Friday Feedback

The rain is falling, court warrants to eavesdrop are apparently a bygone nicety and financial journalist Rebecca lost out on a chance to be Donald Trump’s PR rep for the next year (note to self: if ever asked to run a charity fundraiser, make sure to ask attendees for funds). In other words, it’s time for Friday Feedback.

First up are a couple of comments on Amp’d Mobile, which I’ve been a bit preoccupied with this week. Lynne writes: “I agree with you that Amp’d made a big splash by partnering with MTV, but I still don’t see how their overall business plan is going to make much money. They are undercutting Sprint by selling songs at $0.99 each like I-Tunes, but that price is so low that the music margins might actually be negative. Maybe the future Amp’d user will buy their phones primarily for video, but right now people are more conditioned to buy it for music.”

Then there is R, who asks: “Since when did you start pimpin’ Amp’d?” Ever since they began paying me 1% of all venture capital calls. More seriously, I honestly believe that this company will work, in large part because it keeps answering all of my devil’s advocate questions (via actions, not words). I certainly could be wrong, but my enthusiasm is genuine. If you want me to say something negative about Amp’d, how’s this: The company’s name causes all sorts of problems for writers. Specifically, how do you refer to the possessive? Amp’d’s?

*** A bunch of people commented on the pair of $250 million co-investment program mandates given to Fisher Lynch Capital (by Oregon and Washington, respectively). The general sentiment was summed up like this email from K: “Neither Washington nor Oregon are staffed or structured to efficiently do co-investments… Now whether Fisher Lynch is the best bet is a totally different question.” So you know, I have not yet been able to speak with Fisher Lynch about its strategy, structure, etc., although Linda Lynch did email yesterday to say that such a conversation can occur early in the New Year. So stay tuned.

On the overall subject of large LPs and co-investment programs, Irwin writes: “Large LPs request and get access to co-investments, but uniformly have no infrastructure to do the due diligence or react in ‘deal time.’ Therefore, they need a co-investment manager who has authority to mine their existing portfolio of fund investments for co-investments. The co-investment manager has defined discretion to source, negotiate, and invest without having to go for specific board approval. If Board approval was required, then the delays would kill deal-flow. The manager might also have discretion to source deals that are not in the client LP’s portfolio.

Co-investments are attractive because… they can be powerful in solving the asset allocation challenge of private equity—commitments vs. invested capital. Co-investments are typically ‘free’, in that the LPs don’t have to pay management fees or carried interest on the investment. They pay the co-investment manager a fee (and maybe carry) to handle deals from start to finish. The trick is being able to react in deal time and to act in concert with the deal sponsor.”

*** Finally, Jeff writes: “I am shocked that the Dunkin' Donuts deal didn't receive more coverage in today's column given your geographic loyalties. I think the Metro's blurb was longer than yours.” Criticism deserved. To make amends, I’m speaking with Mark Nunnelly of Bain Capital later today about the deal. Please send over any questions you feel are worth asking (beyond the obvious ones). If you need guidance, take a look at what some loyal D&D denizens have posted on Boston.com.

Have a great weekend…

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