Madison Dearborn Partners LLC

  • Overview
THE SCOOP

Windy City specialists

Madison Dearborn is a private equity company that specializes in leveraged buyouts.  The Chicago-based firm started in 1993 when chief executive John Canning recruited several of the top executives and investment professionals from his former employer, First Chicago Corporation, and banded them together in a new enterprise.  In the years since its inception, Madison Dearborn has successfully raised and invested five funds worth a total of $14.4 billion.  The most recent of these funds closed in 2006 with a total value of $6.5 billion.  Madison Dearborn raises funds from a pool of institutional investors in Europe, Asia and Australia as well as from public and private pension funds.  Madison Dearborn focuses on six industries: communications, consumer services, financial services, health care, energy and power, and basic industries.  Investments typically range between $100 million and $600 million.

Play ball

Private equity companies aren't usually the first thing that comes to mind when thinking of America's favorite pastime.  However, Madison Dearborn is uniquely connected to the sport of baseball through its former chief executive offer and current chair John Canning.  Canning is part owner of the Milwaukee Brewers and recently led a group of Madison Dearborn investors in a deal to purchase his hometown team, the Chicago Cubs, for almost $1 billion.  Though his offer was rejected in July 2008, rumors spread that Canning might attempt to use his ties to baseball Commissioner Bud Selig to get back into the bidding in the future.

Madison Dearborn also completed a takeover of the baseball-card company Topps, Co.  The company joined with a team of investors led by Michael Eisner's Tornante to buy Topps for $385 million, a value of approximately $9.75 per share.  The deal had its pitfalls and almost fell through due to a competing bid by the Upper Deck Company.  However, the acquisition was completed in October 2007 as anticipated.

Record-breaking deal

Madison Dearborn would have become part of private equity history when its deal to buyout Canada's largest telecommunications company, Bell Canada, pushed through.  The Ontario Teachers’ Pension Fund, along with Madison Dearborn, Providence Equity Partners and Merrill Lynch Global Private Equity, signed on to purchase Bell Canada (BCE) for a whopping $51 billion, the largest leveraged buyout ever.  The deal did not push through when BCE’s auditor declared that the company would be impoverished should the transaction be closed.  Consequently, BCE filed a lawsuit seeking $1.2 billion in fees to junk the buyout.

Credit woes

Like many of its peers, Madison Dearborn has had trouble lately coming up with the massive amounts of funds necessary for leveraged buyouts.  In July 2008, Madison Dearborn had only raised about $4 billion, less than half of the $10 billion it had set as a goal for a private fund, due to economic slowdown and withdrawal in investments.  The following month, investment firms pressured the company to lower its private equity fund to $7.5 billion.  Several of Madison Dearborn's deals have gone bad recently.  Recent acquisitions Yankee Candle Co. and Nuveen Investments have both been downgraded in value, and Pierre Foods, another portfolio company, recently filed for bankruptcy protection.  These deals, combined with a difficult economy and a tight credit environment, may spell out hard times for the private equity in the future.

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Madison Dearborn Partners LLC


3 First National Plaza,
Suite 3800
Chicago, IL 60602
Phone: (312) 895-1000
Fax: (312) 895-1001
www.mdcp.com

STATS


  • Employer Type: Private
  • Co-CEOs: Paul J. Finnegan & Samuel M. Mencoff
  • 2007 Employees: 4,158

Key Financials

  • 2007 Revenue: $566 million

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