Berkshire Adopts Investcorp’s Baby –

In today’s murky exit environment where private equity firms are loathe to take anything not related to the health care and energy sectors public, strategic and financial sales are the only viable exit options. So when Investcorp wanted to exit baby and toddler apparel retailer the William Carter Co. (“Carter’s”), it put the company on the block and found a suitor in Boston-based Berkshire Partners for $450 million. Goldman Sachs served as an intermediary for the transaction.

Berkshire’s equity commitment will total approximately $130 million. The transaction is expected to close in the third quarter.

Besides its strong brand name and management team, the company fits well with Berkshire’s investment strategy of investing between $20 million to $200 million of equity per deal, said Jeanine Neuman, a director of client services at Bershire Partners.

Berkshire has a penchant for investing in he retailing sector. Among its portfolio companies in the retailing sector are Gordon Brothers Group LLC, an advisory firm that assists retailers with asset redeployment; Waterworks, a retailer of luxury bath products, and Savers Inc., a retailer of secondhand merchandise.

Investcorp and management originally acquired William Carter in October 1996 for $208 million. Chase Manhattan Bank led the senior debt financing in the amount of $56.1 million and subordinated debt was provided by Bankers Trust Co. in the amount of $90 million. “We owned this company for four-and-a-half years and it was a very successful investment for us,” said Christopher O’Brien, a member of Investcorp’s management committee.

O’Brien said the firm always looks for multiple exit opportunities in every investment and “in today’s marketplace, a financial buyer was the most viable exit.”

Through a “very competitive process with some very high quality bidders involved,” Berkshire Partners won out because they “know the retail and apparel business very well” and “they paid the highest price,” O’Brien said. “It wouldn’t surprise me if in a couple of years you see the company go public,” he added.

Morrow, Ga.-based William Carter Co. markets its brand names of Carter’s and Carter’s Classics to department stores and through its retail outlet stores. The company had net sales revenue of $471.4 million last year.

In other Berkshire news, the firm’s portfolio company TELAV Inc., a provider of presentation technology services to the corporate, production and meetings market, agreed to merge with AVW Audio Visual Inc., an operating unit of The Freeman Companies, to form AVW/TELAV, an audio visual rental and presentation services company.

Berkshire Partners originally invested in TELAV in August 1999 for an undisclosed amount. “Our initial investment in TELAV was based on the company’s leading market position in Canada, superior brand name, strong customer loyalty and reputation for excellence,” said Ross Jones, a managing director at Berkshire Partners. “TELAV had begun the process of opening new offices in the U.S., but the merger of TELAV and AVW catapults the company forward…AVW/TELAV is positioned to become the leading North American AV equipment rental and service company.”

AVW/TELAV will be led by Chief Executive Officer Robert Thiel. AVW will continue under the leadership of Craig Smith as president, and TELAV will be headed by Harald Thiel. TELAV operates in 18 cities across Canada as well as in Seattle and Washington D.C. AVW has offices in 11 cities across the United States. The combined entity will have revenue in excess of $185 million.

In addition to increased local access, AVW/TELAV customers stand to benefit from an expanded range of services. “Our mission will be to provide our clients with a unified, high quality, seamless service delivery network throughout North America with local access to professional personnel and the best presentation technology available,” said Robert Thiel.