TeleCommunication Systems, Inc. (NasdaqGM: TSYS) Swinging for the Fences.
Once upon a time there was a struggling little government contractor in Annapolis, headed by a larger-than-life Naval Academy officer who had to be out of his depth thinking that he could convert his modest foothold in the government market into a major public company. I guess the lesson is always, always to never bet against the U.S. Navy. Read More
The AES Corporation—Did Anybody Notice This Little Investment?
Because AES is a power generation company with worldwide projects and operations, it does not really play in the local sandbox. Nevertheless, with revenues of over $14 billion and a market cap over $9 billion, it is easily one the largest companies headquartered in the region. And in early November, it did an eye-popping private stock sale to Read More
Coastal Sunbelt and MCG Capital—A Sign of Tough Times?
Here is a follow-the-trail story. At the end of November, I noticed an SEC filing of a private placement of $20 million for something called “Coastal Acquisition Corp.” That is a sizeable capital raise. No press release. No indication of who this company was. So, we backed into what the answer appears to be. The Coastal filing address was Read More
The Death of Black & Decker
[This commentary is based on public filings concerning the proposed merger of The Stanley Works and Black & Decker Corporation as well as other publicly available information on the two companies. It was first published by Citybizlist.com on December 18, 2009. A companion piece to this commentary entitled “Black & Decker: How Our System Rewards Failure” was published by Citybizlist on December 4, 2009 and is also found in the October 2009 Mid-Atlantic Deal Review.]
The nagging question about the “merger” of Black & Decker Corporation (NYSE: BDK) and The Stanley Works (NYSE:SWK) is, “Why is this happening?” Why is Black & Decker disappearing (becoming a division of Stanley) at the beginning of an upturn in the market? Why is the company selling for a modest premium? Why are shareholders content to receive the lower end of the range that Black & Decker traded at for four of the past ten years? Read More
Trial Edition from Chessiecap, Inc.
Editor’s Note: Welcome to the 2nd Edition of the Mid-Atlantic Deal Review, a monthly review of transaction activity in the D.C.-Maryland-Virginia-West Virginia region. This edition is a Free Trial, which we hope will begin to add great value to your work and knowledge of the region. Our goal is to measure actual transaction activity and get beneath the surface of deals, news and trends.
Quick Stats is the most comprehensive and thoroughly researched presentation of Mid-Atlantic transaction data available. Mid-Atlantic is defined as D.C., Virginia, Maryland and West Virginia. Private placements include all private equity investment including institutional equity, PIPEs, private investors and other forms of new investment. The M&A data are the first to capture true regional activity. Over 2/3 of all M&A transactions are “undisclosed,” resulting in almost meaningless totals. Chessiecap reviews all reported regional transactions and uses its market knowledge and deal intelligence to assign probable deal values. The data above does not capture debt transactions, recapitalizations, non-corporate real estate financings (project financing) or purchases by local companies of companies outside this region. The primary filter is the addition or transfer of value into or within the region at the corporate level.
October Private Placements knocked the ball out of the park ($289M) with several major investments in Telecom and Biotech. Meanwhile, both M&A and the struggling local market for Public Offerings fell off the table.
Private Placements: October was dominated by several gigantic placements that blur the line between buyout and venture investment Read More
TEOCO Brings Home Huge Investment from TA Associates. 10/6/09 Private Placement. At $60M, it is hard to find a larger first-time minority tech investment than the one made by TA Associates of Boston– at least locally. Awkwardly named TEOCO of Fairfax really means The Employee Owned Company—not too catchy but clearly successful. The company provides critical cost, routing and revenue management software and services for telecom service providers. At least several locally funded companies have set sail in those seas only to end up on the rocks. Read More
United BioSource Opens Sluice Gates for Berkshire Partners. 10/8/09 Private Placement. In a transaction that has similarities with the TEOCO one, United BioSource Corporation of Bethesda took in a massive $125M “growth equity” investment from Berkshire Partners. United BioSource plays an interesting and potentially lucrative role in the Pharma industry by helping develop and commercialize products through providing evidence of safety, efficacy and value. This investment is similar to TEOCO’s because of the size being such that only two local funds (NEA and Carlyle) could play. Read More
Command Information Slips in a Small “Expansion” Round. 10/11/2009 Private Placement. Command Information of Alexandria burst onto the local scene in 2006 with an eye-popping $32M from Novak Biddle, Paladin, Carlyle and Blue Water. It announced an ambitious program, starting from scratch, to become the leader in spreading the new IPv6 Internet protocol throughout government and beyond. It jumped out of the blocks with the purchase of Digital Focus. Many of us at the time were curious how a company could arrange itself to capitalize on a standard. Read More
IXI Corporation Wins Big for Investors through Sale to Equifax. 10/28/2009 Sale of Company. Every now and then, an investment works the way it is supposed to. Core Capital, ECentury, and Blue Chip put $7.75M into IXI in 2004, followed the next year by a much smaller ECentury top-off round in 2005. Then, IXI management took over and created a ground-breaking information/research firm that measures consumer wealth through relationships with financial institutions. Flash forward to October 2009, and Equifax, Inc. (NYSE:EFX) buys the company for $124M. Read More
Allied Capital–End of an Era, End of a Local Institution. In October, Allied Capital Corporation (NYSE:ALD) announced that it was selling to Ares Capital Corporation in NYC (NASDAQ:ARCC). Thus ends one of the most storied finance companies in the region—a company whose origins pre-date almost all of us who have benefited from having this expertise in the region. George Williams, who is in his 80’s, founded the company fifty years ago and took it public shortly thereafter. Allied was a clear pioneer in the realm of small business and mezzanine lending. Read More
TEOCO, GlycoMimetics and United BioSource—Private Placement or Acquisition? It is an issue that has interested us for years. When is an investment a buyout and when is it a venture investment? The line used to be very clear. Buyout funds absolutely had to have control, and control was defined as over 50% of the voting stock. In the previous millennium, a buyout fund would run out of the meeting room if official control was not on the negotiating table. Read More
NEA, One of the First Mega-Funds. Will Smaller Funds Survive? NEA, for as long as most of us can remember, has been an elite leader in the venture capital industry. It comes as no surprise that NEA was listed at the top of all venture funds in terms of number of investments for the three months and nine months ending 9/30. We have seen NEA at the top of about every list for two decades, including key ones such as number of IPOs from its investments. In October, NEA announced it had reached its target of $2.5 billion for NEA Fund XIII. To put this in perspective, only eight other U.S. firms have raised billion dollar plus venture funds since 2004, and NEA is only one of two to raise this level of capital since the beginning of 2008. Read More
Black & Decker Corporation (NYSE: BDK), based in the Baltimore suburb of Towson, announced in early November that it was merging with The Stanley Works (NYSE:SWK) based in Connecticut. As per the usual script, this “merger” was hailed as a great step forward for Black & Decker. Black & Decker shareholders would receive (in stock only) a 22% premium, Nolan Archibald (Black & Decker Chairman & CEO) would become the executive chairman of the combined company, and there would be cost cuts in order to increase value for shareholders. Yet another major Baltimore based company would be throwing in the towel. It is a long list dating back two decades that includes major insurer USG&G, developer Rouse, Maryland National Bank and Alex. Brown & Sons.
The capitulation of Black & Decker is a failure on three levels—corporate management, corporate governance and market regulation. Read More
September 2009
Mid-Atlantic Deal Review
from Chessiecap, Inc.
Editor’s Note: Welcome to the Inaugural Edition of the Mid-Atlantic Deal Review, a periodic review of transaction activity in the D.C.-Maryland-Virginia-West Virginia region. Measure real activity in the region. Entertain and Inform. Pull no punches. Get beneath the surface of deals, news and trends. Participate.
Stat Notes:
Quick Stats is the most comprehensive and thoroughly researched presentation of Mid-Atlantic transaction data available. Mid-Atlantic is defined as D.C., Virginia, Maryland and West Virginia. Private placements include all private equity investment including institutional equity, PIPEs, private investors and other forms of new investment. The M&A data are the first to capture true regional activity. Over 2/3 of all M&A transactions are “undisclosed,” resulting in almost meaningless totals. Chessiecap reviews all reported regional transactions and uses its market knowledge and deal intelligence to assign probable deal values. The data above does not capture debt transactions, recapitalizations, non-corporate real estate financings (project financing) or purchases by local companies of companies outside this region. The primary filter is the addition or transfer of value into or within the region at the corporate level.