RFE’s investment in Commonwealth Business Media, the leading information provider to the global trade and transportation market with comprehensive proprietary data, news and analytical content, exemplifies the specific brand of investing expertise practiced by RFE, particularly the strong bond formed with portfolio company CEO’s.
Alan Glass, Chief Executive Officer of Commonwealth Business Media, discusses RFE’s investment:
I met RFE through a merchant banker who had known Jim Parsons for many years. In the selection process, RFE was up against at least half a dozen other private equity firms, but we had really good chemistry with Jim, Mike Foster and Peter Reiter. I also liked the firm’s size – I didn’t want to get swallowed up by a large private equity fund. I interviewed other CEO’s who RFE had backed and the firm had excellent references. I felt right from the beginning that I was going to be able to work really well with them.
When I started working with RFE, I had done a lot of deals, but none in private equity. I didn’t know what being part of the private equity environment was going to be like. That’s where the chemistry really became very important to us. RFE addressed all of the concerns we had before signing – like dilution protection for add-on deals. They agreed to our growth strategy and how we were going to structure the business. But not before doing their homework. They really drilled into our strategy.
As we grew, RFE helped us recapitalize the whole company, restructure all of our debt, bring in new banks and arrange the acquisition financing for additional deals. They also helped tremendously in terms of acquisitions. They put me in touch with a large network of different people, a network that ended up doing a lot of the hunting for us. We developed an entire database of opportunities that actually resulted in us launching into an entirely new market.
We were pursuing a certain add-on transaction for a long time, when the opportunity to buy the Journal of Commerce presented itself. The JOC was the mother load, frankly – the price was right and it offered significant consolidation opportunities. We couldn’t pass it up. Initially, we pursued both deals simultaneously and even put a $1 million deposit on the first transaction. We really got to appreciate Jim, Mike and Peter when we started seeing them side-by-side with other private equity firms. Then 9/11 hit and the whole situation changed. I was talking constantly with RFE – we had a million dollars at risk in one deal and we couldn’t pass up the JOC deal…but the lending environment changed and now we couldn’t do both. I talked the situation through with Mike and he backed me all the way. We acquired the JOC and forfeited the down payment on the other deal. It wasn’t easy, but it turned out to be the right call.
The decision to exit Commonwealth Business Media was driven by several needs. We needed more capital to grow to the next level and RFE was reaching their equity limit and exit timeframe. While RFE gave me the freedom to choose who was going to run the auction after we had all interviewed several candidates, they also helped me throughout the whole process. When we started reviewing management presentations, Mike and I talked just about every day. They really made a huge contribution at the closing because Mike was very much involved in the contract negotiations. I learned a tremendous amount from him, things I had not even thought of. I should also mention that they were very generous. Financially, they established a bonus opportunity to compensate the management team above and beyond our ownership stake in the company if we hit agreed upon levels of sale price. They were also really “stand-up” guys when it came to other executives who did not have equity, but who were critical to the whole process. RFE was incredibly fair.