Q&A: Hilco Organization Executive Vice President Richard Kaye

April 9, 2007

CHICAGO - “ The Illinois Venture Capital Association sat down with Hilco Organization executive vice president Richard Kaye to discuss his firm's role within the VC and private equity landscapes, the company's investment strategy and his perceived health of the local investment industry.


Illinois Venture Capital Association: Please describe The Hilco Organization's role within the venture capital and private equity industries.
Richard Kaye:
The Hilco Organization offers a suite of services to help facilitate successful private equity transactions. We have an understanding of business asset values, an appetite for acquiring assets across a broad spectrum and an ability to optimize the value of unwanted assets.

The Hilco Organization provides asset disaggregation strategies. We also provide acquisition bridge financing so buyout firms can close a deal quickly - “ in 10 to 14 days - “ with loans from $1 million to $25 million or higher.

In addition, we provide real estate sale and leasebacks. Hilco can complete everything involved in this process in less than three weeks. Our transactions cover all types of structures aside from residential. We are comfortable with company transactions that most other sale leaseback providers avoid. Our capital structure typically allows us to waive financing contingencies.

Hilco also provides lease restructuring, mitigation and valuation; co-investing; sell-side representation; tangible and intangible asset appraisals; and retail chain profit and performance enhancement consulting.

IVCA: Are there particular industries in which the firm specializes?
RK:
Hilco has significant expertise in most industries. The firm has a particularly deep and broad knowledge of the consumer products sector including retailing, wholesaling and manufacturing.

IVCA: What is your preferred transaction size range for deals?
RK:
We are comfortable with transactions ranging from $1 million and up. We recently completed transactions involving investments exceeding $400 million.

IVCA: What focus is there on Illinois- and Midwest-based deals?
RK:
Our headquarters is in the Chicago metropolitan area. Our roots are clearly Midwestern. That said, Hilco is truly an international company. We do deals all over the world.

IVCA: What is the private equity industry background of you and your colleagues?
RK:
There are a number of senior-level executives within Hilco who have many years of private equity and/or corporate M&A transaction experience. In addition, many Hilco executives were former owners and managers of their own companies.

This gives them a unique owner's perspective that has proven to be helpful in negotiations with potential buyout candidate companies.

IVCA: What is your take on the health of the private equity industry in 2007?
RK:
The industry should remain active throughout 2007 as investment capital is plentiful and acquisition multiples remain high. The number of quality target companies could begin to decline as a natural outgrowth of the intense M&A activity over the past five or so years.

This could lead to more intense competition for quality deals, which could boost multiples even higher. It is also possible that we could see an increase in the number of troubled private equity portfolio companies toward the end of the year as a result of a growing softness in certain sectors of the economy.

IVCA: How do you leverage organizations like the IVCA?
RK:
Hilco relies heavily on its affiliations with M&A-related associations to establish business relationships with private equity executives. We also seek relationships with service providers such as lenders, lawyers, restructuring firms and accounting firms.

IVCA: What do you do for fun when you are not making deals?
RK:
I appreciate golf both as a vehicle for developing quality business relationships as well as lasting friendships. I also relish time with my two grandchildren (both of whom have taken enthusiastically to golf).