Ten years ago today, Madison Dearborn Partners completed a deal that, if nothing else, surely resulted in a fragrant board room. On February 6, 2007, the firm acquired The Yankee Candle Company in a take-private buyout for $1.4 billion plus the assumption of debt, a deal financed with $433 million in equity from the firm’s fifth flagship fund and another large chunk of new IOUs.
With the global financial roiling to come, it would prove more difficult to turn the investment into a profitable one than Madison Dearborn probably would have guessed.
But eventually, that’s just what the firm did. After hunkering down for the rest of the decade, MDP withdrew a $300 million dividend from Yankee Candle in 2011, made up of senior notes in a private placement. Two years later, Madison Dearborn began to seek an exit from the business, but potential buyers balked at a reported $2 billion exit price. That was in May. By July, reports surfaced that MDP had begun the process of taking Yankee Candle public, with an IPO potentially on tap by the end of the year.
A few months later, though, in September 2013, the saga turned again. Now, Madison Dearborn had finally found a strategic acquirer to its liking: Jarden, a consumer conglomerate that owns specialized companies like the eponymous Crock-Pot, Rawlings baseball equipment and Coleman’s camping gear. The price: $1.75 billion in cash, a notable if not outrageous uptick from the firm’s purchase price six-and-a-half years prior.
The sale was an important step during the wind-down of Madison Dearborn Partners V, a $6.5 billion fund closed in 2006 that had an IRR of 6.97% as of 3Q 2016, ranking in the third quartile of its peer benchmark, according to the PitchBook Platform. But one has to wonder if the hallways at MDP’s Chicago headquarters ever again smelled quite as fresh.