High-flying deals involving big private equity firms such as Cerberus and Blackstone made headlines in 2007 with acquisitions of companies such as Chrysler and Hilton Hotels.
While mega-transactions have slowed amid the credit crunch, there’s still substantial capital for mid-sized companies, said Mark Jones, a partner of Chattanooga-based River Associates Investments.
“We’re seeing a number of very attractive opportunities,” he said about the private equity firm. “Despite a lot of the gloom and doom ... the lower middle market and middle market for private equity investing continues to be fairly robust.”
Globally, private equity deals reached a four-year low of $43.5 billion in the first quarter 2008, according to Thomson Financial’s mergers and acquisitions review.
“There was a little bit of indigestion,” Mr. Jones said. “We continue to be optimistic.”
River Associates, in business since 1990, has invested or is involved with almost 60 companies, he said.
Mr. Jones said the lower-middle market typically means companies with between $10 million or $75 million of revenues or $2 million or $10 million of operating income.
River Associates often becomes involved when there is a change in control of a company, he said. For example, a business owner may want to diversify his net worth, or sell to a son or management team, Mr. Jones said.
“We sit on the board and will be active investors,” he said.
Or, the company official said, River Associates brings “deep pockets” to a business and allows the owner to take a risk to grow the operation. “We allow them to be prudently aggressive,” Mr. Jones said.
Staff Photo By Kelly Wegel -- Mark Jones, a partner with River Associates Investments, poses for a portrait next to what he calls the tombstones, plaques signifying investments the company has made, in the business' offices downtown on Tuesday.
River Associates is focused on investing alongside business owners and senior management, he said, adding it can invest or find needed financing.
Kent Farmer, chief executive of Selmer, Tenn.-based Spectrum Corp., said it became associated with the Chattanooga private equity firm in December 2006.
Spectrum, which blends and packages oils for outdoor equipment, has had “a very good relationship” with River Associates, Mr. Farmer said.
“They’re very good working with and supportive of management and our objective,” he said. “That’s not always the case with equity firms.”
River Associates brings more than just money to a company. It brings people.
Charlie Cox, chairman of Evansville, Ind.-based Lucent Polymers, said this is his third stint as a top manager for a River Associates company.
“The first one was as CEO,” he said. “The second two were as, effectively, chairman.”
He came aboard Lucent three months ago to help amid tough market conditions as its clients include the hard-hit automotive and housing sectors.
“My role is to come in and provide more day-to-day hands-on assistance to try to deal with tougher market conditions we have and grow in spite of these markets,” Mr. Cox said.
Mr. Jones said River Associates will typically be involved with a company for three to eight years.
“Our goal is not to generate a home run on every investment,” he said. “We want to have good solid doubles.”
At a glance
* Name: River Associates Investments
* Founded: 1990
* Business: Private equity partner for management teams in buyouts, divestitures and recapitalizations of lower-middle market companies
* Partners: James Baker, Mike Brookshire, Mark Jones, G.H. Patten Pettway Jr., W. Craig Baker; George Pettway, advisory partner
