The struggles of the big boys in private equity have been well chronicled: Blackstone Group's (NYSE: BX) declining stock price, the Linens n' Things bankruptcy, and so on.But NexCen Brands (NASDAQ: NEXC), a smaller, less diversified buyout shop, is also in trouble, according to The New York Times. The firm's portfolio companies include Bill Blass, Athlete's Foot and ice cream chain MaggieMoo's. With other brands including Pretzel Time and Great American Cookies, the fast-growing company had planned to make millions in the franchising business. But in recent months NexCen has fired its CFO, delayed the filing of its 10-Q, disclosed that there is "substantial doubt" about its ability to continue as a going concern, and announced that investors should no longer rely upon its 2007 financials.
Basically, NexCen is looking like yet another failed conglomerate, at least for now. Rather than buying, improving, and selling businesses like many private equity firms, NexCen had hoped to acquire various franchise brands and run them under a larger umbrella, taking advantage of synergies and opportunities for integration. Yes, that's the dreaded S-word. I wonder how many billions of dollars in shareholder value have been destroyed by promises of synergy.
With the company badly in need of cash, it's currently looking to sell some or all of its brands. But in this market, that might not be so easy. Athlete's Foot and Pretzel Time sure didn't create a lot of value for NexCen shareholders.
More bad news for Blackstone:
