If you’ve ever bought a copy of The New York Times, a doughnut and a read-it-in-an-hour paperback from airport concessionaires, chances are that you were buying from The Paradies Shops Inc., a 50-year-old Atlanta-based business.

Now, with the help of its lawyers at Paul, Hastings, Janofsky & Walker and Nelson Mullins Riley & Scarborough, Paradies—which has more than 500 stores in airports and hotels in the U.S. and Canada—has entered into an agreement to receive a significant investment and form a new partnership with private equity firm Freeman Spogli & Co.

Terms of the deal were not disclosed, but Paul Hastings partner Walter E. Jospin said his client’s ability "to obtain an investment from one of the leading private equity shops in the country reflects that the private equity business is vibrant, but they’re looking for quality.”

Karen K. Leach, a partner at Nelson Mullins, said Paradies was attracted by Freeman Spogli’s history of working with family-owned businesses.

Jospin, who has represented Paradies since 1997, and Leach, who spent almost a decade representing the company with Jospin, reunited to handle this deal. Leach left Paul Hastings in April, and said she’d handled some restructuring work in past years for Paradies—which she said had more than 50 legal entities and a complex organizational structure—in preparation for the right opportunity. 

Paul Hasting’s Philip J. Marzetti handled tax matters, and Nelson Mullins lawyers from several offices also were in on the deal, including partner William R. Gaines Jr. on lending matters and associates Bradley M. Burman and Steve B. Park, all in Atlanta. Leach said that Genesis Capital served as the investment bank for the transaction.

Freeman Spogli’s lawyers were from Bingham McCutchen’s New York, Los Angeles and Orange County, Calif., offices.

New private equity funds—especially ones which actually invest—are a bit of a rare breed these days. But DLA Piper partner Gerry Williams managed to land one as a client and help it make its first investment recently.

Williams’ client, the Bethesda, Md.-based RLJ Equity Partners, is a portfolio company of The RLJ Companies, founded by Robert L. Johnson, the owner of the Charlotte Bobcats. Its new fund closed in June with $230 million of committed capital.

Its first investment was the purchase of what Williams calls “a significant minority ownership stake” in LAI International from Minneapolis-based private equity firm Spell Capital.

LAI, which is based in Scottsdale, Ariz., and has outposts around the country, uses state-of-the-art lasers and water jet processing to manufacture precision-engineered components for a variety of industries, including healthcare, power generation, aerospace and defense. LAI has annual revenues of about $55 million, according to Spell Capital’s portfolio description.

The financial terms of the deal were not disclosed.

Williams said RLJ became his client when Rufus H. Rivers, whom he met through a mutual friend about seven years ago, became RLJ’s managing director.

The legal aspects of the deal took about 90 days to put together, and Williams said his team of lawyers handled all the mergers and acquisitions work, as well as issues related to real estate, environmental, intellectual property, employee benefits and tax matters.

“I think the unique aspect is, that given the current environment in the debt markets, the deal was done keeping the senior debt lenders in place,” he said. “It became a partnership between the then-existing private equity fund [Spell Capital] that owned the business and RLJ Equity Partners.”

Spell Capital was represented by Fredrikson & Byron in Minneapolis. The investment bank for LAI was Lincoln International.

Bill Rowland and a team of Jones Day lawyers just put the finishing touches on what's become an almost-unheard-of transaction these days: a private equity deal.

Rowland represented TorQuest Partners, a Canadian private equity fund manager, in its agreement to purchase a Brunswick, Ga.,-based refined wood rosin and natural wood terpenes business from a subsidiary of Ashland Inc. for about $75 million.

“The exciting thing for us is to see some activity in the market,” said Rowland. “It's a private equity buyer, and there's acquisition financing. Those are good signals for a return to health in the market. … Private equity in general has been very quiet.”

This transaction, which is expected to close in about 60 days, involves $60 million in cash and a $15 million note from the buyer, payable over time, which Rowland said essentially functions as seller financing and will serve as security for any post-closing claims, and will help bridge any valuation gap.

That valuation gap—not uncommon in today's market, where businesses sell for less than their actual or perceived value—comes into play here because the wood rosin business, owned by Covington, Ky.-based Ashland's subsidiary, Hercules Inc., generated revenues of about $85 million in fiscal year 2009.

The business, which will be called Pinova once the transaction closes, is touted as the world's only supplier of wood rosin, which is used in a variety of applications in the adhesives, construction, beverage, personal care and agriculture markets.

Rowland said that Ashland acquired the wood rosin business when it purchased Hercules about a year ago. “Ashland was looking to dispose of nonstrategic business lines that they inherited when they bought Hercules,” he said. “Hercules had previously disposed of other parts of its rosins business, and coincidentally we were involved in that [sale representing] Eastman Chemical.”

Jones Day lawyers handled a variety of issues for TorQuest, including antitrust advice, employment, corporate, tax and transactional work. A big part of the deal, he said, involved representation by the firm's environmental team.

“The kindest way to put it is, it's a very messy site; it's an old chemical site with a wide range of issues,” Rowland said. TorQuest, he said, particularly as a financial buyer looking to build the business and then sell it in a few years, was concerned with understanding and resolving environmental issues.

The other challenges of the deal, he said, were the typical ones that arise when a business and assets are carved out of an entity that is not a free-standing corporation.

TorQuest also was represented in the deal by Canadian law firm Stikeman Elliott. Ashland was represented by its in-house counsel. Other Jones Day lawyers who worked on the deal included TorQuest's longtime environmental counsel, Charles Perry, as well as partners Scott Specht, Mike Lee, Doug Gosden and Tim Bratcher; of counsel Chris Morgan, Elaine Rogers Walsh and Arthur Kent; and associates Casey Fernung and Sarah Watts.

One of the largest U.S.-based textile manufacturers recently relied on a Greenville, S.C. law firm for advice on acquiring a private equity fund’s portfolio company.

Milliken & Co. was advised by a legal team from Wyche, Burgess, Freeman & Parham on its acquisition of carpet maker Constantine LLC. Heading up the Wyche team was partner Kevin Hendricks, a former associate in Jones Day’s Atlanta office. The deal closed on Tuesday and terms weren’t disclosed.

Milliken, a privately held company that’s headquartered in Spartanburg, S.C., manufactures modular carpet, apparel, fabrics and chemicals. Constantine is based in Calhoun, Ga., and is owned by the Boston private equity fund Lineage Capital LLC. Constantine makes broadloom and modular carpet tile, as well as other types of floor-covering products.

Working with Hendricks on the Milliken deal were Wyche partner Cary Hall and associates John Harvey, Maurie Lawrence and Rita Barker, all located in Greenville. Ropes & Gray advised Lineage Capital.

Wyche, a 38-lawyer firm, has weathered the economic downturn well because there were few examples of companies and lenders in the Greenville area that became overextended leading up to the recession, Hendricks said.

“Greenville never went crazy in the last few years in terms of growth and massive deal flow,” Hendricks said.

With an even split between litigation and transactional work, Wyche is able to handle clients’ needs on most deals, in spite of its size, Hendricks said. Occasionally Wyche will partner with a Washington firm when a client needs specific regulatory advice.

The Wyche firm is known for its work in some specific areas. Founding partner Tommy Wyche has authored several books about the South Carolina mountains, and he helped lead the redevelopment of downtown Greenville, including the creation of a park centered on the Reedy River waterfalls. Wyche’s office is situated on a parcel overlooking the falls. The Wyche firm has also carved out a niche, led by partner Wallace Lightsey, as a specialist in representing architectural firms in copyright infringement litigation.

Hard on the heels of handling more than $1 billion in financing transactions for Delta Air Lines earlier this month, Kilpatrick Stockton partner Benjamin W. Barkley found himself wondering—in these deal-starved times—what he’d be doing next.

But before he even had time to catch up on his sleep, he was representing longtime client Five Star Food Service in its recapitalization by Navigation Capital Partners. Chattanooga-based Five Star, which provides vending, coffee and food services, has long been a portfolio company for Atlanta-based private equity firm Navigation.

Though financial terms of the deal were not disclosed, Barkley, who worked on the transaction with partner Todd C. Meyers, said, “It was a refinancing, a paying off debt and additional investments. Like everybody else.”

The deal increases Navigation’s majority ownership stake in Five Star, and also makes Five Star a franchisee of Canteen Vending Services, an operating company of Charlotte-based Compass Group North America, according to information from the companies.

Attorneys from Reed Smith represented Navigation in the deal.

A group of triathletes and a merchant bank staffed by athletes went on a run for their money recently, when, with the help of some Seyfarth Shaw lawyers, they purchased a company which makes devices designed to speed the recovery of sports injuries.

Seyfarth partner Louann Bronstein, along with partner Jay Myers, both in Atlanta, and Boston partner Brian Michaelis represented Ponte Vedra Beach, Fla.-based acquirer Recover Gear Acquisition in its purchase of Recover-Gear LLC, a private company based in the Jacksonville, Fla., area.

The acquirer, Bronstein said, is a company formed by merchant bank Harbor View Advisors, also of Ponte Vedra Beach, and a group of athlete-investors called Ironmen LLC solely for this purchase. Collectively, according to information from Bronstein, Ironmen and Harbor View’s principals have competed in more than 25 ironman competitions.  

“These investors … use the products in their training,” Bronstein explained. The primary product Recover-Gear makes, she continued, is “a compression garment with a pocket for holding an ice pack or a heat pack, and they can be worn … after a race or if you’re a baseball player, for example, after a game. They’re also designed to be worn during a … training run.”

The products include an array of stretchy sleeve-type devices that can slide over an elbow or knee, or garments that look like tight-fitting bike shorts or shirts, each with pockets for ice or heat packs. The products are used by athletes and physical therapists, Bronstein said, adding that Recover-Gear has applied for a patent.

The company was founded by Steve Petitt, a former right-hand pitcher for the St. Louis Cardinals and a seven-time Hawaii Ironman triathlete. Petitt came up with the idea, according to the company’s Web site, while sitting in an ice bath after a hard run thinking that there had to be a better way to engineer his recovery.

Seyfarth, Bronstein said, got the work as the result of its relationship with Jim Philip, an athlete who is a Harbor View partner. The firm represented Philip’s former company, human resources software marketer and developer Vurv Technology, where he was president, in its merger with public HR company Taleo Corp. in 2008.

Recover-Gear was represented by Mark Young, a patent attorney in Jacksonville.

Terms of the deal were not disclosed.

Lawyers from Greenberg Traurig’s Atlanta office have kept busy on the deals front this summer.

Earlier this month, partners David I. Schulman and Stephanie D. Ratcliffe, along with David J. Gellen from the firm’s Palm Beach County, Fla., office represented Servigistics when it was acquired by Marlin Equity Partners. Los Angeles-based Marlin immediately merged its new acquisition with the service networks solution division of another recent purchase, Click Commerce, to form a single company.

That company, now operating under the Servigistics name, is based in Atlanta and focuses on software that helps companies manage and monitor their post-sale service business processes, including service parts, field technician scheduling, routing and pricing management, as well as management of returns, repairs and warranty decisions.

Financial terms of the deal were not disclosed.

In a separate deal, Greenberg Traurig partners Daniel B. Brown and Gerald L. “Jerry” Baxter represented Carmel, Ind.-based Dormir LLC, a company whose subsidiaries offer patient care to those suffering from sleep disorders, in its successful bid to raise $8 million in growth capital from investors CHL Medical Partners and Noro-Moseley Partners.

CHL, based in Stamford, Conn., and Noro-Moseley, based in Atlanta, were represented by attorneys from Morrison & Foerster’s Palo Alto, Calif., office.

You know how you like to gather a group of buddies in front of the flat-screen TV with some good beer and a plate of nachos to watch the game?

Well, the team of attorneys who helped structure the deal to bring four new minority investors into Arthur Blank’s Atlanta Falcons franchise was kind of like that—minus the TV, beer and nachos and plus a whole lot of paper and phone calls.

That’s because many of the lawyers on the deal used to practice together at King & Spalding. Michael J. Egan III, who represented Blank, still works there. Lead counsel for the four investors, Tyler B. Dempsey, spent nine years at K&S before joining Troutman Sanders in 2008. William B. Shearer III, the general counsel of United Distributors, a company headed by one of the new minority investors, was at King & Spalding until about a year ago.

As Egan put it, when he was with opposing counsel on this deal, “You’d often find yourself sitting around talking about things you’d be discussing if you were watching the game with a friend.”

Dempsey said that these negotiations, like most, had moments of conflict. But, he added, “Probably because a lot of the reason these [minority investors] are doing it is for fun, it wasn’t as heated as some of these are.”

In general, Egan said, negotiations involved discussions of when minority investors may or must liquidate their interests; what participation rights and perks minority investors receive; some tax issues related to investing in a limited liability corporation, which is the Falcons’ business structure; and the National Football League’s investor approval process.

“The NFL is very, very strict about who they will have as an owner, even a small owner of one of their teams,” Egan said. “There’s a detailed questionnaire that has to be filled out and submitted to the league, to the financial committee [on which Blank serves]. … They approve not just the people, but they review all the documents and they have to be satisfied with the structure of the deal.”

Egan said that Blank, a co-founder of Home Depot, retains “better than 90 percent control” of the Falcons. The team already had two minority owners—John P. Imlay Jr. and John A. Williams—prior to this transaction. The new minority owners are all local business leaders.

They are: Ronald E. Canakaris, chairman and chief investment officer of Montag & Caldwell, an investment management services company based here; Douglas J. Hertz, president and CEO of United Distributors, a beverage distributor based in Smyrna; Ed Mendel, co-founder of investment-related firms Ned Davis Research Group and Davis, Mendel & Regenstein Inc.; and Derek V. Smith, the former chairman and CEO of ChoicePoint Inc.

Neither Egan nor Dempsey would reveal the value of the transaction. Forbes valued the Falcons franchise at $872 million in September 2008; Blank paid $545 million for the Falcons in 2002.

Forbes, Egan said, has valued NFL teams for years. “If you go back 15 years … the average NFL team has appreciated almost 14 percent per year, and that’s a pretty good investment for something where you get to have a lot of fun, too. All four of these [minority investors] are pretty savvy businessmen. They wouldn’t invest just for fun.”

Dempsey pointed out that a large proportion of sports revenue is derived from media sales. In this era of TiVo, an NFL game is one of the few things people watch live, which makes it a very attractive advertising vehicle. “So there are all these business reasons it is a solid investment,” Dempsey said of why the minority investors were interested in the deal. “And it’s fun—they’re all Falcons supporters and fans.”

Egan said that Blank wanted to bring in more minority investors because he was “looking for some liquidity to fund his foundation further during his lifetime. So that’s really the primary motivation behind this.”

The Arthur M. Blank Family Foundation is a charitable group focused on helping Georgia families and enhancing community life.

In addition to Egan, King & Spalding associate Chirag P. Shah also worked the deal on behalf of Blank, as did tax lawyers Peter J. Genz and Svetoslav S. Minkov.

Dempsey’s team at Troutman included tax partner Robert A. Friedman in the firm’s New York office and associate Brian A. Teras on corporate matters.

“It was interesting,” said Dempsey. “At the end of the day, the documents looked pretty much the same [as for any other deal], but for some reason it’s a lot more fun when the Falcons are involved.”

When Atlanta-based Red Clay Capital Holdings bought motorcoach tourism company Gray Line of Nashville, two groups of local lawyers were involved.

DLA Piper partner Joseph B. Alexander Jr. led the team for Red Clay Capital Holdings, a private investment firm focused on the long-term development of growth-stage companies. Atlanta corporate associate Anthony M. Webb and Baltimore tax partner Jordan I. Bailowitz also worked on the deal.

Terms of the deal, which was brokered by Corporate Finance Associates, a California-based investment bank, were not disclosed. Hoover’s, the business reporting company, estimated that LCL Inc., which operates as Gray Line and offers charter, daily sightseeing and package tours, had 2008 sales of $18.8 million.

Buckhead-based Atlantic Capital Bank provided financing for the deal. The bank was represented by partner Harrison J. Roberts and associate C. Keith Taylor at Parker, Hudson, Rainer & Dobbs.
The representation of LCL Inc./Gray Line was handled by Jeffrey Mobley of Howard & Mobley in Nashville, Tenn.

With the help of a team of lawyers from DLA Piper, private equity firm Navigation Capital Partners has pledged to invest up to $15 million in interactive marketing agency Definition 6.

DLA partner Joseph B. Alexander Jr. (pictured below) and associate Daniel P. Rollman, as buyer’s counsel, advised Navigation in its decision to take a controlling ownership share of Atlanta-based Definition 6.

Definition 6 is the third portfolio company for this private equity firm, which has $375 million under commitment and is focused on investing in middle-market companies. Alexander said he also helped NCP acquire its other two portfolio companies: Dallas-based Exeter Finance Corp. and Atlanta-based James Brown Contracting.

The Definition 6 deal, said Alexander, is a small one for NCP. The company’s investment in Exeter, an auto finance company, for example, was $60 million, he added.

Alexander said his client was interested in Definition 6 because “they believe strongly that businesses are going to look to the Internet to advertise, that interactive media is the wave of the future in terms of advertising dollars.”

Greenberg Traurig shareholder Stacey O. Gallant led the representation of Definition 6, along with shareholders Gary E. Snyder, Ronald W. Eisenman and associate Guillermo N. Wasserman.

The companies now share some top talent. After inking the deal, NCP appointed Managing Partner Larry Mock, Operating Partner O.G. Greene and Vice President Zuri Briscoe to Definition 6’s board of directors.

Definition 6, said Gallant, was interested in the deal because “they wanted the capital so they could expand the products and services offered to their customers and also potentially expand geographically.”

Gallant and Alexander said the deal closed quickly, in part because Navigation financed the transaction itself. The legal work took less than 60 days, Alexander said.

“In this economic climate, that’s kind of astounding,” Gallant said. “And that it actually closed.”

“This is one of the few deals that we’ve gotten started and closed,” Alexander said, explaining that he’s working on a few other potential deals for Navigation. “Until they get closed, though, you just kind of sit and hope. That’s the way it is right now.”