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Big deal(Santa Barbara News-Press (CA) (KRT) Via Thomson Dialog NewsEdge) Oct. 11--Jones Equity Partners, a small family-owned private equity firm based on State Street in downtown Santa Barbara, has just proved it can do business in the big leagues. On Tuesday, twin brothers Marc and Eric Jones announced the sale of one of their investments, Aspect Education Ltd., to Kaplan Inc., a New York-based international education firm which last year posted revenue north of $1.4 billion. Kaplan is also a wholly-owned subsidiary of the Washington Post in which legendary investor Warren Buffett's Berkshire Hathaway Co. is a significant shareholder. As part of a management buyout in 2002, Jones Equity, the largest single investor, and about a dozen other investors, half of them in Santa Barbara, paid $11.5 million for Aspect. Headquartered in London, Aspect is a major provider of English language instruction and training, with 19 schools located in the U.K., Ireland, Australia, New Zealand, Canada and the U.S., including in Santa Barbara. The sales price to Kaplan has not yet been disclosed but Marc Jones was able to confirm it was "several times the buying price." "This sale represents a phenomenal outcome for our financial partners, our friends in management and, importantly, for the hundreds of employees of Aspect who are now partnered with the best in the business," said Mr. Jones. Jones Equity acquired Aspect in a management buyout after the business downturn caused by the terrorist attacks of 9/11. "No students were getting on planes," said Mr. Jones. "But we saw Aspect as a quality company with the people we needed already in place." Which is typically how the firm has been operating since it was started about six years ago, during which time the brothers, happy to wait patiently on the sidelines for as long as it takes, have averaged only about one deal per year. "We like to buy companies but we're very, very patient," said Marc Jones. "We're prepared to wait for opportunities that make for compelling transactions with a great company." Jones Equity started out looking at deals worth between about $10 million and $20 million but has now raised its sights to between $25 million and $75 million. At the same time, the focus has shifted from having a large stable of investors to just a handful of major partners, with additional capital pumped in by the firm itself. The company Web site describes an "opportunity-driven investment style," and the brothers say they are prepared to consider investing across all industries. However, one important criterion is that they have to understand any businesses they buy, which might rule out something like a highly technical biotech. The brothers also say they only buy companies they are prepared to hold long term -- that was the case with Aspect before Kaplan came along and offered a price they could not refuse. Deals to date have come together through an initial public offering (IPO), an acquisition, minority investments and the sort of financial distress which can trigger a management buyout. This was the case at Aspect and is probably the preferred scenario for Jones Equity because it means they are also buying the skills, experience and passion to succeed that usually come with a management team prepared to buy their own business. "A big component for us is working with people you really like," said Marc Jones. "People are everything." The brothers, originally from Chicago, both won gymnastics scholarships to attend UCSB, where they graduated with business degrees in 1992. Marc Jones began his professional career with Paine Webber just before graduating. After periods with A.G. Edwards and Prudential Securities, he left to open his own advisory business, managing $300 million of assets through Bankers Trust Private Banking. Eric Jones followed a similar path. He was a financial consultant at A.G. Edwards and, at the age of 26, became the youngest associate vice president for Everen Securities. Besides Jones Equity, the brothers are partners in downtown Santa Barbara nightclub Indochine and, with others, in Latin restaurant Sevilla; Eric Jones is also heavily involved in one of their purchases, Ascendim Inc., an online advertising agency and search engine, while his brother is nurturing a real estate development company. Until a couple of months ago, they also owned a 25 percent stake in Cinema Circle Corp., the parent company of Spiritual Cinema Circle, a worldwide, subscription-based DVD film club for "spiritual" moviegoers. This proved another lucrative deal when Jones Equity sold its share to Gaiam Inc., a large publicly listed lifestyle/media company that paid $6.9 million cash for about 63 percent of Cinema Circle. To see more of the Santa Barbara News-Press, or to subscribe to the newspaper, go to http://www.newspress.com. Copyright (c) 2006, Santa Barbara News-Press, Calif. Distributed by McClatchy-Tribune Business News. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |