J.W. Childs Associates LP

  • Overview

Childs grows up

J.W. Childs Associates came on to the private equity scene in 1995, several years after the leveraged buyout boom of the 1980s began to settle down.  The firm was started by John W. Childs and three other senior executives from one of the most successful leveraged buyout firms, Thomas H. Lee Partners.  In the 13 years since breaking free from their former employee, these former execs put their business savvy to work for their own buyout firm.  While at Thomas H. Lee, John W. Childs was instrumental in the buyouts of companies, such as Snapple Beverages and Ghirardelli Chocolates.

J.W. Childs Associates has invested in companies with a total transaction value of $10 billion.  The firm's current investments come out of its third dedicated fund, J.W. Childs Equity Partners III, which has a value of $1.75 billion.  The capital for this fund was raised from a combination of financial institutions, pension funds, insurance companies and university endowments.  J.W. Childs invests in middle-market companies that it feels have the potential to grow 10 percent or more each year.  The private equity firm specializes in investing in the areas of consumer products, health care, specialty retail and asset management.  J.W. Childs' portfolio includes Advantage Sales, Brookstone, CHG Healthcare, Esselte, Fitness Quest, Joseph Abboud, MAAX, Mattress Firm, Nutrasweet, Simcom Training, Sunny Delight and WS Packaging.

Fundraising failure

Tough times have hit J.W. Childs hard in the past few years.  The firm suffered a disastrous failure in 2007 when it was forced to postpone the fundraising for its fourth fund, J.W. Childs Equity Partners IV.  The hype for this fund had begun in early 2006 when J.W. Childs began advertising its launch.  The fundraising goal was $2.5 billion, $750 million larger than the firm's previous fund.  However, bad results from recent investments led institutional investors to become cautious of J.W. Childs, signaling that the firm may have passed its heyday of private equity glory.  J.W. Childs postponed fundraising for Equity Partners IV in mid-2007 and has since found it difficult to resume among the tense climate of the credit crisis.

As a result of the company's troubles, J.W. Childs saw an unprecedented turnover of senior executives in summer 2007.  Senior partners Dana Schmalta and Ted Yun were the first to defect, and rumors soon swirled that they would launch their own business.  Shortly after, J.W. Childs suffered the resignations of principals James Rhee, Jeffrey Teschke and Mark Tricolli.  In November 2007, it was announced that the ex-J.W. Childs execs had formed West Hill Partners, a new private equity firm.

SPAC for success

After the painful failure of J.W. Childs' fourth fund, the firm quickly bounced back and tried a new tack.  In March 2008, the company filed for a $200 million special purpose acquisition company (SPAC) to raise funds.  A SPAC is an investment vehicle that draws funds through public stock market investors with the launch of an IPO.  In the current credit challenged environment, SPACs have quickly become an attractive fundraising alternative for firms which don't have as easy access to private funds.  J.W. Childs is among several high profile firms to turn to this method of fundraising to keep its head above water in tough times.



J.W. Childs Associates LP


111 Huntington Avenue
Suite 2900
Boston, MA 02199-7610
Phone: (617) 753-1100
Fax: (617) 753-1101
www.jwchilds.com

STATS


  • Employer Type: Private
  • President: John W. Childs
  • 2007 Employees: 9,100

Key Financials

  • 2007 Revenue: $897 million