uses Market Intelligence to Source Off-Market Opportunities

Fri, 16 May 2008 21:13:43 GMT

Bainbridge Featured in Oil and Gas Investor Magazine

The best potential acquisitions are not always advertised. Sometimes it takes market intelligence and a proactive process to know about possible matches outside the traditional auction environment.

Download the pdf to read the full article featured in the April 2008 edition of Oil and Gas Investor Magazine's "The A&D Deal Showcase 2008".

Yahoo fends off Microsoft

Tue, 06 May 2008 21:11:26 GMT

Bainbridge quoted in recent Financial Week article

Tick, tick, tick...ka-boom!

Some claim Yahoo pitted employees against shareholders to help fend off Microsoft

By Andrew Osterland, Financial Week

May 5, 2008

Microsoft CEO Steve Ballmer didn't go medieval as threatened on Yahoo management last week for refusing to discuss his offer to buy the company. Instead, Mister Softee simply rode on, apparently galled by Yahoo's insistence that he raise Microsoft's offer for the search engine specialist.

Mr. Ballmer, who reportedly grew irate a few weeks ago when a Yahoo director suggested the company was worth $40 a share, indicated to his employees last Thursday that he was still considering a deal-friendly or not-rather than walking away from his sour courtship of Yahoo.

But in the end, Yahoo's reported asking price turned out to be too rich for even Microsoft's considerable means.

While Yahoo CEO Jerry Yang successfully defended the company he built. he may be dealing with the now-kaput offer from Microsoft for years. Indeed, the Yahoo board's efforts to thwart Microsoft's advances have already spawned at least two investor suits claiming directors breached their fiduciary duty to shareholders in rebuffing Mr. Ballmer. What's more, in their defenses against Microsoft, Mr. Yang and the board arguably pitted the interests of Yahoo employees against those of Yahoo shareholders, say plaintiff's lawyers.

A lawsuit filed in late February on behalf of two Detroit pension funds that own Yahoo stock is now playing out in the Delaware Chancery court. It accuses the Yahoo board of failing to act in the interests of shareholders by refusing to negotiate with Microsoft about a deal. A key issue in the shareholder suit is an employee retention plan adopted by the Yahoo board shortly after it rejected Microsoft's $31 bid. The plan, which would kick in on a change of control at the company, grants "golden parachute payments to every single Yahoo employee," according to the filed complaint. It also provides for accelerated vesting of all employee stock options and restricted stock, and grants them broad "walk away" rights to leave the company and still collect big severance checks.

Contracts aimed at protecting key personnel at target companies in acquisitions are common, but this is an über retention plan that "applies to every janitor, every file clerk, every secretary, every security guard-everybody," said Bouchard Margules & Friedlander partner David Margules in a teleconferenced court hearing in late March. Mr. Margules represents plaintiffs in the case. The total cost of the plan to Microsoft or any other acquirer of Yahoo could reach $3 billion, or more than $2 per Yahoo share, according to plaintiff estimates.

"This isn't about employee retention. This is a poison pill," said Mark Lebovitch, a partner at Bernstein Litowitz Berger & Grossman who serves as lead counsel for the plaintiffs. Yahoo also has a shareholder rights plan that would deter any hostile bidder from accumulating more than 15% of Yahoo stock. "The [retention] plan provides a huge incentive for Yahoo employees to walk away on a change of control, and it presents real integration problems" for potential acquirers of the company, said Mr. Lebovitch.

Not only does the plan increase the cost of cutting the Yahoo work force of 14,000, it also raises the price required to keep key employees. If Mr. Ballmer ever contemplated making a higher bid for Yahoo, the cost of the retention plan currently in place no doubt limited his willingness to raise the price, say analysts. In other words, Yahoo employees' gains would be Yahoo shareholders' pain.

"The Yahoo board created an incentive for employees to leave that would decrease the value of the asset after acquisition," said Nick Chini, managing principal of M&A advisory shop Bainbridge. "Microsoft [had] to factor that into its valuation model. If I were a Yahoo shareholder, I wouldn't be happy." Among other things, the shareholder suit seeks to invalidate the retention plan.

Mr. Lebovitch hopes to get an expedited trial schedule and is currently trying to depose the chairman of Yahoo's compensation committee, Arthur Kern. Not surprisingly, Yahoo is in no rush to make him available. The company claims that Mr. Kern, who was married on March 1, has postponed his honeymoon because of his responsibilities to Yahoo. He now plans to spend five weeks abroad with his new wife and would not be available for deposition until next month.

In the meantime, Microsoft management will be drawing up a new strategy. In a letter to employees obtained by Reuters, Mr. Ballmer elaborated on what the next step for Microsoft would be.

"Ultimately, our goal is to build the industry-leading business in search, online advertising, media, and social networking," Mr. Ballmer wrote in a Saturday letter to employees, obtained by Reuters.

"Although the acquisition of Yahoo would have accelerated our ability to deliver on our strategy in advertising and online services," Mr. Ballmer wrote, "I remain confident that we can achieve our goals without Yahoo."

If so, Yahoo will likely be hearing from a few more of its shareholders.

URL for this article: http://www.financialweek.com/apps/pbcs.dll/artikkel?Avis=CF&Dato=20080505&Kategori=REG&Lopenr=786576806&Ref=AR

Private Equity Firms Searching For Smart Deals in the Middle Market

Tue, 08 Apr 2008 22:41:27 GMT

Private Equity Firms Are Searching For Smart Deals in the Middle Market as M&A Activity Reaches a Four Year Low

According to a recent editorial from CNBC and the Financial Times, the worldwide volume of mergers and acquisitions (M&A) fell to its lowest level in four years in the first quarter of 2008 as the credit squeeze and market turmoil continues to put a brake on deal-making activity. According to Deborah Larrison, Citi Capital Strategies, investors will be more careful in who they lend too, and private equity sources and firms will be more apt to conduct due diligence on their target companies. Additionally, while the attention has historically been focused on the larger deals, there continues to be growth and opportunity in the middle-market arena, deals under $500 million.

According to recent Securities Data Company statistics, of all M&A activity worldwide, over 85% has been in the under $500 million deal space. There continues to be a large volume of deals at lower per deal transaction amounts, allowing firms to spread their investment risk across a variety of smaller deals versus taking the risk of one large deal succeeding. Therefore, due to the current market space, it is important to be strategic in what deals companies pursue.

Bainbridge is well-versed in the M&A marketplace, particularly in the middle-market. Through primary-source research, the firm's teams are able to identify hidden niche markets and new industries and conduct careful due diligence, ensuring that clients are pursuing well-explored investments. Beyond due diligence and market studies, the Bainbridge team of experienced M&A Analysts is able to find target companies that match the investor's criteria, often making clients the bidder of first choice. Working as an extension of a private equity firm's development team, Bainbridge is able to create proprietary deal flow outside of the auction environment for its clients coupled with careful due diligence, creating a well rounded investment strategy.

Media Contact:
Bainbridge Media Relations
858-410-0922

Bainbridge Offers Sports Due Diligence Services

Thu, 06 Mar 2008 23:34:16 GMT

Bainbridge's Professional Athlete Due Diligence offering featured in the La Jolla Village News

by Brett Hanavan, La Jolla Village News, Business Section

March 06, 2008 - La Jolla-based management consulting service Bainbridge has launched a new service called Bainbridge's Professional Athlete Due Diligence. Its target is professional sports organizations.

The service will provide insight into a player's character and into the player's past. It is a proprietary insight using research methodology to look into that player's past character in order to predict whether the player will be a good fit with the franchise.

The service is designed to provide teams with information necessary to make informed and prudent player investments, such as offering the player a long-term contract.

The service is rooted in a professional sports team's need for research and analysis to support its draft selections and long-term contract negotiations.

Bainbridge's managing director is Dr. Kenneth Wagner, but the company's roots in management consulting go back to its beginning in 1975. Boulton Bainbridge Miller, Ph.D., founded the company. He was a professor, consultant and author.

Bainbridge targets Fortune 1000 corporations, private equity groups and start-ups by providing similar due diligence services to support brand strategy, market entry and crucial investment decisions, including mergers, acquisitions and divestitures.

Essentially, Bainbridge's Professional Athlete Due Diligence builds on the process similar to what a major league scout would.

It employs a consultative approach by conducting personal interviews with potential draft picks and goes beyond conducting computer-based background checks to look into secondary sources of information.

"Our open-ended questions center around a player's past behavior," Wagner said. "We only conduct interviews with the permission of the player in question. Of course, players will be motivated to grant permission when they are told that a certain team is interested in drafting them."

Then Bainbridge research analysts conduct interviews with people important in the player's past to get a better feel for the character behind the player. This information is provided to team management.

In the end, the process provides the team with a third-party insight into whether a player's values are consistent with those needed to effectively compete and win.

"Given how important the issue of character is to professional sports teams, we think it is prudent to employ trained and experienced consultants to conduct interviews with prospective players, former coaches, teachers, teammates and personal acquaintances," Wagner said. "Such due diligence provides a valuable source of information to a team prior to its decision to invest millions of dollars in a player."

Wagner said that due diligence is increasingly important to professional sports teams in these days of multi-year contacts and large signing bonuses. In the aftermath of incidents such as pro football player Michael Vick's conviction for dog fighting and cruelty to animals, a player's character is becoming more important to the organization.

"Bainbridge's full reference interviews offer a third party, unbiased perspective for assessing if a player's values are consistent with those needed to compete and win," Wagner said. "To make more prudent and sound business decisions, teams must go beyond basic background research.

Bainbridge's clinical and sociological approach to interviews will provide the information needed to guide the most informed player selections, investments and contract terms."

Bainbridge is offering its due diligence services to organizations in the National Football League, National Basketball Association, Major League Baseball, the National Hockey League and Major League Soccer.

"Leveraging our expertise in primary-source research and history of successful investment due diligence, we have developed a new service for professional athletes," Wagner said.

Source: La Jolla Village News

Bainbridge Launches New Higher Education Consulting Service

Tue, 04 Mar 2008 23:38:32 GMT

Strategy Consulting Firm Enters Higher Education Market

San Diego, CA – March 4, 2008 – Bainbridge, a boutique management consulting and M&A advisory firm based in San Diego, announced today the release of its innovative Higher Education Research and Consulting Practice. Bainbridge has expanded its already wide breadth of industry consulting services to the higher education market with the launch of this new offering.

“We offer an unbiased perspective that outperforms secondary research,” said Dr. Ken Wagner, Vice President and Managing Director at Bainbridge. “Whether a school is looking to improve its student retention, competitive positioning amongst other schools, or assess its brand in the market, Bainbridge can provide custom research and insightful solutions.”

Dr. Wagner, a former Professor of Sociology from Hamilton College, believes higher education institutions are facing competitive challenges in today’s economy. In response, Bainbridge is placing increased importance on helping colleges and universities achieve their strategic goals. As an extension of Bainbridge’s current consulting services catered to educational organizations, Bainbridge’s dynamic higher education consulting services include: Strategic Branding, Market and Industry Analysis, Competitor Intelligence, Internal Assessment and Organizational Implementation,, Stakeholder Analysis, Benchmarking and Best Practices.

“Our specialization in primary-source research, our team’s expertise in analytical thinking and ability to provide strategic insight reaches across numerous industries, including higher education,” said Dr. Wagner.

For more information about Bainbridge please visit media@bainbridge.com.

About Bainbridge

Bainbridge is a combination management consulting and M&A advisory firm dedicated to providing its clients with custom-tailored solutions and accelerated growth. Through its unique expertise in primary-source market research, Bainbridge specializes in articulating growth strategies supported by market, customer, and competitor research. Bainbridge's staff of seasoned industry executives, management consultants and financial analysts continuously monitors clients' external environments to help build and maintain the most effective market and competitive positioning. Bainbridge clients gain a competitive advantage through which they make strategically informed decisions.

Bainbridge Announces Genesis Energy, L.P.’s Latest Acquisition

Mon, 03 Mar 2008 23:21:17 GMT

Genesis has completed its $563 million acquisition of five energy-related businesses from the Davison family

San Diego – August 20, 2007 – Bainbridge, a boutique management consulting, M&A advisory, and private equity firm based in San Diego, today announced that Genesis Energy, L.P. completed its $563 million acquisition of five energy-related businesses from the Davison family. The Davisons have owned and controlled energy-related transportation businesses in Ruston, Louisiana since 1937. The transaction was completed on July 25, 2007.

Genesis Energy, L.P., a diversified midstream energy master limited partnership headquartered in Houston, Texas, acquired Davison assets including a refinery services business, petroleum products marketing business, terminal business, trucking business and a fuel procurement business. Genesis expects that the transaction will allow the company to move forward to negotiate several additional transactions with the owner of its general partner, Denbury Resources, Inc.

Bainbridge’s Capital Advisory group assisted Genesis Energy in the identification of the off-market opportunity with the Davison family. "This transaction demonstrates the value of proprietary deal flow and of having a proactive process and an experienced business development team," said Nick Chini, Managing Principal of Bainbridge.

Bainbridge’s past transactions and experience as a buy-side advisor in the upstream and midstream oil and gas industry proved to play a significant role in conducting proprietary deal flow development for Genesis Energy. Bainbridge’s search and analysis service – AcquSearch – provides clients with consistent, quality deal flow through services including market feasibility studies, acquisition search, due diligence and negotiation strategy development.

About Bainbridge

Bainbridge is a combination management consulting and M&A advisory firm dedicated to providing its clients with custom-tailored solutions and accelerated growth. Unlike traditional investment banking or consulting firms, Bainbridge combines strategic and financial advisory to produce business results. Working with a diversified client base of Fortune 1000 corporations, private equity groups, and start-ups, Bainbridge's staff of seasoned industry executives, management consultants and financial analysts continuously monitors clients' external environments to help build and maintain the most effective market and competitive positioning. Bainbridge's Capital Advisory Group provides a range of services including acquisition search, sell side advisory, market feasibility studies, due diligence, and more. Using primary-source research, our team works with private equity groups to provide deal flow outside the auction environment, putting your firm in non-bidding situations for well qualified candidates. Our full-service approach is guaranteed to optimize the timing, quality, and quantity of your deal flow pipeline. For more information, please visit http://www.bainbridge.com.

Resin-related M&As attract private equity

Mon, 18 Feb 2008 22:12:02 GMT

Bainbridge Featured in Plastics News Private Equity Article

By Frank Esposito, Plastics News

AKRON, OHIO -- Feb. 18, 2008, 10 a.m. EST—What could you get for $50 billion in the 2007 plastics mergers and acquisitions market? How about three (and a half) major material producers?

Actually, the tab for purchasing GE Plastics, Huntsman Corp., Lyondell Chemical Co. and half of Dow Chemicals' polyethylene, polypropylene and polycarbonate units came to $50.9 billion - but what's a half billion really matter to private equity firms and state-backed Middle Eastern companies?

Going down the year's roll call, we find:

* Saudi Basic Industries Corp. of Riyadh, Saudi Arabia, paying $11.6 billion for engineering plastics power GE Plastics.

* Hexion Specialty Chemicals Inc. - backed by private equity giant Apollo Management LP - snagging polyurethane leader Huntsman for $10.4 billion. This deal is still awaiting approval from the Federal Trade Commission, which has requested additional information from both companies. A Huntsman spokesman said there's no financial reason for the delay.

* Basell Holding BV - owned by Access Industries Inc., another private equity player - picking up Lyondell for $19.4 billion.

* Petrochemical Industries Co. of Safat, Kuwait, taking on half of the Dow businesses for $9.5 billion.

"If you look at the megatrend outside of plastics, plastics then looks like a microcosm of the new capital holders," said Nick Chini, managing principal with Bainbridge Inc., a management consulting and M&A advisory firm in San Diego. "There's a lot of private equity looking for good quality deal flow."

"The [U.S.] dollar being low will draw more international buyers than ever," he added. "Interest from other parts of the world will be higher because they'll be able to get more for their dollar. There are petrodollars in Abu Dhabi and Asian trading dollars in Singapore.

"The plastic market is global right now. If you believe in growth in India and China, you're going to be bullish on plastics even if it's a commodity. That's consistent with other commodity sectors. You can do the same comparison on energy, metals and other raw materials. This bull run will continue until a substitute for these commodities comes along.

"Even if the U.S. hits a recession - which I think we're already in - there's still going to be demand for plastics."

And the presence of private equity companies in the market is something plastics firms should become accustomed to, according to Stewart Kohl, managing general partner of private equity firm Riverside Co. in Cleveland.

Globally, private equity investment peaked in the second quarter of 2007 when it represented 25-30 percent of all M&A deals, according to Kohl. Historically, this number had been below 10 percent.

As credit markets have tightened, this percentage has dropped somewhat, but Kohl said "it's not going back to 10."

"M&A reflects a significant return for private equity - it can be very attractive," he added. "As a result, private equity firms have become aggressive strategic buyers."

The value of plastics firms to the M&A market is apparent in Riverside's 32-company portfolio. The portfolio includes Hudson-Sharp Machine Co., a maker of plastic bag-making machines in Green Bay, Wis., and three firms involved in plastics processing - Commonwealth Laminating & Coating Inc. of Martinsville, Va.; Connor Sport Court International of Salt Lake City; and Stoffel Seals of Nyack, N.Y.

Kohl agreed with Chini, saying that non-U.S. buyers "are looking at U.S. companies as cheap today. These are [state-owned] sovereign wealth funds with money to spend."

As of Jan. 29, the U.S. dollar was worth less than 70 cents when compared to the Euro used by many European countries. The two currencies haven't been of equal value since late 2002.

The compounding market also was active in 2007, with at least six deals involving U.S. firms taking place, including:

* Compounding leader PolyOne Corp. buying thermoplastic elastomer compounder GLS Corp.

* Basell buying PP compounder Solvay Engineered Polymers.

* Private equity firm Wind Point partners acquiring color and additive compounder Matrixx Group.

* A. Schulman Inc. picking up Swedish color concentrate maker Delta Plast Group.

* Liquid color maker ColorMatrix Group snagging Swiss color concentrates maker Colorant-Chromatics Group.

* Private equity firm Spell Capital Partners adding PVC compounder Prime PVC Inc.

No purchase price was disclosed in any of the above deals. Market sources estimated the Solvay EP transaction at between $100 million and $150 million.

It's difficult to estimate the purchase multiples - the number multiplied by a firm's earnings to calculate its sale price - for the compounding deals, but the four major material deals each had multiples estimated at 10 or higher. That's a fairly high number given recent M&A history.

"It's all supply and demand - and [10] is the multiple that the market is willing to bear now," said Chini. "A multiple of 10 is average in this market. And remember that foreign buyers are getting a 20-25 percent discount because of the currency difference. Middle Eastern firms are holding dollars from oil trading. They've got more capital than they can place."

"As [M&A] activity peaked in the second quarter, larger deals tended to trade at higher multiples," added Kohl at Riverside. "Now, we'd expect to see multiples backing off because of the credit situation."

The changing materials landscape created by all of this M&A upheaval will have an effect on North American processors and their resin buying efforts, according to Bill Bowie, chief operating officer of Resin Technologies Inc., a resin-buying consultancy in Fort Worth, Texas.

"The North American polyethylene market had 18 suppliers in 1999, and now there's 10," Bowie said. "A processor used to always be able to find someone hungry that month who would move a car [of resin] at a lower price. You could find someone to do a deal if you were a savvy buyer."

"Now, these big companies like Dow, ExxonMobil, Nova and ChevronPhillips don't have to be followers. It's an ongoing issue to deal with and North American processors aren't alone. Now, [resin makers] believe size is the way to survive and larger customers are driving partnerships."

Bowie described the Dow-Kuwait deal as "a watershed moment" for the North American resin market.

"It was more of a surprise," he said of the deal. "You knew the GE Plastics business had been out there [for sale] for some time and you knew it was coming. But Dow - maybe because they're based in the Midwest - just seemed a bit more surprising."

Chini and Kohl also did their best to disprove some of the myths that may have accumulated around private equity ownership. When private equity is mentioned - regardless of the industry - some expect drastic cost-cutting and a quick turnaround and sale. Chini and Kohl each said that's not always the case.

"Any private equity firm worth its weight will run a business effectively," Chini said. "If a buyer doesn't see potential development, that could reduce their interest."

"If it's more of a turnaround situation, you might see people being fired and the business broken up," Kohl added. "But it's been my experience that when you pay high multiples, you can't cut back on marketing, [research and development] and employment if you want to get anything out of the company."

Source: Plastics News

Credit Squeeze Leads Firms Down-Market

Mon, 04 Feb 2008 23:10:35 GMT

Bainbridge Featured in Buyouts Magazine Article

By Erin Griffith

The credit scarcity of the last six months has forced firms of all sizes to adjust their price horizons downward. Mega-firms are pursuing deals they wouldn't have touched a year ago, and likewise mid-market firms are looking to scoop up small companies that might not have previously qualified as prime buyout candidates.

Such a shift poses risks for firms. One is that deal prices remain artificially high as buyout firms all descend on the smaller end of the market that remains active. Another is that buyout firms find themselves understaffed as they're forced to invest in more portfolio companies than they had originally anticipated. Finally, they make hear complaints from limited partners worried that they're not getting the diversification by deal size that they had signed up for when putting their portfolios together.

But waiting out the storm won't work, either. Coming off of two consecutive record-breaking fundraising years, buyout firms have more cash to spend than ever-nearly $500 billion by our estimate. But with equity to deploy but less to borrow, the LBO world is feeling "a little desperation," said one buyout pro. Firms "can sit around and collect fees for nothing, or they can do smaller deals."

To date, buyout firms haven't cut a clear path downhill, and no straightforward pattern of deals has emerged. But testimonies from auction participants suggest that dealmakers up and down the market are seeing larger bidding pools populated with unfamiliar faces.

Warburg Pincus, for example, placed a first-round bid for Press Ganey, an Indiana-based health care outpatient survey company owned by American Security Capital, according to a knowledgeable source. The Lehman Brothers-run auction, still under way, has seen strong interest from several $10 billion-plus funds, sources say. Valued between $750 million and $800 million, and requiring an approximately $250 million equity check, the deal would not have attracted several "heavy hitters" pre-credit crunch, the source said.

Large-market LBO shops also populated the buy side in the auction of Spectrum Brands's $800 million pet care business, put on the block in late fall. Of the 20-plus bidders, about half were buyouts firms drawn to a deal they "wouldn't have bothered with a year ago," a person familiar with the sale said. "It would have felt too small." (Spectrum Brands ultimately pulled the deal after receiving unsatisfactory offers.)

Further down-market is the recent $285 million sale of ORS Nasco, an Oklahoma-based wholesale industrial supply distributor. The company ultimately went to a strategic buyer-United Stationers. But sell-side banker Rick Lacher at Houlihan Lokey Howard & Zukin said several unusually large LBO players inspected the deal. "We saw interest from a $5 billion fund, a $3 billion fund, and a few $1 billion funds," he said. Interest in the Brazos Private Equity Partners-backed company, Lacher noted, came from large firms looking to create a consolidated company through several acquisitions.

Firms at the smaller end of the market are reporting similar pressures. A managing director of a mid-market buyout firm recently reported getting outbid by as much as 50 percent for a $10 million EBITDA business. Considering the fact that his firm submitted an offer valuing the company at 10x EBITDA, the managing director attributed the sky-high pricing to up-market competitors.

Firms justify their smaller deals by arguing that they're buying fast-growing companies capable of generating strong returns despite heavy equity investments. CCMP Capital Advisors recently cut a $500 million equity check to kick-start Legacy Hospital Partners, a new platform company that is admittedly smaller in initial scale than the firm's typical $500 million to $3 billion LBO deals. The firm is willing to go downstream in areas of expertise-like health care-for "transactions that are doable in this credit environment," said Nancy-Ann DeParle, a CCMP managing director.

Firms can make the case that they're playing in the same industry sector, if not the same market size, and implement a multi-year roll-up strategy that results in a much bigger company, added Nick Chini, a managing principal at midmarket investment bank Bainbridge. "They can't go too far from home," he said of the need to maintain sector focus. The sale of distributor ORS Nasco, for example, attracted larger firms because of the company's roll-up potential, according to the deal's banker.

Although they weren't preparing specifically for a slowdown in the market, several firms have recently expanded their capacity for smaller deals. TPG, Silver Lake, and Goldman Sachs have each recently raised separate smaller-market funds to seize opportunities their respective multi-billion-dollar funds couldn't handle. Each of these middle market funds was in the works long before the credit meltdown came into play, but they conveniently put the firms in a strong position to ride out the current environment. TPG recently closed on $1.5 billion for its middle market fund. Silver Lake is targeting $750 million for its Silver Lake Sumeru fund, and Goldman Sachs's mid-market GS Direct will dedicate around $1 billion to the mid-market, according to published reports.

The debt dry-up may not last forever, but in the last six months, large-market deals have been rare, with only two control-stake deals of more than $1 billion announced by United States-based sponsors since the start of the year and 18 since Sept. 1, according to Thomson Financial, publisher of Buyouts. In the large market, the sluggishness of the secondary loan market has dried up available debt to back multibillion-dollar LBOs. And the same phenomenon is playing out in the middle market, where senior lenders must club together to produce credit facilities of more than $100 million. A debt package of $250 million is uncommon, and firms are fighting for every shred of financing they can get their hands on.

Strategic Add-ons Add Value for PE Firms

Mon, 28 Jan 2008 23:05:40 GMT

Bainbridge Featured in Financial Week Article

By Matthew Quinn

With the crash of the credit markets, all expectations turned from buyout shops to strategic corporate buyers to make deals. However, armed with a stable of portfolio companies, private equity firms can also play the part of strategic buyer, a role they are increasingly expected to embrace.

Earlier this month, buyout behemoth Blackstone Group, along with Wellspring Capital Management, agreed to acquire Performance Food Group for $1.3 billion, one of the larger take-privates in recent months. The price of $34.50 for each share of Performance stock represented a more than 40% premium to the closing share price the day before the deal was announced. Such a hefty price was likely more palatable because Performance will be combined with Vistar Corp., a food service distributor, which Blackstone bought a 67% stake in from Wellspring in September in a deal valued at $420 million.

There is only so much a company can be improved through increased operational efficiencies, and only so much a private equity firm can milk from added leverage (though that can be quite a lot). Companies need to grow to add value, and opportunistic acquisitions can achieve that for portfolio companies just as well as they can for others.

"It's always been an objective of ours when we can to turn ourselves from a financial buyer into a strategic buyer by making acquisitions by a portfolio company," said Peter Gottsegen, a managing partner with private equity firm CAI Managers.

Private equity firms sometimes make acquisitions with the explicit purpose of using them as a platform for add-on deals. For example, in December, buyout shop Oak Hill Capital agreed to buy eight TV stations from News Corp. for $1.1 billion. Those stations will be put under the Local TV holding company that Oak Hill formed last January to acquire nine TV stations from the New York Times Co. for $575 million. Also in December, Local TV inked a deal to manage 23 stations owned by Tribune Co. Voilà. Instant broadcast company with 40 stations in its stable.

Portfolio companies were faced with the same hurdles as other corporate buyers amid the record-setting M&A activity of the past two years, where sellers fetched historically high valuations thanks to easy credit terms for leveraged buyouts.

Even so, private equity pros said that add-on acquisition activity, which is difficult to track, has been steady if not strong in recent years, but more deals could be on the way as larger deals become harder to get done, forcing firms to look for opportunities to build their businesses in the meantime. And with the advantage at the bargaining table shifting toward the buyer, deals are starting to look even more enticing.

"I expect to see more bolt-on acquisitions that were not possible before mainly because of the valuations, not the availability of credit," said Nick Chini, managing principal at boutique M&A advisory firm Bainbridge. "In the small-cap sector, credit is out there."

Mr. Chini said that a few sectors could see a significant pickup in add-on acquisitions, including health care, food and beverage, commodity-backed products and the industrial sector.

Add-on deals, in a difficult lending environment, are simply easier to swing. "If you've got an existing portfolio company that already has financing doing smaller add-ons, where you put in some equity and just borrow more on your existing credit facilities, that's easier than going out and finding new financing," said Christopher Hagan, a partner in law firm Goodwin Procter's private equity group.

Credit tightening has had a profound impact on some firms' exit strategies, adding to the momentum for add-on deals. Mr. Hagan said that he has one client that was looking to unload one of its portfolio companies, but pulled out of the sales process because of market conditions. In turn, knowing that it was now facing a longer hold period, the company shifted gears and instead started doing some add-on acquisitions.

"They just felt they weren't going to get the right price right now, but have found some very attractive growth opportunities," he said. FW

This article can be found online at: http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080128/REG/987994761/1036

Boutique Business Consulting Firm Thrives in San Diego

Thu, 24 Jan 2008 23:29:44 GMT

Bainbridge Profiled in The San Diego Daily Transcript

By Jeran Wittenstein

When business consulting shop Bainbridge Inc. decided it was time to establish a West Coast presence in the late 1990s, the company initially looked to San Francisco, the epicenter of the technology boom.

"Then we did a little more homework and decided the quality of life (in San Diego) is better," said managing principal Nick Chini.

The lower cost of living and numerous universities in close proximity were other considerations. A decade after choosing San Diego as the destination for its main office, that decision has turned out to be key in the evolution of Bainbridge - even though there are no Bainbridge clients in the area.

What began as a small shop to help a university professor research projects has grown into a nationwide business providing management and investment advice to some of the highest profile companies in the world. One of the critical drivers of that growth is within walking distance of Bainbridge headquarters in UTC: the University of California, San Diego.

UCSD graduates now account for more than half of Bainbridge's full-time recruits, said Chini, who is active in advising clients with private equity and M&A deals as well as managing the firm's overall execution from San Diego.

"UCSD has been a huge advantage," Chini said. Graduates "want depth of experience and diversity... there is no other field out there that gives you the exposure to the range of industries, the range of functions - sales, strategy, product development - than consulting."

With no other major consulting groups in San Diego, Bainbridge has essentially had its pick of the litter among those that would like to stay local, often choosing from a field of 20 to 30 well-qualified candidates per position, according to Chini.

Founded in 1975 by author, consultant and professor Boulton Bainbridge Miller, the company now operates nearly a half dozen offices in California, Massachusetts, Nevada and Texas.

Bainbridge has three areas of expertise: management consulting for large capitalization companies, advising private equity groups and hedge funds on acquisitions and, most recently, managing the firm's own private equity funds.

Chini declined to reveal the names of the firm's clients, although he did note that Microsoft (Nasdaq: MSFT) was once a client. He did say that Bainbridge currently advises some of the largest companies engaged in sectors ranging from the Internet and hardware to financial services and energy.

Everything begins with research at Bainbridge.

"What really sets us apart from our peers is our primary source research," Chini said. "Information is power, and that leads to better executive decisions."

Though Chini isn't specific about what this research entails, for consulting he said it often involves surveying customers and clients of companies in order to present management with "a perspective they usually don't see directly."

Chini has been involved with Bainbridge since he connected with the nascent firm at the Massachusetts Institute of Technology, where he earned an MBA. There he was among a group of students and professors in high demand as the technology boom was picking up speed.

"We were at the right place at the right time," Chini said. "What was really just a hobby - a way for us to make ends meet in grad school - the next thing we knew had became a long-term business."

jeran.wittenstein@sddt.com
Source Code: 20080124cre

This article can be found online at: http://www.sddt.com/files/Banking&FinanceQuarterly_2008.pdf

Blank Check Companies Amassing Big War Chest

Mon, 17 Dec 2007 22:54:24 GMT

Bainbridge Featured in Financial Week Article

By Matthew Quinn

Hicks, Perelman, others launch special purpose IPOs to do deals under deadline. Where? Private firms looking to cash out, for starters.

Despite the slowdown in M&A, investors' appetite for private equity-like investments remains strong, leading to a boom in fund-raising for special purpose acquisition companies, also known as SPACs or blank check companies.

SPACs are companies that have no operations, but go public with the intent of merging with or acquiring a company with the proceeds from their initial public offerings. Under Securities and Exchange Commission rules, a SPAC has 24 months from the time of its initial public offering to make one or more acquisitions that have a fair market value of at least 80% of its total net assets. If it doesn't complete the transaction in that time, it must dissolve.

Since 2003, 143 SPACs have raised roughly $17.4 billion in proceeds-$11.4 billion of it raised this year alone-with annualized returns of 7.6%, according to data from SPAC Analytics. Approximately half of those funds, with $10.7 billion in proceeds, are currently looking for an acquisition. Another 65 have announced or completed an acquisition, while seven, with gross proceeds of $447 million, have been liquidated.

SPACs have made 45 acquisitions this year valued at $6.6 billion, according to data from Thomson Financial. The largest acquisition by a SPAC this year was U.K.-based hedge fund operator GLG Partners' reverse acquisition with Freedom Acquisition Holdings, completed last month and valued at $3.4 billion. The second largest was Symmetry Holdings' $535 million purchase of Novamerican Steel of Canada, also completed last month.

SPAC investments tend to be in the small-cap sector and in a variety of industries. In 2007, acquisitions most frequently targeted the financial industry, with 12 deals valued at $465 million, Thomson data show. Materials and consumer products were also active industries, with seven and five acquisitions, respectively. SPACs can serve as an exit strategy for private equity firms, as well as owners looking to retire.

Investors in SPACs are initially buying little more than the reputation of the holding company's management. "It's very speculative," said Chip MacDonald, a partner with law firm Jones Day. "You give someone a load of money to go out and buy something and you wonder whether that money is burning a hole in their pocket in between. You're betting on a management team, that they can pull off an acquisition that makes sense within a given time frame."

Lately, some high-profile names have been filling their pockets in this fashion. In September, a SPAC headed by billionaire Thomas Hicks, owner of the Texas Rangers and Dallas Stars, raised $550 million. Sapphire Industrial, headed by Donald Drapkin, the chairman of Lazard's investment committee and former head of Ron Perelman's investment company, MacAndrews & Forbes, filed to raise $500 million in October. Lazard rival Greenhill filed to raise $400 million through an IPO last month for its GHL Acquisition Corp. Mr. Perelman got in on the action himself earlier this month when his MAFS Acquisition Corp. filed to raise $500 million. And the largest SPAC offering ever, Liberty Acquisition, raised more than $1 billion earlier this month.

Though SPACs need not, and so tend not to, spell out which industries they are targeting, their management teams often have expertise in specific areas, and when they do, they extol that. For example, the prospectus from Mr. Perelman's company points out that its management team has experience in consumer products, gaming, entertainment, financial services, defense, private security, medical devices and biotechnology.

It can be a real challenge to identify, agree to and find financing for an acquisition in such a short time. Endeavor Acquisition averted a forced liquidation by three days last week when shareholders for clothing line American Apparel approved their merger, which the two agreed to 12 months ago.

The fund-raising momentum is nonetheless expected to continue into 2008. Boutique M&A advisory firm Bainbridge, for one, is looking to raise $225 million through a SPAC to soak up some of its excess deal flow.

"We have a tremendous amount of deal flow for private equity and corporate clients," said Nick Chini, a managing principal at Bainbridge. "We sat on this deal flow and the orphans were very qualified companies. We needed a home for them. The SPAC was the way to go."

With large buyouts-and the hefty fees that come with them-out of vogue at the moment, investment banks are eager to find anything to underwrite.

"A lot of the investment banks are all of a sudden getting into SPACs," said Mr. Chini.

Citigroup has been particularly busy, underwriting both Mr. Perelman's deal and that of Liberty. Others are working on growing their businesses, with Bear Stearns underwriting its first-ever SPAC earlier this month and Deutsche Bank hiring three more bankers to focus on SPACs last month. FW

URL for this article: http://www.financialweek.com/apps/pbcs.dll/article?AID=/20071217/REG/71214023/1023/OTHERVIEWS

La Jolla consulting group applies finance knowledge to sports

Mon, 26 Nov 2007 22:49:02 GMT

By Elizabeth Malloy, The San Diego Daily Transcript

A La Jolla-based management consulting and capital advisory firm launched a new consulting service Monday designed to help sports teams decide which athletes to are the best fit for their organization.

Bainbridge announced the launch of the Professional Athlete Due Diligence group, designed to leverage the company's proprietary primary-source research methodology and history of successful investment due diligence. The service is designed to provide teams with the information necessary to make the most informed and prudent player investments.

Building on the traditional process scouts use for evaluating a player's character, Bainbridge employs a consultative approach by conducting primary-source personal interviews with potential draft picks. Beyond computer-based background checks and other sources of secondary information, Bainbridge's research analysts conduct primary-source interviews with athletes' former coaches, teachers, teammates, and personal acquaintances. Bainbridge's full reference interviews offer a third-party, unbiased perspective for assessing if a player's values are consistent with those needed to effectively compete and win.

The founding of the Professional Athlete Due Diligence service is rooted in professional sports teams' persistent need for research and analysis to support its draft selections and long-term contract negotiations, according to a company statement. Since 1975, Bainbridge has provided the Fortune 1000 with similar market research and due diligence services to support brand strategy, market entry, and the most critical investment decisions including mergers, acquisitions, and divestitures.

Bainbridge is offering its due diligence services on an exclusive basis to a variety of organizations including the National Football League, National Basketball Association, Major League Baseball, National Hockey League, and Major League Soccer.

URL for this article: http://www.sddt.com/Search/article.cfm?SourceCode=20071126cza

Bainbridge Launches New Management Consulting Service, Professional Athlete Due Diligence

Mon, 05 Nov 2007 22:45:52 GMT

New service provides teams with the information necessary to make the most informed and prudent player investments

La Jolla, Calif. - November 5, 2007 - Bainbridge, a combination management consulting and capital advisory firm based in La Jolla, California, today announced the launch of a new Management Consulting service, Professional Athlete Due Diligence. Serving professional sports organizations, the Professional Athlete Due Diligence group will leverage Bainbridge's proprietary primary-source research methodology and history of successful investment due diligence. The service is designed to provide teams with the information necessary to make the most informed and prudent player investments.

The founding of the Professional Athlete Due Diligence service is rooted in professional sports teams' persistent need for research and analysis to support its draft selections and long-term contract negotiations. Since 1975, Bainbridge has provided the Fortune 1000 with similar market research and due diligence services to support brand strategy, market entry, and the most critical investment decisions including mergers, acquisitions, and divestitures.

Building on the traditional process scouts use for evaluating a player's character, Bainbridge employs a dynamic and consultative approach by conducting primary-source personal interviews with potential draft picks. Beyond computer-based background checks and other sources of secondary information, Bainbridge's trained research analysts conduct primary-source interviews with athletes' former coaches, teachers, teammates, and personal acquaintances. Bainbridge's full reference interviews offer a third-party, unbiased perspective for assessing if a player's values are consistent with those needed to effectively compete and win.

"In the age of multi-year contracts, large signing bonuses and the increasing importance of character, unbiased due diligence provides a team with more detailed background information prior to drafting a player into its organization," notes Bainbridge's Managing Director, Dr. Kenneth Wagner. "To make more prudent and sound business decisions, teams must go beyond basic background research. Bainbridge's clinical and sociological approach to interviews will provide the information needed to guide the most informed player selections, investments, and contract terms."

About Bainbridge

Bainbridge is a primary-source research and management consulting firm, offering clients a fresh outsider's perspective and the knowledge and experience of a diverse team. Since 1975, Bainbridge has used primary-source research to help clients outmaneuver the competition, improve customer loyalty, support and protect investments, and boost profitability through its fact-based, results-oriented approach.

Bainbridge Announces Sponsorship of 4th Annual Buyouts West Conference

Mon, 24 Sep 2007 18:23:15 GMT

Bainbridge's Managing Principal, Nick Chini, will be featured as a key panel speaker on trends in deal flow

San Diego, September 24, 2007 - Bainbridge, a boutique management consulting and M&A advisory firm based in San Diego, is pleased to announce that they will be participating in the 4th Annual Buyouts West Conference, to be held November 13th and 14th at the Fairmont Hotel in San Francisco. With the relevant theme of this year's event - the latest trends in deal-making and financing - Bainbridge's Gold-level Advisory sponsorship is a symbol of its continuing dedication to addressing a variety of issues that impact the expanding private equity marketplace.

About Bainbridge & Its Involvement In This Year's Buyouts West Conference

With record amounts of money to put to work and a new environment of tighter credit, it is apparent that investors require a constant scan of today's marketplace in order to stay competitive in identifying strategic acquisition opportunities. The Buyouts West Conference will be covering a variety of topics on the West Coast buyouts industry and will be moderated by editors who will be discussing the market, assessing key players, and reporting and analyzing trends that will impact the market and the businesses involved. With Bainbridge's unique hybrid approach to M&A advisory and management consulting, the firm is well positioned to participate in Buyouts West's discussion of the evolving leveraged buyout market

Bainbridge's Managing Principal, Nick Chini, will be featured in the Conference's Panel Five discussion on the topic of "Finding Your Next Deal". The panel features an impressive group of speakers, including Josh Payne, Associate Editor of Buyouts Magazine, Tom Amster, Managing Director of Goldman Sachs, Mark Bradley, Managing Director and Global Head of the Financial Coverage Group at Morgan Stanley, and David Harvey, Founder of Harvey & Company. With over 17 years of experience conducting strategic management consulting and M&A advisory, Nick can offer insight on the latest and most successful approaches for sharpening investment strategies and maximizing deal flow development for private equity groups.

"I appreciate the opportunity and look forward to participating in the Buyouts West Conference," said Nick Chini. "The convergence of different market participants and perspectives will surely promote thought-provoking discussion on the current and future state of the market and strategies to help private equity groups enhance deal flow and performance."

Bainbridge's Capital Advisory Group works with private equity firms to define strategic investment plans, conduct market-proving research, identify off-market and proprietary acquisition opportunities, execute profitable transactions, and achieve new levels of financial and strategic performance.

About Nick Chini

As a senior management consultant and investment banker, Nick is a perfect fit for the panel, as well as an asset to the conference. He has over seventeen years of experience conducting strategic management consulting and M&A advisory. Over ten years with Bainbridge, Nick has analyzed more than 500 product and service companies, covering 200 markets for strategic planning, competitor and market analysis, operations improvement, divestitures, acquisitions, recapitalization, and financial valuation. Nick's client list spans a variety of industries and includes top Fortune 500 corporations and private equity groups.

Nick holds a Master of Business Administration from Massachusetts Institute of Technology and a Bachelor of Science in Finance from Lehigh University. Nick has also completed advanced studies at Harvard Law School's Program on Negotiation.

About Bainbridge

Bainbridge is a combination management consulting and M&A advisory firm dedicated to providing its clients with custom-tailored solutions and accelerated growth. Unlike traditional investment banking or consulting firms, Bainbridge combines strategic and financial advisory to produce business results. Working with a diversified client base of private equity groups, Fortune 1000 corporations, and start-ups, Bainbridge's staff of seasoned industry executives, management consultants and financial analysts continuously monitors clients' external environments to help build and maintain the most effective market and competitive positioning. Bainbridge's Capital Advisory group specializes in mergers, acquisitions, divestitures, corporate restructurings, and financial management strategy. For more information, please visit www.bainbridge.com.

Bainbridge Receives 8th Annual "Best Places to Work in San Diego" Award

Mon, 18 Jun 2007 21:39:20 GMT

Firm recognized for unique hybrid business model

San Diego—March 5, 2007—Bainbridge, Inc., a boutique management consulting, M&A advisory, and private equity firm based in San Diego, today announced it is a recipient of the San Diego Business Journal's “Best Places to Work in San Diego” award. Bainbridge was selected for the award in the Small Business category (firms with 50 employees or less).

Bainbridge's employee benefits are designed to contribute to long-term employment, employees' self-actualization, and professional growth. In line with the company's mission to optimize the strategic position of its clients and employees, Bainbridge was recognized for its unique hybrid business model. Unlike traditional consulting or investment banking firms, every employee is given the opportunity to work in a cross-functional environment, fostering a well-rounded business experience in both the financial and strategic advisory fields. The company was also honored for its Internal Excellence Initiative and Professional Development Plan programs that include ongoing employee training and mentoring programs, employee satisfaction surveys, peer performance management reviews, and biweekly roundtable discussions.

"We pride ourselves on investing in our staff and helping our employees to reach their full potential," said Nick Chini, Director of Bainbridge. "I am honored to receive this exciting award, as it is a true testament to our teamwork and success."

The San Diego Business Journal's "Best Places to Work in San Diego" awards were created to spotlight local organizations dedicated to developing positive, productive and committed working environments for their employees. An independent panel of judges evaluated and rated entries for key criteria including overall corporate culture, mission statement, diversity, and employee benefits. After a five month nomination process, the recipients were announced at an awards ceremony on February 22, 2007.

About Bainbridge, Inc.

Bainbridge is a fact-based management consulting firm that provides its clients with custom-tailored research, analysis, M&A advisory and other strategic solutions that are designed to address each client's specific business situation. Working with a diversified client base of Fortune 1000 corporations, private equity groups, and start-ups, Bainbridge's staff of seasoned industry executives, management consultants and financial analysts continuously monitor clients' external environments to help build and maintain the most effective business strategies. For more information, please visit www.bainbridge.com.

Bainbridge Sponsors 4th Annual MIT Sloan Private Equity Symposium

Thu, 26 Apr 2007 21:21:48 GMT

M&A Advisory Group offers strategic insight and deal flow for the expanding private equity universe.

San Diego—April 27, 2007—Bainbridge, a boutique management consulting, M&A advisory, and private equity firm based in San Diego, today announced its sponsorship of this year's MIT Sloan Private Equity Symposium. With the relevant theme of this year's event—Navigating the Expanding Private Equity Universe—Bainbridge's sponsorship is a symbol of its dedication to addressing investor's specific needs in today's growing private equity market.

Bainbridge's M&A Advisory Group helps private equity firms define strategic investment plans, execute profitable transactions, and achieve new levels of performance. As the private equity industry continues to grow in size and complexity, Bainbridge recognizes that today's successful acquisition programs include a constant scan of the marketplace for strategic acquisition opportunities. Specializing in working with private equity firms, Bainbridge's M&A Advisory Group is constantly evolving its service offerings based on the dynamic industry trends.

Nick Chini, a Director at Bainbridge, graduated from the Massachusetts Institute of Technology Sloan School of Management with a Master of Business Administration. As a direct, Nick acknowledges the importance of supporting his alma mater in its address of highly relevant issues in the private equity industry.

"We are proud to sponsor such an important event on the private equity landscape," said Nick Chini." Bainbridge's M&A Advisory Group continues to support private equity firms through all stages of their business development."

The Symposium's distinguished line-up of speakers and panelists represented many leading private equity firms, addressing a broad range of the latest issues in the industry that are highly relevant for private equity investors, industry service providers, entrepreneurs and managers. Some topics of the symposium included middle market private equity, private equity and hedge fund deal convergence, operational excellence, limited partners, distressed investing, mega funds and raising private equity.

About Bainbridge

Bainbridge's Capital Advisory Group provides a range of services including acquisition search, sell side advisory, market feasibility studies, due diligence, and more. Using primary-source research, our team works with private equity groups to provide deal flow outside the auction environment, putting your firm in non-bidding situations for well qualified candidates. Our full-service approach is guaranteed to optimize the timing, quality, and quantity of your deal flow pipeline. For more information, please contact us at privateequityinfo@bainbridge.com or visit www.bainbridge.com.

Bainbridge announces that Cano Petroleum acquired Myriad Resources

Sun, 30 Apr 2006 20:12:57 GMT

Bainbridge Capital represented Cano Petroleum in M&A services and implementation.

In May, 2006, Cano Petroleum, Inc. announced that it closed an acquisition of producing oil and gas properties in the Texas Panhandle Field for $24,000,000. Bainbridge Capital acted as Cano Petroleum's exclusive strategic advisor in the acquisition. The acquisition adds approximately 400 net barrels of oil equivalent (BOE) to Cano's daily production and approximately 7 million BOE to Cano's proved reserves, of which approximately 2.1 million BOE are proved producing. The properties cover approximately 9,700 acres and include 2 workover rigs and other equipment valued at approximately $1.25 million. The properties offset existing production and are intended to be incorporated into existing operations without any measurable increase in G&A costs. As a part of the financing terms, 50% of the newly acquired production will be hedged with a 'floor' at $60 per barrel and $7.60 per mcf during the three year period beginning May 2006. The acquisition, at a cost of $3.25 per BOE of proved reserves, constitutes further evidence of Cano's ability to identify and target acquisition opportunities within their core areas which provide excellent operational synergies, efficient use of existing infrastructure and personnel, and meaningful reserve and production accretion. Bainbridge Capital delivered superior value to Cano shareholders through proprietary deal flow.