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Private equity not just for big firms
When the subject of private equity comes up, it's usually the big deals that come to mind. Think Blackstone Group's purchase of Chicago-based Equity Office Properties Trust.
But according to a new trade group trying to spread the word about the benefits of the industry, many smaller companies are also owned by buyout firms. In Illinois alone there are about 60 such companies, according to the Private Equity Council, citing data from PrivateEquityInfo.com.
More under-the-radar Illinois companies with private-equity ties include FTD Group Inc., whose major shareholder is Los Angeles-based Leonard Green & Partners; Rand McNally & Co., another Leonard Green holding; Harlem Furniture, whose owners include Bear Stearns' private-equity arm; Fort Dearborn Co., a decorative label supplier bought last year by San Francisco-based Genstar Capital; and Stampede Meat Inc., bought this year by California-based Fairmont Capital Inc.
Illinois is also home to about 90 companies involved in the buying and selling of businesses, the Private Equity Council points out.
BREAKUP BROUHAHA: The unsecured creditors committee in the bankruptcy of another private-equity portfolio company, Chicago-based Jays Foods Inc., doesn't like the fact that the prospective buyer, snackmaker Snyder's of Hanover, will get a breakup fee of 3.5 percent of the proposed purchase price if the deal falls through.
Bankruptcy records show that the creditors committee thinks Snyder's should receive a breakup fee of no more than 1 percent of the $24.8 million offer for Jays and sister firm Select Snacks if Jays strikes a deal with another buyer.
BRANCHING OUT: The number of U.S. retail bank branches grew 3.3 percent, to 97,694 locations, from June 30, 2006, to Oct. 17, according to SNL Financial. Retail deposits grew 2.9 percent, to $6.16 trillion, over that period.
The Chicago area ranked third in the number of new branches, with 112 net new locations, giving the area 3,265 offices. That represents a growth rate of 3.5 percent. Chicago-area deposits grew 2.7 percent, the trade publication reported.
Of the 10 U.S. markets with the most net branch closings, four were in Michigan and three were in Ohio.
SHORT-TERM PAIN: While PrivateBancorp's hiring of about a dozen LaSalle Bank lenders bodes well for the Chicago-based company's growth prospects in the long term, it will pressure profits in the short term, one analyst says.
"Unfortunately, the costs come first and the revenues later, particularly in the case of commercial and industrial lenders," Stifel Nicolaus analyst Ben Crabtree wrote in an Oct. 22 report.
It estimates the hires could result in additional costs of at least 5 cents a share next year, but they "also increase our confidence that PrivateBancorp can be a mid-teens grower over the longer term," he wrote.
MUM ON JOBS: Bank of America, already cutting 2,500 Illinois jobs in the wake of its Oct. 1 purchase of LaSalle Bank, isn't saying how many additional local jobs might be cut in light of Wednesday's announcement that the Charlotte-based bank is also laying off 3,000 workers in various units because of poor third-quarter results in its capital markets businesses.
Most cuts will occur in its global corporate and investing banking arm, spread through business lending, treasury services, and capital markets and advisory services, as well as back-office jobs.