Barbell Validation? Greetings from the During a limited partner panel at the Wharton Private Equity conference in Philly last month, Barry Gonder of Grove Street Advisors (and formerly of CalPERS) talked about how top-tier LPs are starting to employ what he referred to as a "barbell" fund commitment strategy. This generally means that LPs would focus most of their allocation attentions on small/micro buyout funds or large/mega buyout funds, because they believe that the middle market is too crowded (the VC market employs an inverse cousin to this theory, but we'll leave that for another day). Gonder's comments generated affirmative head nods from his fellow panelists, and seem to have morphed into conventional wisdom. I even caught myself repeating it when speaking to another journalist yesterday (note: Gonder credited someone else with the barbell term, but I can't remember who it was). What I'd like from you, dear reader, is your opinion on whether or not the conventional wisdom is wise. Are middle-market deals really being bid up more unreasonably than are mega-market deals, due to a glut of players? Have the historical performance benchmarks showing mid-market funds significantly outperforming mega-market funds become obsolete? Is this just an excuse for people like Gonder to recommend massive LP commitments to multi-billion funds? In short, does the barbell strategy make sense? So, again, I ask for your guidance. Interested in placing your text ad in this spot? Learn How
Apax Partners Worldwide has agreed to merge its GTCR Golder-Rauner and a group of auto repair industry executives have teamed up to form Solera Inc., a San Diego-based company that will focus on the auto physical damage claims settlement process, providing consulting, outsourced services and strategic technology solutions. GTCR will invest up to $100 million into the company, which is expected to grow both organically and via acquisitions. Tony Aquila, former president of Mitchell International, will serve as Solera's chief executive. www.solerainc.com Pfizer Inc. (NYSE: PFE) has agreed to acquire Idun Pharmaceuticals Inc., a San Diego-based drug company focused on a type of cell death known as apoptosis. No financial terms were disclosed. Idun has raised over $100 million in venture funding since its 1993 inception, from firms like Arch Venture Partners, Accel Partners, MPM Capital, RBC Capital Partners, Venrock Associates, Prospect Venture Partners, IVP, Sutter Hill Ventures and BioVeda Capital. www.idun.com
The Speedel Group, a Switzerland-based drug company focused on cardiovascular and metabolic diseases, has raised CHF 47.8 million (approx. $39.8 million) in new venture capital funding. No further details, including investor names, were disclosed. www.speedel.com Scandius BioMedical Inc., a Littleton, Mass.-based maker of minimally-invasive orthopedic implants and surgical instruments, has raised $8 million in Series C funding. Stockton Partners led the deal, and was joined by return backers KBL Healthcare Ventures, Commerce Health Ventures and Ivy Healthcare Ventures. www.scandius.com T-VIPS AS, a Norway-based provider of IP video gateways for broadcasters, has raised NOK 28 million (approx. $4.5 million) in funding from Northzone Ventures and Selaag Venture Capital. www.northzoneventures.com SecureWave SA, a Luxembourg-based provider of endpoint security software, has raised 3 million euros in Series B funding. Index Venture led the deal, and was joined by return backer Mangrove Ventures. www.securewave.com
Jefferies Capital Partners has sponsored a buyout of Barnhill's Buffet Inc., a chain of 41 all-you-can-eat restaurants in the Acon Investments of Tapp Technologies Inc., a Canadian producer of wine and food labels, has completed a recapitalization. Pender West Capital Partners led the recap, and now will hold a majority shareholder position in Tapp Technologies. No financial terms were disclosed. www.tapptech.com Best Brands Corp., an Egan, Minn.-based provider of specialty bakery products, has completed a recapitalization. Subsequently, the company acquired Multifoods Foodservice & Bakery Products, a division of the J.M. Smucker Co. (NYSE: SJM). No financial terms were disclosed for either event. Best Brands is owned by an inv*stor consortium that includes Brantley Partners, National City Equity Partners and Prudential Capital Group. It was advised on the recap and acquisition by Brown, Gibbons Lang & Co. www.bestbrandscorp.com Concord Communications Inc. (Nasdaq: CCRD) has completed its acquisition of Aprisma Management Technologies Inc., from Gores Technology Group, for approximately $93 million in cash. Aprisma is a Portsmouth, N.H.-based provider of software that manages network health and performance. www.aprisma.com
Symyx Technologies Inc. (Nasdaq: SMMX) has agreed to acquire Synthematix Inc., a Durham, N.C.-based provider of organic synthesis reaction planning software systems for scientific knowledge management in chemistry research. The deal is valued at $13 million in cash, plus the possibility of an additional $4 million based revenue milestone payments. Synthematix had received venture capital funding from Catalysta Ventures and Southern Capitol Ventures. www.symyx.com www.synthematix.com CommSoft Inc., an Albany, N.Y.-based provider of billing software for telecom companies, has acquired the Services Activation division of Denver-based Connexn Technologies. No financial terms were disclosed. CommSoft is owned by Saratoga Partners. www.commsoft.net Curacyte AG, a
Mobility Venture Capital is planning to raise between $75 million and $150 million for its inaugural fund. The vehicle will be called Mobility Ventures II, since the firm is serving as a successor to Dallas-based Genesis Campus. Mobility Venture Capital's three principals are: Roman Kikta (managing partner of Genesis Campus); Frank Lee (former partner with Vertex Partners); and Michael Buckland (Genesis Campus venture partner). Wu-Fu Chen, a general partner with Genesis Campus, will serve as a senior advisor and special limited partner. www.mobilityvc.com Bain Capital and certain executives of portfolio company KB Toys are being charged with improperly paying themselves $121 million before KB sought Chapter 11 bankruptcy protection last year, according to The Associated Press and The Berkshire Eagle. The case will be heard Monday, with plaintiffs including Hasbro Inc., Lego Systems Inc. and various KB landlords. Bain Capital called the action "entirely without merit."
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February 24, 2005 
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