George Capital Hires Former AEA Partner –

The George Group took an important step in building a separate private equity arm this month when it partnered with Alan Wilkinson, a partner at AEA Investors from 1989 to 1999, to lead its effort.

The Dallas-based management consulting firm has been working in recent months to form a team, temporarily named George Capital, that will make direct investments (BUYOUTS March 8, p. 16). George Capital already has retained Merrill Lynch & Co. as its placement agent and soon will begin marketing a debut vehicle. Merrill had advised The George Group on what type of person it should partner with to lead George Capital.

“Merrill cautioned me that I needed to hire someone that leads $200 million deals in the same industries we target in order to raise a $500 million fund,” said Michael George, the founder of George Capital and The George Group.

According to Mr. George, Mr. Wilkinson meets the qualifications. Mr. Wilkinson led deals at AEA for industrial and consumer products companies. Also, he worked in a similar culture in that AEA often teamed a financial partner, like Mr. Wilkinson, with consultants to manage portfolio companies. In a similar manner, George Capital will work closely with The George Group to manage its investments, although the two entities will remain separate, Mr. George said. The new firm also will conduct due diligence on investments with The George Group. To generate returns, George Capital plans to acquire manufacturing companies and use its operating expertise to implement improvements in time management.

Mr. George hired Mr. Wilkinson after he met with several candidates, and at least one-Alan Menkes, formerly of Hicks, Muse, Tate & Furst Inc. and now at Thomas Weisel Partners-decided against signing on to the new group.

The George Group is planning to rename the private equity arm and finish rounding out its team. In the near future, Mr. George would like to build George Capital to four partners: Mr. Wilkinson, Mr. George and an two as-yet-unnamed professionals. He would also like to add about 10 other professionals. However, the firm will start fund raising without the team in place, Mr. George said.

AEA Loses Another

Meanwhile, AEA Investors is responding to the recent wave of resignations at the firm. The group last month added a new partner, John Garcia, the former head of leveraged lending in Europe for Credit Suisse First Boston.

AEA has invested about 30% of the $1.2 billion partnership it raised in late 1996. Since it launched the fund, three of the group’s six senior partners have resigned-Chip Baird who left to start Northcastle Partners, L.L.C. (BUYOUTS Oct. 26, 1998, p. 7); Henry Skelsey who left in 1998 to become CFO of AEA portfolio company Tanning Technologies; and now Mr. Wilkinson. Vincent May remains the firm’s CEO. Priscilla Newman, who was not a partner, also left to join Welsh, Carson, Anderson & Stowe as a partner.

In response, the group has added three partners: Martin Murrer, formerly an investment banker at Donaldson, Lufkin & Jenrette, Scott Dahnke, formerly CEO of American Business Information of Omaha, Neb., a business that provides data processing services to other companies (BUYOUTS Oct. 28, 1998, p. 16), and Mr. Garcia.

An AEA L.P. said he believed Mr. Wilkinson’s strength was his ability to raise capital in Europe and his experience in finding deals. He said he believed AEA worked like a franchise and could still effectively make investments. Partners at AEA declined comment.

Mr. Wilkinson declined to comment on the internal situation at AEA and said he resigned from the firm because he wanted to run his own group.