The most difficult aspect of starting a new private equity firm is 1) finding good deals (although this is hard for every firm), and if you happen to be an unfunded new firm, 2) figuring out how to pay.  When you have to raise both equity and debt to close deals, #2 can be especially draining when changing terms and investor control quickly reduces the sponsor’s ownership in prospective transactions.

However, if you can find deals like OpenGate Capital’s recent acquisition of TV Guide Magazine from Macrovision, things don’t look so daunting. Terms of the deal weren’t initially disclosed but in a SEC filing, (and as AdAge points out), OpenGate acquired TV Guide for $1 (one dollar) down, and will get a $9.5 million loan from Macrovision to help with the purchase.

OpenGate Capital it should be noted, is an unfunded investment firm formed in 2005.

The TV Guide property unit is running at a significant loss, so there’s certainly some work needed if OpenGate hopes for a return on its initial outlay, but this is certainly the type of opportunity many new (and old) firms would love to tackle.

Tags: OpenGate Capital

This entry was posted on Wednesday, October 15th, 2008 at 9:27 pm and is filed under Private Equity News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.