This is why we now give awards based on exits and not deals.
Yet another recipient of a Buyouts Deal of the Year awards has soured. Sterling Investment Partners’ award-winning take-private target, U.S. Shipping, filed for bankruptcy. (See below for a list of other cursed winners.)
The deal was named small market deal of the year in 2002, the year Sterling purchased the oil transportation services business of Amerada Hess Corp. for $198 million. U.S. Shipping paid approximately 5.5 times pro forma EBITDA and had a number of co-investors to its $40 million equity stake, according to the accompanying story.
Buyouts deemed this deal a winner because of the special five-year revenue guarantee it had locked in with the seller. It seems like a good plan, except Sterling probably didn’t expect things to turn sour after that five-year period ran out.