Since CIT Group Inc. emerged as a candidate for bankruptcy in July of this year, not much focus has been placed on the fate of Edgeview Partners, the mid-market boutique consultancy CIT Group acquired in mid-2007.
Now that the top mid-market lender has officially filed for Chapter 11 bankruptcy protection, Edgeview Partners remains in limbo—too small to be spun off or sold, but facing difficulty doing business as part of a restructuring entity.
While Edgeview Partners has carried on “business as usual” as its parent company struggled to avoid bankruptcy, its founding partners Drew Quartapella and Matt Salisbury left in February. More recently, partner Bill Morrissett also departed.
According to the Charlotte Observer, Quartapella and Salisbury offered to buy the firm back, but CIT was unresponsive. The three men are subject to a non-compete period that was set when Edgeview Partners originally sold to CIT. According to two sources familiar with the firm, the non-compete expires in the middle of next year.
Meanwhile Edgeview Partners’s remaining employees are waiting anxiously for the dust to settle around CIT. M&A advisory business has been slow in a credit crunch, and bringing in new deals with an unstable parent company doesn’t help.
Quartapella told Buyouts sister publication peHub.com that, in recent times, Edgeview Partners has not reaped the benefits of its merger with CIT. “A big part of doing the deal was getting CIT’s leveraged loan relationships married to Edgeview’s relationships with LBO shops. That part of the equation hasn’t been there for quite awhile,” he said.
Quartapella remains a consultant to Edgeview Partners and said he would return to the firm once CIT’s situation stabilizes. “I think we’re all waiting to see what happens,” he said. If CIT emerges from bankruptcy quickly and as a stronger company, Edgeview Partners will be a successful part of that, he said. CIT hopes to complete its restructuring as early as the end of this year, the company said, calling the quick process “crucial” to retaining customers.
Quartapella said he would consider returning to the firm he co-founded, but for the time being, he is trying his hand as a buyout investor of sorts. With his own personal investment and the backing of U.K. hedge fund J.O. Hambro, he has acquired and merged three chemical companies under the name Precision Chemical. Quartapella serves as the company’s chairman.
He said he continues to seek out new deals alongside former colleagues from W-H Energy Services, where he worked in the 1990s. In December 2008, that company sold to Smith International. Quartapella said he’s seeking both oilfield services and chemical companies that generate EBITDA of around $5 million, but he has the ability to do larger investments as well. The effort, which included an investment from Salisbury, has no official name, although Quartapella jokingly suggested “EdgeFew.”
CIT, which filed for bankruptcy on Nov. 1, said it will eliminate $10 billion in debt as a result of the restructuring. The firm received $4.5 billion in credit from its own lenders and bondholders. CIT’s bondholders had previously voted down the firm’s proposed debt swap, which would have wiped out $5.7 billion in the firm’s debt.