Transitions – Saunders Karp Names Partner –

New York-based private equity firm Saunders Karp & Megrue this month named James Dworkin as its eighth general partner.

Prior to joining SKM in 1998, Dworkin was a managing director at BT Capital Partners Inc., the private equity investment arm of Bankers Trust. Dworkin laughed remembering his cold call to John Megrue in early 1998 who eagerly accepted the call thinking that he was someone else. “I was three interviews into it when they realized that I was somebody else, but by then it was too late,” Dworkin said.

“I’m ecstatic for the opportunity to partner with such high quality investors and individuals,” Dworkin said.

As a principal at SKM, Dworkin was involved in several of the firm’s transactions including SKM Applied Technology Partners, a buy-and-build initiative with the goal to consolidate the fragmented rubber and plastics industry (BUYOUTS August 16, 1999, p.12) As of this article, ATP has integrated seven companies under the ATP platform.

Dworkin indicated that ATP currently has one new opportunity under letter of intent with several other equally appealing acquisition opportunities under consideration. Two of the companies are in the West Coast and a third is located in Connecticut. “We’d like to expand our capabilities in order to accommodate our customers that are looking for both a full complement of skills in addition to geographic coverage,” Dworkin said.

“These small, management-intensive companies fit squarely within our strategy,” Dworkin said. “We believe that we’re uniquely well-positioned at both SKM and ATP to attract these companies given SKM’s management-partnership orientation in the middle market. Roughly two-thirds of SKM’s deals have been in management recapitalizations.”

Firm to Focus on PIPEs

As a partner, Dworkin said that one of his primary responsibilities in 2000 would be to spearhead SKM’s focus in private investments in public equities, or PIPE transactions. He thinks that a lot of small middle-market companies with cash flow between $10 million and $100 million are not getting the kind of valuations that they should in the public market because the market is either ignoring them due to size or is focused more on the hot technology sectors. “Again, these companies fit quite well with SKM’s partnership profile,” Dworkin said.

“There are not a lot of funds now that are willing to deploy the kinds of resources it takes to make $25 million to $50 million investments,” Dworkin said. “As large funds expand, they’ll want to invest $100 million to $150 million per deal in order to be more efficient in their use of resources. We want to stay toward the lower end of the range, because we think the opportunities are more interesting there.”

Dworkin also mentioned that ATP is redoing its bank deal and anticipates a high yield offering by year-end.

Saunders Karp is a private merchant bank, which pursues recapitalizations and growth buyouts in the $40 million to $400 million range.