Former Bain Exec Forms Private Equity Firm

A veteran from Bain & Co. has launched his own private equity firm, targeting companies with revenues under $500 million. Southlake, Texas-based Prophet Equity, founded by Ross Gatlin, makes control investments in special situations, turnarounds, acquisitions, bankruptcies and reorganization. The firm opened its doors this month.

Gatlin and his team will focus their attention on underserved smaller and mid-sized businesses. Post-Bain, Gatlin was first a founding principal at The Carlyle Management Group, and then a founding partner at Insight Equity.

“Given the credit crunch and the demands placed on small and mid sized business, being a passive financial or strategic buyer with deep pockets is no longer good enough,” said Gatlin. “You have to partner with management and bring tools to the table which are powerful and proven for turbo-charging growth and delivering tangible value at strategically viable companies.”

Gatlin plans to begin raising Prophet’s debut p.e. fund early next year.

Featured in FINAlternatives.com December 17, 2007.

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Private Equity Firm Prophet Equity Launched

Dallas-based private equity firm Prophet Equity LLC, run by Insight Equity co-founder Ross Gatlin, was formally launched this month, the company said in a statement on Friday. The firm focuses on strategically viable companies in special situations, turnarounds, acquisitions, bankruptcies and reorganizations. Founded by vastly-experienced Ross Gatlin, the company plans to begin raising its debut fund early next year.

Gatlin began his career at an investment bank specializing as an advisor in bankruptcies, restructurings and distressed situations. After serving at Houlihan Lokey Howard & Zukin for years, Gatlin moved to international strategy consulting firm Bain & Company. He later became a founding principal at The Carlyle Management Group and then a founding partner at Insight Equity.

According to Gatlin, “The value proposition we are offering to the market has decades of experience and a proven investment track record to back it up, and people seem to ‘get it’ immediately, whether they are investors, managers, lenders or advisory firms looking to partner with an activist firm like ours, or prospective employees looking for an exciting and rewarding career.”

Featured in RTTNews.com, as well as, NASDAQ.com December 14, 2007.

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Private Equity Executive Launches Turnaround Firm

Private Equity Executive Launches Turnaround Firm Insight Equity Managing Director Ross Gatlin has left the firm he co-founded to start his own turnaround shop, Prophet Equity LLC, which will begin raising its debut $200 million fund next year.

Gatlin left Carlyle Group’s turnaround arm to start Insight Equity in 2002. He described his latest move as a friendly departure, saying he felt like he’d developed a strong enough track record to start his own firm. He remains an Insight Equity limited partner and continues to sit on the boards of portfolio companies he helped acquire when he was with the firm.

Private Equity Insider earlier reported the news of Gatlin’s new firm. Prophet Equity has been in the works since Gatlin left Insight Equity in July, although it officially launched this week. The firm is looking to invest $5 million to $50 million in underperforming companies worth $10 million to $250 million. It will be tracking smaller deals than Insight Equity, which buys companies worth up to $500 million.

The firm is targeting $200 million with a hard cap of $250 million for its debut fund, Prophet Equity I. The firm doesn’t have a placement agent and is looking for one. Gatlin isn’t waiting for the fund to close before sourcing deals, saying he has $100 million of capital available right now from himself and potential co-investors, whom he declined to identify.

The credit crunch and other economic difficulties are putting pressure on small companies, Gatlin said, providing plenty of turnaround opportunities in the smaller end of the market, a segment he felt was often neglected by private equity.

Gatlin and Prophet Equity’s team of buyout, turnaround and investment professionals plan to take a hands-on approach to their investments, and expect to close two or three deals a year. Senior team members have key strategic, operational and financial engineering experience, having served as executives in numerous buyouts, turnarounds and value creation success stories.

Prophet Equity has hired two other junior professionals so far, though Gatlin says their staff should top out at 15 or so when it closes its fund in late 2008 or early 2009.

Gatlin isn’t the only buyout veteran to recently strike out on their own with a small-buyouts-focused turnaround firm. Peter Shabecoff left North Castle Partners LLC in 2006 to raise $100 million for Atlantic Street Capital Management LLC, which buys underperforming consumer products businesses.

Reach Prophet Equity at 817-898-1501.

Featured in Dowjones LBO Wire December 14, 2007.

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Prophet Equity Opens Doors to Invest in Lower and Middle Market Companies

Prophet Equity LLC (December 13, 2007)

Public Press Release

Southlake, TX – – December 13, 2007 – Prophet Equity LLC, (“Prophet”) a private equity firm that makes control investments in companies with revenues under $500M and collaborates with existing management to improve profitability, formally opened its doors this month in Southlake, Texas, a suburb of Dallas, Texas.

Prophet focuses on strategically viable companies in special situations, turnarounds, acquisitions, bankruptcies and reorganizations. Prophet uses proven, data-driven analytical techniques coupled with decades of investment and management experience to invest in, unlock, and realize future value today. Partnering with owners and management teams, Prophet principals deploy a toolkit that is Fortune 500 tested and private equity proven to diagnose and drive dramatic value creation. Portfolio company management teams are highly motivated with clear, uncapped incentives based on realized business performance.

With a 20 year track record of delivering outstanding financial results for both clients and investors in lower and middle market and Fortune 500 companies, Gatlin and the Prophet team focus their attention on a part of the private equity landscape that is one of the largest – smaller and mid sized businesses – but one that is also underserved by other investment firms who often target larger deals or ones where current financial performance is strong.

Gatlin and the team are experienced in returning value to investors and shareholders. Gatlin has helped lead the investment and management of approximately $300M in control equity across companies with over $2.5Bn in revenue generating sizeable returns to investors. Prophet’s senior team has led operational improvements at a series of private, private equity owned and public companies where significant shareholder value was also created. Moreover, each has assumed operating roles in numerous companies across an unusually broad array of industries where they put their value creation toolkit to work. First learned at international strategy consulting firm Bain & Company and then honed in operating and investment situations at private equity firms, the Prophet Equity team applies its unique, Holistic Value Creation approach through a set of proven strategic and operating tools which optimize performance across all areas of a company including manufacturing, finance, working capital, taxes, sales, marketing, IT, product development, channel management, distribution and procurement to map a battle plan with management teams that yield rapid improvements as well as dramatic, long term value creation.

“This is an exciting time in private equity and at Prophet Equity”, commented Ross Gatlin, CEO and Managing Partner. “Given the credit crunch and the demands placed on small and mid sized business, being a passive financial or strategic buyer with deep pockets is no longer good enough. You have to partner with management and bring tools to the table which are powerful and proven for turbo-charging growth and delivering tangible value at strategically viable companies.”

Gatlin’s experience confirms his track record of value creation. Educated at The University of Texas at Austin and with an MBA from The Kellogg School at Northwestern, Gatlin began his career at an investment bank specializing as an advisor in bankruptcies, restructurings and distressed situations. After working for years at Houlihan Lokey Howard & Zukin, Gatlin then joined international strategy consulting firm Bain & Company, where he worked on a number of high profile profit improvement clients such as the turnaround at Continental Airlines and the merger of Lockheed and Martin Marietta to name a few, as well as due diligence and implementation work for other acquisitive corporate clients and private equity firms. Post Bain, Gatlin was first a founding principal at The Carlyle Management Group and then a founding partner at Insight Equity, where he invested his own money alongside institutional dollars and helped build operating portfolios with billions of dollars of revenue across a diverse set of industries while also driving operating improvements which delivered exceptional returns to investors and management teams.

Gatlin met and worked with many of the Prophet team memebers while working at Bain & Company and the prior private equity firms he was a founder in. At Bain, they worked with Continental Airlines, Dell Computer, Ford Motor Company, Schlumberger, Sabre Group, DHL and other large global companies, on profit improvement and turnaround initiatives. Meanwhile, other Prophet team members worked on similar initiatives at other middle market private equity firms, consulting firms and lower and middle market operating success stories.

“The response thus far from potential investors and our deal sources has been extraordinary”, explained Gatlin. “The value proposition we are offering to the market has decades of experience and a proven investment track record to back it up, and people seem to ‘get it’ immediately, whether they are investors, managers, lenders or advisory firms looking to partner with an activist firm like ours, or prospective employees looking for an exciting and rewarding career. The future looks bright, but we know we have a lot of hard work ahead of us.”

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