peHUB Wire: Monday, December 7, 2009

Six weeks ago, I asked you to participate in our bi-annual survey of dealmaker attitudes and predictions, which is done in partnership with the Association for Corporate Growth. We got over 900 respondents, and official results will be released tomorrow morning. But since I’d hate for you to have to wait…

Eighty-two percent of respondents expect M&A volume to increase over the next six months, with 72% percent predicting “moderate” growth and another 10% predicting “significant” growth. Only 1% expects any sort of decline.

Such optimism is stronger than in a similar survey six months ago, but also may reflect negative feelings toward current conditions. Fifty-six percent of respondents said that current M&A conditions were “fair,” while 31% said “fair” and just 12% said “good.” The “excellent” option garnered just 1% of the vote.

When asked what would be the largest potential impediment to M&A over the next six months, 37% said it would be buyer unwillingness to sell at offered prices. When asked what would be the largest impediment to general corporate growth, 36% said the credit crunch, followed by reductions in consumer spending (16%), economic deleveraging (14%), recession (13%) and unemployment (10%).

Eighty percent of respondents said that it is currently a buyer’s market, and 74% said that current conditions favor strategic acquirers over private equity sponsors.

Data on all 40 questions will be released tomorrow, but here are a few more PE-focused highlights:

• Are you concerned about the public’s perception of the PE industry?

Very concerned: 5%

Concerned: 38%

Not concerned: 57%

• In what industry do you see the best opportunities for buyouts:

Manufacturing/Distribution: 26%

Business Services: 15%

Healthcare: 14%

• In what industry do you see the best opportunities for distressed investments:

Manufacturing/Distribution: 30%

Real Estate: 25%

Business Services: 15%

Consumer Products: 12%

• How much do you expect to pay for companies over next 6 months?

0-3x EBITDA: 20%

4-5x EBITDA: 60%

6-7x EBIDTA: 17%

8x EBITDA+: 2%

• Will leverage levels go up in next 6 months?

Yes: 47%

No: 53%

• How much equity do you expect to put into an avg. deal over next 6 months?

20-30%: 17%

31-40%: 30%

41-50%: 32%

More than 50%: 22%

• How has FAS 157 affected you?

No significant effect: 60%

Drain on our time: 26%

Drain on our wallet: 14%

• What % of your portfolio cos are performing above prior year in terms of EBITDA?

0-25%: 61%

26-50%: 25%

51-75%: 9%

76-100%: 5%

There were over 920 survey respondents, consisting of service providers (28%), investment bankers (27%), PE pros (18%), operating executives (12%), lenders (9%), VCs (2%), limited partners (2%) and hedge fund managers (1%)


In Memoriam: Very saddened to learn that Dick McGlinchey, a Boston-area marketing pro focused on VC firms and early-stage companies, passed away last Wednesday night from a heart attack. Dick also had been suffering from a progressive neurological disease called Multiple System Atrophy.

I first got to know Dick when he was in charge of marketing for Battery Ventures (1999-2004). He later continued to work with various VC firms and early-stage companies. Extremely generous with his time, expertise and advice. He also didn’t mind swapping industry gossip, which is a great way to make sure reporters pick up the phone when you’ve got something to pitch. Really just a wonderful guy, and someone I was honored to be able to call a friend.

He is survived by his wife Sara, daughter Elizabeth and son Andrew.

A service will be held later this month up at Prince Edward Island, with! a Boston memorial service to occur sometime in the spring. Donations may be made in Dick’s honor to the National Ataxia Foundation (; the Northeast Animal Shelter (; or the Friends of Covehead and Brackley

Top Three

Celgene Corp. (Nasdaq:CELG) has agreed to acquire Gloucester Pharmaceuticals, a Cambridge, Mass.-based developer of oncology drugs. The deal is valued at up to $640 million, including a $340 million up-front cash payment and up to $300 million in earn-outs. Gloucester Pharma had raised over $130 million in VC funding, from firms like Apple Tree Partners, Novo AS, ProQuest Investments, Prospect Venture Partners and Rho Ventures.

The Carlyle Group reportedly has offered to buy British waste management company Shanks Group PLC for £536 million.

5AM Ventures, a bi-coastal venture capital firm focused on early-stage life sciences comp! anies, has raised $200 million for its third fund. The firm also has added Jenny Lee as vice president of finance. She previously was CFO for Global Catalyst Partners.

VC Deals

Clear2Pay NV, a Brussels-based provider of payment solutions for financial institutions, has raised €50 million in new private equity funding. Aquiline Capital Partners led the round, and was joined by return backers like AGF Management, IRIS Capital, Big Bang Ventures, GIMV and Trust Capital.

Movik Networks Inc., a Littleton, Mass.-based provider of solutions for bringing content and application awareness to the edge of the mobile network,has raised $8.5 million insecond-round funding, according to a regulatory filing. Return backers include Highland Capital Partners and North Bridge Venture Partners. Sean Dalton of Highland and Ed Anderson of NBVP sit on the Movik board of directors.

JanRain Inc., a Portland, Ore.-based provider of online identity technology and customer engagement services, has raised $3.25 million in Series A funding. DFJ Frontier led the round, and was joined by RPM Ventures and Anthem Venture Partners.

One Kings Lane, operator of a members-only ecommerce site for home décor, has raised an undisclosed amount of VC funding from First Round Capital and Kleiner Perkins Caufield & Byers.

Dow Chemical Co. (NYSE: DOW) has formed Pfenex Inc. as an independent developer of proteins based on Dow’s fluorescens-b! ased platform that uses high throughput, parallel processing methodolo gies. San Diego-based Pfenex will count Dow and Signet Healthcare Partners as shareholders.

XATA Corp. (Nasdaq: Xata), a Minneapolis-based provider of fleet management solutions to the truck transportation industry, has raised $30 million in PIPE funding from Technology Crossover Ventures and existing shareholder Trident Capital. The company also announced that it has paid $20 million in cash and stock to acquire Ontario-based Turnpike Global Technologies, a provider ofPDA-based fleet operations solutions.

Buyouts Deals

Clear Channel Communications Inc.’s outdoor advertising business is in talks with lenders to raise as much as $2.5 billion in the high-yield market, according to the Wall Street Journal. Clear Channel was acquired last July in a $17.9 billion takeover by Bain Capital and THL Partners.

Generation Brands, a Cary, N.C.-based provider of lighting fixtures and ceiling fans for the building construction and home improvement industries, has filed for Chapter 11 bankruptcy protection. The company also said that it has agreed on a prepackaged restructuring, which would eliminate $150 million of debt and bring in $20 million of new equity funding from existing sponsor Quad-C Management.

MBK Partners and Korean telco KT reportedly have been named preferred bidders for Korean rental car company Kumho Rent-A-Car. The deal would be valued at approximately $260 million.

Patron Capital Partners has completed its acquisition of Powerleague,owner and operator of 5-a-side football centers in Europe. The deal includes over £50million in equity, at an enterprise value in excess of£80 million.

PE-Backed M&A

Fastech Integrated Solutions, a portfolio company of NewSpring Capital, has completed its acquisitions of the assets of two IT and telephony service vendors focused on SMEs: Aserdiv Inc. and Transcend Communications Inc. No financial terms were disclosed.

Synexus, a clinical trial recruiter and operator backed by Lyceum Capital, has agreed to acquire Leipzig-based ClinPharm for an undisclosed amount.

PE Exits

The Quadrangle Group has sold its remaining2.33 millionshares in Cinemark Holdings Inc. (NYSE: CNK),a Plano, Texas-based movie theater chain, via a secondary public offering. The shares were sold at $12.85 each, or approximately $30 million. Barclays Capital served as underwriter. Cinemark went public in 2007 at $19 per share.

Human Resources

Vijay Aggarwal has joinedThe Channel Group and its BioMed Transition Partners affiliate as a partner. He previously was president and CEO of Aureon Laboratories Inc.

TCW Group has fired chief investment officer Jeffrey Gundlach. It also said that Gundlach would be replaced as head of TCW’s high-grade fixed income group by Tad Rivelle, a co-founder of recent TCW acquisition Metropolitan West Asset Management.