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PE Hub Blog

All posts from www.pehub.com, a Public Forum for Private Equity.

RocketLawyer Raises Cash from LexisNexisYesterday

RocketLawyer, a San Francisco-based lead generation startup that provides free legal information and forms to attract visitors, is $2.09 million closer to a $3.09 million Series B round, according to an SEC filing. More interesting is the single backer named in the filing: LexisNexis, the major compiler of legal and consumer information (and division of the Reed Elsevier Group PLC).

The investment is unusual for LexisNexis, which more typically gobbles up companies whole. For example, in 2007, it purchased Image Capture Engineering, an Omaha, Nebraska company that developed discovery document processing software. Months later, it bought Juris, a Brentwood, Tennessee startup that sold time, billing and accounting software. And last September, it completed its acquisition of Voxant, which developed business intelligence products for broadcast content, helping companies like peHUB’s parent Thomson Reuters get its content found, and paid for, on the Web.

I can’t say what’s behind LexisNexis’s investment in RocketLawyer, but Thomson Reuters-owned West Group, whose services include the online legal research tool Westlaw, has also been an aggressive in the marketplace over the years. Depending on your perspective, LexisNexis is trying to become, or remain, the top dog in the legal community. (There’s even a surprisingly funny Youtube video about i

peHUB Second Opinion 1.7Yesterday

Had to Happen Sometime: Apollo is getting burned on the distressed Lyondell Chemical Co. debt it purchased. (The Deal)

Porn Adult Entertainment Industry Bailout: Yes, thank you Fox Business News for covering this big story. “Girls Gone Wild” CEO Joe Francis and “Hustler” magazine publisher Larry Flynt have said they will petition Congress for financial aid along the lines of what the Big Three auto makers are getting.” (Fox Business)

FYI: The Ascent of Money, a Niall Ferguson documentary and book about the financial crisis, is airing on PBS Jan. 13. (Very Short List)

With Dignity, I Guess: How Satyam’s Chairman announced his massive fraud. (Clusterstock)

Don’t Count On Exits: The IPO Chill may last through 2010. (Deabook)

Get Ready: For your first mark-to-market investor letters. Yes, many of you have been doing it since Q3, but FT predicts “the equity may be well worthless today.” (

The Ax Falls Tomorrow at GE CapitalYesterday

Tomorrow is January 8, and for many GE Capital employees, that means D-Day.

peHUB reported in December that the GE Capital and its mid-market lending subsidiary, GE Antares, had suspended a planned round of planned layoffs until January 8, in order to implement a new, lower severance package plan. We haven’t been able to confirm specifics, but rumors are that the severance package may be less than two weeks salary for each year of service.

Perhaps the pitiful severance package isn’t surprising, given the pressure on financial firms to curb executive pay. But since GE has not recieved any TARP money yet, that’s hardly a valid excuse.

As you probably know, GE Antares’ layoffs are part of a giant restructuring plan to shrink General Electric’s exposure to the financial services industry, making GE Capital a smaller part of the conglomerate’s business by about 20%. The official headcount for both GE Capital and GE Antares hasn’t been revealed (although we heard a low estimate of 18 for GE Antares). So, tipsters, if you’re out there, please let us know.

Also interesting will be GE’s supposed return to market. Despite adamant denials, the firm was reported to be out

Sun Capital Laying Off 23, But Why?Yesterday

Seemingly out of nowhere, Sun Capital is laying off 10% of its workforce. The turnaround buyout firm—which I was just writing about as having a strong position going into the new year—is cutting 23 from its 200-person staff, a spokesperson confirmed.

This is confusing to me since the firm only last year raised its largest ever fund, oversubscribed by $2 billion. Meanwhile, it is in the midst of prime feeding season for turnaround firms like itself. Sun’s biggest selling point is its massive staff of seasoned turnaround operating experts. Did the firm get ahead of itself in its 2008 ramp-up?

Forget that the firm has seen more of its investments go bankrupt than any other firm—Sun Capital assumes that 10% to 15% of its investments will fail and calculates that into its returns. The firm buys companies that are on the verge of extinction at next-to-nothing prices.

When I asked about the reason for the cuts, a PR rep for Sun said it’s just like the cuts from other PE firms like Carlyle, 3i, or Blackstone. The cuts are in no particular strategy or region, but “ac

Left At the Alter: How Some Firms Get Around ContingenciesYesterday

It’s a familiar story line these days: Once the masters of their domains, private equity pros have faded from power and prestige with the onset of the credit crunch. Et cetera, et cetera.

Yesterday’s news provided further proof of this narrative. Macrovision rejected One Equity Partners, the firm it had lined up to buy TV Guide Network, in lieu of a strategic buyer. The price, $255 million, was only a slight bump from One Equity’s $225 million. The biggest difference of course, is those pesky contingencies. Unlike One Equity, strategic suitor Lionsgate would pay it all in cash. Private equity has been abandoned at the alter, and frankly, it’s a bummer.

I can’t say I’m surprised with the number of things that can do wrong in the deal-closing process these days. The flood of stories claiming “Lender X is closed for business,” or “Layoffs of Lender Y” don’t help. But what a burn. Given this situation and probably countless others behind the scenes, it’s fair to say firms wanting to do deals this year need a steady source of financing.

Beyond bridging the deal ’