Willis Stein Vets Struggle To Branch Out

Chicago-based buyout firm Willis Stein & Partners has been unable to raise a new fund for the past couple of years. With that effort on hold, several of its top partners have left to hang their own shingle, but the jury is out on whether those efforts will prove to be more fruitful.

In 2007, Willis Stein managing partner Dan Blumenthal left to form his own firm, taking with CFO Todd Smith and principals Bradley Shisler and Roy Jain with him. The new shop, called Blue River Partners, was expected to raise up to $150 million for lower mid-market investments.

As with any number of first-time funds entering the market amid a credit crunch, Blue River’s fundraising effort did not get off the ground. Bluementhal tells peHUB that the firm’s formal fundraising process has been “deferred for the foreseeable future” — with Blue River receiving some commitments, but not enough.

As a result, Blue River shifted gears to a consolidation strategy, Blumenthal says. The firm raised a small, undisclosed amount of capital from high net worth individuals to invest in a roll-up of veterinary hospitals. The effort, called Blue River Petcare, will mirror a National Veterinary Associates, a similar roll-up Blumenthal executed while at Willis Stein. That company sold to Summit Partners in 2007. He says the project is “just beginning,” holding a first close on some capital in late spring and a second close more recently.

Roy Jain remains at the firm. In January Todd Smith took the role of VP and Controller at Lakeside Energy, an American Securities-backed acquirer of energy companies. Bradley Shisler left the firm’s roster as well, but remains on board as a consultant.

Blue River’s fundraising difficulties should have been a warning to new endeavors in this market, but it didn’t stop Willis Stein managing director Phil Pool. In April, Pool announced he would form his own placement agency with Leo van den Thillart, formerly of Bear Sterns & Co. That effort, called Navidar Capital, also has come to a standstill, with Pool remaining on Willis Stein’s roster as head of investor relations.

There is one of Willis Stein alum who found fundraising success, but he left prior to the stalled fundraise. Daniel Gill, a founding Willis Stein partner, founded Silver Oak Services Partners in 2005 It raised $100 million for its first fund and has invested in services companies including Accent Food Services, Physicians Endoscopy, Unified Investigations & Sciences and Convergent Resources Holdings.