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Term Sheet — Monday, April 25

Random Ramblings

On Friday I mentioned a Legg Mason survey about affluent investors and the “American Dream.” Below are my thoughts on it, but I’ve also received dozens of emails that I plan to address (and likely publish) later this week. In short, many of you disagree with Legg Mason’s threshold for affluence. Keep em coming…

Rarely a day goes by where I don’t hear some politician or pundit claim that the American Dream has become unattainable for too many. It’s also a common theme in my Facebook feed.

Sometimes the culprit is student debt. Sometimes it’s static wages, or the disappearance of pensions and manufacturing jobs. Sometimes it’s how predatory lenders have the disproportionate capacity to financially maim so many.

And I have responded by despairing for their desperation, for their newfound conviction that America is no longer the land of opportunity—that the prospect of upward mobility has become a cruel mirage. My only solace was my equally strong conviction that I not only have achieved at least some version of the American dream (yes, via a combination of privilege, hard-work and luck), but that my daughter will have a chance to do the same.

But, for the first time, I’m no longer so sure E will get there. Not because she’ll lack for intelligence or dedication or good fortune, but because she will be raised in an era of unprecedented entitlement. If it takes a village to raise a child, then her father’s voice will be drowned out by millions of naysayers.

So, What Changed?

My breaking point came Friday, upon reading a Legg Mason survey of affluent investors, which the firm defined as individuals with more than $200,000 in investment assets. It found that 55% of those surveyed believe that the American Dream no longer remains within reach, with only 23% “strongly agreeing” that they are living proof of its existence.

Remember, these people are prosperous, by almost any relative measure of global or American life in 2016. Their $200,000 isn’t an annual salary. It’s the amount of cash sitting in bank accounts or investments that are designed to appreciate in value. It doesn’t even include the value of their home, or even their second or third. It’s income after tax, mortgage payments, and literally every other past expense. There should be little worry about where the next meal, or next lifetime of meals, is coming from.

But they don’t feel rich. And before you tell me that $200,000 doesn’t go as far as it used to, particularly in certain cities, please realize that only 36% of those with at least $1 million in investible assets “strongly agreed” that they had attained the American Dream.


To be sure, the “American Dream” has no official definition, making it largely in the eye of the beholder. But when asked to give their top characteristics of someone who has achieved the American Dream, Legg Mason survey respondents said the following (in order):

1. Feeling financially secure
2. Having the freedom to live the way you want to
3. Being able to retire at 65 and live comfortably in old age
4. Owning your own home
5. Knowing that working hard pays off

We’ve already addressed the first one, and the second is equally absurd. If you have $200,000 of investible assets—let alone $1 million—and you don’t have the “freedom to live the way you want to live,” perhaps that’s more reflective on your decisions and expectations than on your actual means. For example, I want to live with a private helicopter (with a dedicated pilot) sitting outside of my home so that I can avoid traffic when heading into Boston. A private chef would also be nice, plus a heated indoor pool, and court-side season tickets to the Celtics. Am I missing out on the American Dream until those luxuries materialize? Of course not.

Retiring at 65 (or maybe an extra couple of years, given average lifespan increases) should be possible for most of these survey respondents, again depending on their definition of living comfortably. And I’d assume that most people with this much cash either own their own home, or have intentionally decided that it’s too much of a hassle (helicopter pad maintenance and all). Finally, if you’ve achieved the first four, it’s hard to imagine that the fifth remains elusive.

But, again, none of this is about objective logic. It’s about sentiment, and a political and societal climate that can no longer distinguish between those who actually have been victimized and those who simply fuel their own narcissism with self-pity. How can most Americans aspire to the American Dream when those who have achieved it refuse to acknowledge their own success?

They probably can’t, which means this cycle of pessimism will feed on itself and, in some cases, become self-fulfilling. I really hope my daughter doesn’t fall into that trap, that she will take advantage of opportunities and, if successful, that she will be grateful for it. Not ignorant of it.


• Ardagh Group, an Irish packaging conglomerate, has agreed to acquire a group of assets being sold by beverage can makers Ball Corp. (NYSE: BLL) and Rexam PLC (LSE: REX) ― to facilitate regulatory approval of the former’s purchase of the latter. The deal is valued at around $3.42 billion.

Rival bidders reportedly included Apollo Global Management, The Blackstone Group and Madison Dearborn. Read more.


• Sirin Labs, an Israel-based luxury smartphone manufacturer, has raised $72 million in new “seed” funding from Renren (NYSE: RENN), Moshe Hogeg (founder of Singulariteam) and Kenges Rakishev. Read more.

• Helium, a San Francisco-based maker of smart industrial sensors, has raised $20 million in new VC funding. Google Ventures led the round, and was joined by Khosla Ventures, FirstMark Capital and Munich RE/Hartford Steam Boiler Ventures. Read more.

• Augmedix, a San Francisco-based physician platform for patient data that leverages Google Glass, has raised $17 million in strategic funding from health systems like Sutter Health, Dignity Health, Catholic Health Initiatives (CHI), TriHealth Inc. Existing backers include Emergence Capital and DCM. Read more.

• Sysdig, a San Francisco-based container monitoring company, has raised $15 million in Series C funding from return backers Accel and Bain Capital Ventures.

• Unlockd, a New York-based mobile ad startup that helps users get smartphone bill discounts, has raised $12 million in Series B funding. Return backer PLC Ventures was joined by individual angels like Radek Sali, Greg Roebuck, Peter Gammell and Sam Mostyn. Read more.

• Kamcord, a San Francisco-based provider of mobile game streaming solutions, has raised $10 million in Series C funding led by Time Warner. Return backers include Plug & Play Ventures, Tencent, TransLink Capital, XG Ventures and Wargaming.

• AbSci, a Portland, Ore.-based provider of soluble microbial protein expression solutions, has raised $5.1 million in Series A funding led by Phoenix Venture Partners.

• BioBeats, a stress assessment app that integrates with wearable devices, has raised $2.28 million in VC funding. White Cloud Capital led the round, and was joined by AXA Strategic Ventures and IQ Capital.


• Advent International has agreed to acquire Viakem, a Mexican manufacturer of fine chemicals for the agrochemical market. No financial terms were disclosed.

• The Carlyle Group is partnering with former Barclays CEO Bob Diamond on an offer to acquire the Africa unit of Barclays (LSE: BARC), as first reported by Sky News. Read more.

• Cinven is in “final talks” to acquire Hotelbeds Group, a Spanish online hotel booking site, from listed German tour operator TUI, according to Reuters. The deal could be valued at around $1.1 billion. Read more.

• CVC Capital Partners has agreed to acquire a majority stake in Tipico, a German private sports betting group. No financial terms were disclosed, but earlier media reports suggested that the deal could value Tipico at around $1.1 billion. Rival bidders had included a joint offer from Centerbridge Capital Partners and Deutsche Telekom. Read more.

• J.F. Lehman & Co. has completed its previously-announced take-private acquisition of API Technologies Corp., an Orlando, Fla.-based provider of RF, microwave, microelectronics and security technologies, for around $111 million.

• Warren Equity Partners has acquired Hydromax USA LLC, a Chandler, Ind.-based provider of data collection for the purposes of locating and assessing the condition of water, wastewater and natural gas conveyance systems. No financial terms were disclosed.


• Three companies are expected to price IPOs on U.S. exchanges this week: Red Rock Resorts, Yintech Investment Holdings and Global Water Resources. Read more.

• Performance Health Holdings, an Akron, Ohio-based maker of branded wellness and rehabilitation products, has filed for a $100 million IPO. It plans to trade on the Nasdaq under ticker symbol PHC, with Credit Suisse and Jefferies serving as lead underwriters. The company reports $5.7 million in net income on $118 million in revenue for the first nine months of 2016. Shareholders include Gridiron Capital.


• Regulatory DataCorp., a King of Prussia, Penn.-based provider of enterprise risk, governance and compliance solutions, has hired Evercore to find a buyer, according to Dow Jones. Shareholders include Bain Capital Ventures.

• Telecom Italia (Milan: TLIT) is in talks to acquire Italian fiber optic network operator Metroweb from state-owned lender CDP and F2i, in exchange for a stake in its international wholesale unit (Sparkle), according to Reuters. Read more.


• Bank Dhofar of Oman said that it is in talks to merge with smaller rival Bank Sohar. Read more.

• Eramet SA (Paris: ERA) has agreed to acquire stakes in Indonesia’s Weda Bay nickel mine from Mitsubishi Corp. (Tokyo: 8058) and Pacific Metals Co. (Tokyo: 5541) for approximately $99 million.

• Famous Brands (JSE: FBR) of South Africa has acquired a 51% stake in small Italian fast casual restaurant chain Lupa Osteria for an undisclosed amount. Read more.

• Gannett Co. (NYSE: GCI) has offered to acquire Tribune Publishing Co. (NYSE: TPUB) for approximately $815 million (including the assumption of debt), or $12.25 per share (nearly 63% premium over Friday’s closing price). Read more.

• Nevsun Resources Ltd. (TSX: NSU) has agreed to acquire fellow Canadian mining company Reservoir Minerals Inc. (TSX: RMC) for approximately US$365 million in cash and stock. Read more.

• Novartis (Swiss: NOVN) is considering the sale of its $13.8 billion stake in Roche (Swiss: ROG), according to Reuters. Read more. Read more.


• The Abraaj Group is raising upwards of $500 million for a Turkey-focused private equity fund, according to Private Equity International.

• Ares Management has closed its fifth “flexible capital” fund with $7.85 billion in capital commitments.

• Matrix Partners India said that co-founding partner Avnish Bajaj has left to launch a new VC firm called Epiq Capital. Read more.


• David Crane, former president and CEO of NRG Energy (NYSE: NRG), has joined Pegasus Capital Advisors as a senior operating executive.

• Andrew Skinner has stepped down as a director with Better Capital, the British buyout firm he joined in 2014 from PwC, according to Dow Jones. No word yet on his future plans.

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