J-Dubs Redux: Beaten, Abandoned, & Left For Dead, J.W. Childs Is Back: CORRECTED

J.W. Childs Associates LP, which looked like it was dead a few years ago, is back. It’s currently looking for a deal with a $125 million SPAC–a humbling endeavor for a firm founded by Tom Lee’s former number 2 which raised $1.7 billion for its third fund.

But the firm sees the SPAC as a bridge back to the LP-supported fund market. Childs is committed to raise a proper fourth fund, and if it does so, founder John Childs is giving up some control (apparently, he’s been reluctant to do so in the past), transitioning to a partner role instead of his current CEO role, Adam Suttin, a partner and co-founder, told Buyouts for profile of the firm to be published Feb. 28th.

On the exit side, the firm distributed $750 million to its investors in 2010—its second best year for distributions, according to the firm. And it recently generated 3x its money with the sale of marketing agency Advantage Sales and Marketing to Apax Partners Worldwide.

Childs started his firm in 1995 after helping to lead several buyouts of household-name consumer brands while at Thomas H. Lee Co. These included the legendary Snapple deal, which Lee bought for $135 million in 1992 and sold two years later for $1.7 billion.

Childs raised $430 million for its debut fund, and in fairly quick succession raised $980 million for its second fund in 1998, then $1.7 billion for its third fund in 2002.

But by 2008, the firm looked like it was finished. LPs, wary of the firm’s ever-larger funds, its foray into health care and a lack of exits from fund III, couldn’t stomach its plan to raise $2.5 billion for its fourth fund in 2006. The firm’s portfolio struggled, and several investment pros defected to start their own fund, West Hill Partners, which ultimately failed to raise a fund.

The firm has since regrouped, promoting some junior execs and welcoming back Jeff Teschke, one of the West Hill defectors who had been a principal, as a partner (yes, it was awkward. But Suttin said they got past it).

Fund III, which once looked abysmal shaky, is turning out to be a decent performer. The fund has so far generated 1.9x its invested capital and a 17 20 percent gross IRR, according to the firm. You can read more about the firm’s rebound in the upcoming issue of Buyouts.