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August 06, 2008

Texas Startup Staffs Up for 1st Close

Prophet Equity, launched late last year by turnaround specialist Ross Gatlin, has rounded out its investment team and is nearing a first close on its debut fund.

Last July, Gatlin left Insight Equity, a Dallas turnaround firm he co-founded in 2002, to start his new operation in Southlake, Texas.

Immediately after forming, the group began laying plans to raise $250 million for the firmís debut fund. Prophet is shooting for a late-September first close on at least $100 million of commitments. The firmís principals are likely to commit around 20% of the total equity. Over the past several months, a handful of other executives have joined Prophet. On board now: senior advisor Sam Metz, who worked with Gatlin at Insight; vice president Brian Hegi, who was a vice president with AlixPartnersí performance-improvement practice.

Prophet appears to have already lined up some deals for the fund, which will aim for a 30% internal rate of return. It will pursue buyouts of small and mid-size companies that are considered under-performing. It will also seek to capitalize on financial distress stemming from the credit crunch, as well as sales through bankruptcy proceedings. The firm plans to play a major role in improving companiesí operations.

Featured in Private Equity Insider, August 6, 2008

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