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Firm Future Is Childs’ Play

Mid-market buyout firm J.W. Childs lost a pair of top execs last week, when president Dana Schmaltz and partner Ted Yun announced their resignations. The moves follow last year’s departure of co-founding partner Steven Segal, and really seems to put the firm’s future in the hands of 65-year-old John Childs.

The Boston-based firm pre-marketed its fourth fund last year with a $2.5 billion target, but postponed the effort after limited partners said they wanted to see additional liquidity events. Some of those deals have since occurred – or are occurring, like last week’s agreement to sell Sheridan Healthcare to Hellman & Friedman – and some news outlets have suggested that the decision to resume fundraising is just a formality. My understanding, however, is that Childs has not yet made up his mind.

Chances are that he’ll progress – more than one person has remarked to me that’s “he’s not a quitter” – but he’ll first have to decide on new hires or promotions to replace Schmaltz and Yun (who seem to be leaving on relatively good terms). J.W. Childs only has two remaining “partners,” with a large roster of “operating partners” and principals who could be asked to move up the hierarchy for a new fund. Again, the smart money is on a fourth fund. But nothing is set in stone yet.