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Term Sheet — Friday, May 22

May 22, 2015, 1:39 PM UTC

Friday Feedback

The sun is shining, the SEC has proposed new reporting rules to drive private equity crazy and my car is already packed for Cape Cod. In other words, it's time for some Friday Feedback.

 First up are some emails related to carried interest taxation, and my suggestion that Rep. Paul Ryan used the business tax vs. personal tax dichotomy as a “cop out.”

Greg: “If Congress gets business tax reform done this session without carried interest, I wouldn’t be surprised if, when they do personal tax reform next year, they exclude carried interest because it’s a ‘business tax’ issue. Anything to make sure their big donors keep getting a big benefit.”

Sam: "This is why no one reads your emails for your analysis; they read them for the headlines on other articles and news. You are right on the definition of carried interest, but then you rant about how you feel it has to be related to business earnings. Which is demonstratively false and uninformed, carried interest is the result from an exit or sale, not regular business activity… Go back to whining about Forbes or how Boston doesn't have unicorns, at least you don't sound like a complete idiot with those.” [I don’t know where Sam works, but I’ll presume it’s an unsuccessful private equity firm where profitable exits/sales aren’t "regular business activity."]

Mark thinks I was too tough on Ryan and too soft on Barney Frank’s flip-flop over SEC registration: “Why the inconsistency? You write that Paul Ryan copped out, but no such editorial remark on Barney Frank. I was at PEI’s CFO/CCO conference where Barney Frank made his comments. He elaborated on the topic for five minutes demonstrating he not only he understood the question, but the implications of it as well.” [Fair point, and I didn’t mean to undersell Frank’s backtrack.]

 Anon on Andreessen/Gurley relationship: “Of course you do recall - okay, maybe it was too long ago - that it was Gurley who first downgraded Netscape when it was a high-flying public company. Gurley learned that businesses were not buying the enterprise product, or whatever it was called, at the expected rate and correctly called that out. The stock did not take it well.”

 Robert on the Avon scam: "I just want to give some gentle push back on your demand that the SEC remove the filing. Under the securities laws, Edgar is meant to be an archive of filings that are made. The accuracy of the filings and the liability for incorrect/fraudulent filings are governed by a separate regime involving a combination of SEC enforcement and private enforcement through civil litigation. I agree 100% that the SEC should be investigating the case and should throw the book at whoever made this filing. I also agree that the security protocols for making a filing should be revisited in light of these type of incidents. But I don’t see a basis for removing the filing from the archive as it was in fact made and should remain part of the historical record. Think of it this way—we know that the financial statements of Enron and Worldcom were intentionally inaccurate. Should they also be removed from the Edgar record?"

 Tom on Mike Cavanagh leaving Carlyle: "You should have also noted that in both cases, departures are occurring of the "New Blood.” Adena was the second CFO to succeed previous longstanding CFO John Harris. The initial successor, Pete Nachteway took on a role at Legg Mason after less than 3 years… What this particular chain of events confirms/reveals, is that Carlyle is a tough place to get things done without deep institutional knowledge and a very high level of political prowess."

 Finally, we have Max on the Ifty Ahmed situation (which reader Jeff feels we should headline 'Ifty Shades of Gray'): "It also makes you wonder how Ahmed expected to get away with it. Unless the investment were to be written off, the cap table would have been wrong on the next round or on the exit. It seems like Ahmed could only have gotten away with it if the Giosis Mecoxlane investment completely tanked. Completely tanked... Son of a gun. Was he trying to pull the 'Springtime for Hitler' scam from The Producers?"

 Have a great long weekend...


General Atlantic is working with German automakers Mercedes, Audi and BMW on their joint bid for Nokia's digital mapping unit, according to Reuters. The deal could be valued at upwards of €4 billion. Rival bidding groups reportedly include Uber, working with Baidu and Apax Partners; and Tencent Holdings, working with EQT Partners. Read more.

It's also worth noting that General Atlantic is a small shareholder in Uber, per sources familiar with the situation. Those same sources say that General Atlantic and Uber are aware of each other's involvement in the Nokia process.


 Wifi Master Key, a Chinese app that lets users crowdsource login credentials for China’s ubiquitous hotspots, has raised $50 million in VC funding from firms like Northern Light Venture Capital, according to Fortune. Read more.

 Outset Medical Inc., a San Jose, Calif.-based maker of miniature dialysis machines that kidney patients can use at home, has raised $45 million in Series B equity funding from return backers Warburg Pincus and Vertical Group. The company also secured $15 million from converted warrants. Read more.

 Mode Media (f.k.a. Glam Media), a Brisbane, Calif.-based vertical digital media company, has raised $30 million in new funding led by existing shareholder Hubert Burda Media. Some of the proceeds will be used to pay off debt. The company has now raised a total of $186 million in equity, from such firms as DAG Ventures, Accel Partners, DFJ and Walden Venture Capital. Read more.

 Brit + Co., a San Francisco-based online lifestyle brand, has raised $23 million in new VC funding, according to a regulatory filing. Intel Capital appears to be a new shareholder. Existing backers include Cowboy Ventures, Index Ventures, Founders Fund, General Catalyst Partners and Yahoo CEO Marissa Mayer. Read more.

 Enterprise Therapeutics Ltd., a UK-based drug startup focused on respiratory disease, has raised £2.4 million in new Series A funding from Imperial Innovations (£2m) and existing backer Epidarex Capital (£0.4m). The company’s total Series A round now stands at £4 million.

 Companion Medical, a San Diego-based maker of “smart insulin pens,” has raised $3 million in new Series B funding from Eli Lilly. Read more.

 CyPhy Works, a Danvers, Mass.-based drone developer led by iRobot co-founder Helen Greiner, has raised an undisclosed amount of VC funding from Draper Nexus. Existing shareholders include Lux Capital, General Catalyst and Felicis Ventures.

 Digital Specialty Chemicals Ltd., a Toronto-based provider of advanced materials to the semiconductor, pharma and specialty chemical markets, has raised an undisclosed amount of equity funding from Intel Capital.


 ABRY Partners has agreed to acquire Gilbert, Ariz.-based FastMed Urgent Care, which calls itself the second-largest independent urgent care organization in the U.S. No financial terms were disclosed. Sellers would include Comvest Partners.

 Ambrx Inc., a La Jolla, Calif.-based developer of a type of protein therapeutics called bio-conjugates, has agreed to be acquired by a consortium that includes Shanghai Fosun Pharmaceutical Group, HOPU Investments, China Everbright Ltd's healthcare fund. No financial terms were disclosed. Ambrx recently withdrew IPO registration due to “market conditions.” Current Ambrx shareholders include Tavistock BIO (19.3% stake, per IPO filing), Maverick Capital (17.4%), Apposite Healthcare Fund (9.5%), Versant Ventures (7.5%), 5AM Ventures (6.9%), Roche (6.2%) and Merck (5.2%).

 A.P. Plasman, an Ontario-based provider of injection-molded plastic automotive components, has made two acquisitions: The assets of A-Brite Plating Co., a Cleveland-based custom chrome plating company; and the assets of Thermotech Inc., a Hopkins, Minn.-based provider of injection-molded electrical and mechanical components and assemblies. No financial terms were disclosed for either deal. A.P. Plasman is owned by Insight Equity.

 NRD Partners has agreed to acquire Frisch's Restaurants Inc. (AMEX: FRS), a Cincinnati-based operator of family-style restaurants, for approximately $175 million, or $34 per share (21% premium over yesterday’s closing price).

 Planview, an Austin, Texas–based provider of portfolio and resource management software, has acquired Troux, an Austin-based provider of enterprise portfolio management and enterprise architecture solutions. No financial terms were disclosed. Planview is a portfolio company of Insight Venture Partners, while Troux had raised over $30 million in VC funding from such firms as Austin Ventures, Greylock, Pinnacle Ventures and Verdane Capital.

 Platte River Equity has acquired Profile Products LLC, a Buffalo Grove, Ill.-based maker of products designed to minimize soil loss and accelerate seed germination. No financial terms were disclosed. Sellers include Mid Oaks Investments.


 No IPO news this morning.


 2x Consumer Products Growth Partners has sold its majority stake in Preferred Brands International, a Stamford, Conn.-based provider of ready-to-eat meals, to Kagome Co. (Tokyo: 2811) for approximately $80 million.

 Cerberus Capital Management is planning to sell upwards of $878 million worth of stock in listed Japanese railway and bus company Seibu Holdings, according to IFR. The deal would leave Cerberus with around a 25% stake in Seibu. Read more.

 EMD Millipore, a unit of Merck KGaA, has agreed to acquire the life science research business of Singulex, an Alameda, Calif.-based developer of biomarker diagnostic systems. No financial terms were disclosed. Singulex has raised over $65 million in VC funding from firms like Fisk Ventures, Jafco, OrbiMed Advisors and Prolog Ventures.

 Spectrum Brands Holdings Inc. (NYSE: SPB) has completed its previously-announced acquisition of Armored AutoGroup, maker of Armor All and STP auto products, from Avista Capital Partners for $1.4 billion in cash and assumed debt.


 HSBC is exploring “strategic options” for its money-losing Brazil business. Read more.


 Obvious Ventures, the VC firm launched by Twitter co-founder Ev Williams, has closed its debut fund with $123,456,789 (yes, you read that correctly).

 Jared Cohen, a former managing director with Fortress Investment Group, is prepping his own distressed debt fund, according to Bloomberg. Read more.


 Yie-Hsin Hung has been named CEO of New York Life Investment Management, effective immediately. She previously was co-president of the business, which manages more than $500 billion in assets.

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