Private Equity: Putting a Band Together

Jefferies Capital Partners for Pacific Basin

Like so many deals that look like an overnight success, the seeds of this deal were planted a long time ago – 13 years to be exact. But when you consider that Jefferies Capital Partners generated a return on equity in excess of 700% from the period of 1999 until exiting the investment in late 2005, in a business that historically returns closer to 7%, I think all of our readers can agree that this deal is deserving of a Deal of the Year Award.

In order to really understand this deal, we need to rewind the clock to 1993 – when Jim Dowling and Brian Friedman at Furman Selz took public a company called Pacific Basin. At the time the deal was done the underwriters got to know the management, Paul Over and Chris Buttery. Fast-forward three years to when MISC makes a bid to buy PacBasin, to which the shareholders agree. Over and Buttery walk away with some cash, a non-compete agreement and the rights to use the name Pacific Basin in the future.

When the non-compete agreements expired in early 1999, Over and Buttery contacted their former bankers and current friends Dowling and Friedman, who were now running several pools of equity on behalf of third-party investors as well as partners of Furman Selz who had been bought out by ING and told them their idea: getting the band back together for a revival tour.

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