After criminal charge, John Childs retires from firm he founded

  • Childs is retiring from firm and Fund IV portfolio company KeyImpact
  • Not clear if departure triggers key-man provisions in funds
  • Firm said Childs had not been part of daily management

J.W. Childs Associates announced that Chairman John W. Childs is retiring from the firm he founded in 1995 in the wake of police charging the private equity pioneer with solicitation of a prostitute.

Childs’s decision comes as the firm is in the market targeting $500 million for its fifth fund. Fund V has collected at least $209.2 million as of November, according to an SEC filing.

Childs stepped down as chairman of the firm and as a board member at KeyImpact, a Fund IV portfolio company. He has not been active in day-to-day management for several years, the firm said. J.W. Childs continues to be led by Managing Partner Adam Suttin and Partners David Fiorentino, Jeff Teschke and Bill Watts.

“John built an enduring and strong business and we appreciate his many contributions to JWC,” Suttin said in the statement. “I look forward with confidence to the next chapter for our firm and wish John well.”

Photo of John Childs sourced from J.W. Childs Associates website

“He’s a super smart guy, super nice guy, very good investor,” said a person who has worked with him who asked not to be named.

It’s not clear what kind of communication the firm has had with its investors. One of the firm’s LPs told Buyouts it was taking a “wait-and-see” approach to the situation.

The statement from J.W. Childs does not explain why Childs retired and makes no mention of the charges. An arrest warrant was issued for Childs, 77, Feb. 18.

Childs reportedly told Bloomberg: “I have received no contact by the police department about this charge. The accusation of solicitation of prostitution is totally false. I have retained a lawyer.”

Childs led the firm through its first three funds, which closed on $430 million in 1996; $980 million in 1998 and $1.7 billion in 2002.

In 2007, the firm abandoned an attempt to raise $2.5 billion for Fund IV amid concerns about performance and deteriorating market conditions. The firm instead raised a $125 million special purpose acquisition vehicle in 2010, which it used to buy stone tile retailer Tile Shop.

J.W. Childs completed a restructuring of its third fund with CPPIB and Goldman Sachs that moved remaining assets into a new vehicle and raised about $119 million for Fund IV.

Childs previously was a high-ranking executive at Thomas H. Lee Partners and led the Snapple Beverages deal, the ice tea company the firm acquired for $135 million in 1992 and sold two years later for $1.7 billion, Buyouts reported.

Previously, Childs was a senior managing director for the capital markets group at Prudential Insurance Co.

Action Item: Read J.W. Childs’s statement announcing Childs’ retirement: