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Hometown Firm Big Winner as GTCR Invests New $3.85B Fund

Chicago-based private equity stalwart GTCR LLC has wasted no time putting money from its 11th buyout fund to work after reaching a $3.85 billion close in January, and one firm stands out as a favorite choice in the firm's recent slew of deals.

Kirkland & Ellis LLP, which has a more than three-decade relationship with GTCR, helped the Windy City private equity firm mold several of the most notable transactions so far this year. In July alone, the law firm helped the private equity shop usher through three transactions — a fast pace for the firm relative to its historical average — while also staying on top of some ongoing litigation GTCR has on its plate.

The GTCR-Kirkland relationship goes back to the founding of GTCR and the infancy of private equity, according to Stephen Ritchie, a partner with Kirkland’s corporate practice in Chicago. When Stanley Golder left First Chicago Corp. in 1980 to co-found the firm that would become GTCR, he took his attorney — Kirkland's Jack S. Levin — along with him.

Levin was a natural choice for Golder, as the two had already been working together for years, both in deals and in lobbying, to open up private equity to more investors. All that work marked Levin as one of the first real private equity attorneys.

But history isn't what has kept the relationship alive, says Ritchie.

"You never want to rest on your laurels," he said. "GTCR is a great client, in part because they have high expectations, so we have to stay on our toes and make sure we are consistently beating their expectations."

Beyond good work, the firm's attorneys consistently try to build strong personal relationships with their counterparts at GTCR through lunches and basketball games. Now they're closer than ever, with only about 20 floors separating them in their offices on the bank of the Chicago River.

Still, while Kirkland has proven itself up for a variety of work from GTCR, Ritchie says he isn’t afraid to refer them elsewhere if necessary.

"We're not suited to everything, so if we're not the best firm for something, we'll tell them," he said. "We're not going to fake it."

Here, Law360 looks at some of the key GTCR transactions helped along by Kirkland this year.

Swamped Summer

Far from taking the summer easy, Kirkland's attorneys helped GTCR push out three deals in July alone, proving that this private equity firm has no trouble spotting good buying opportunities, even as other shops have said they remain cautious.

On Wednesday, GTCR announced a buyout of San Diego-based health care technology company XIFIN Inc. for an undisclosed amount, a deal advised by none other than Kirkland. And that deal was just two weeks behind another Kirkland-led $480 million carveout of Cole-Parmer, a Thermo Fisher Scientific unit.

Both those deals were funded out of the new GTCR Fund XI, a fund with which Kirkland is familiar. New York-based John O’Neil, head of Kirkland’s private funds group, led a team advising on its formation.

The third deal during the month, though, was funded out of GTCR’s three-and-a-half-year-old, $3.25 billion 10th fund. That deal saw GTCR agree to buy third-party management specialist Hiperos LLC through its financial technology partnership company Opus Global Holdings LLC, which was created in September together with former VeriFone chief executive Douglas G. Bergeron.

The summer is likely to remain busy, as Ritchie says the firm still has a few other matters on its plate that aren’t quite ready to be announced.

Clearing Hurdles

Also this month, Kirkland helped see GTCR and its portfolio company Sterigenics International LLC through a difficult $805 million bid for Canadian medical isotopes company Nordion Inc.

On July 11, the companies said they had cleared both U.S. and Canadian regulatory hurdles, with both the U.S. Federal Trade Commission and the Canadian Competition Bureau indicating they didn’t intend to challenge the deal, even after the FTC requested additional information in June.

The extra regulatory scrutiny followed a dramatic bidding process that almost saw the deal derailed by an unnamed rival.

Sterigenics twice sweetened its takeover offer, after an unnamed bidder made a separate offer and after a previous $758 bid fell less than half a percentage point shy of a required two-thirds threshold in an initial vote on the deal. That was up from an initial offer of $727 million.

Kirkland corporate partners Sandy Perl, Michael Weed and associate John Berger led the team advising Sterigenics, with debt finance partners Christopher Butler and Amy Peters and tax partners William Welke and Russell Light also working on that transaction.

Deal-Linked Litigation

Also keeping Kirkland busy of late is a case against GTCR and its former portfolio company Partners Healthcare Solutions Holdings LP, alleging the company and its private equity backers had hidden facts get a $222.3 million deal done.

That case, first launched in Delaware federal court in October — a year and a half after the deal closed — has since been dramatically slimmed down, with the judge last week ruling that securities violation and fraud allegations failed to state a claim, granting the defendants’ motion to dismiss seven counts.

Kirkland’s Reed S. Oslan, Scott A. McMillin and Richard U.S. Howell are representing the defendants.

That case is Universal American Corp. v. Partners Healthcare Solutions Holdings LP et al., case number 1:13-cv-01741, in the U.S. District Court for the District of Delaware.