Apax Partners: Deciding Whether to Bid for Trader Corp.

Apax Partners’ investment committee was schedule to meet on March 21, 2011, to decide whether to invest in Trader Corporation, a Canadian classified advertising business for used automobiles with both print (magazines) and digital (website) distribution. What made this investment complicated and, therefore, risky was the print business was going away and the online business was underperforming. Equally troubling were the facts that the key members of the leadership team (namely the CEO and CFO) would not join the acquired firm and there was a significant competitor (eBay-owned Kijiji) in the market. New partner Marcelo Gigliani had led the analysis of the deal and was assisted by Seth Brody, another Apax partner who was trying to launch a new “portfolio support group” (PSG) designed to help assess and then manage potential investments for greater return. Brody wondered whether this was the right deal to showcase what his new team could do—how it could add value and help mitigate risks. Or was this deal simply too risky and would he be better off waiting for another deal.