Madison Dearborn Emerges As Channel Force With CDW Bid

Most CDW employees were caught off-guard by the bid and were left scrambling on their own to find out more about the Chicago-based private equity firm.

"We've been told that it's a change in investor structure, not a change in strategy or management," said one CDW employee who asked not to be identified. The CDW insider said he called a few financial analysts to get third-party opinion on the equity firm: "I was told that the firm in question is highly regarded, that it's not a chop shop, so that was reassuring, to have that third-party validation, because of course the message from management is always going to be 'Don't worry about it.'"

David Moser, an Madison Dearborn managing director and one of the point people on the CDW deal, did not return calls seeking comment on whether the company might go after other IT channel companies.

According to Madison Dearborn, it has more than $14 billion of equity capital under management and makes new investments through its most recent fund, Madison Dearborn Capital Partners V, a $6.5 billion investment fund raised in 2006. Madison Dearborn Partners, or MDP, focuses on management buyout transactions and other private equity investments across a broad spectrum of industries, including basic industries, communications, consumer, financial services and health care.

MDP has held or currently holds a stake in dozens of communications companies including small business broadband network provider Cbeyond, Atlanta. And published reports say MDP has plenty of buying power. It's new $6.5 billion fund has the borrowing power to spend up to $26 billion to acquire companies, typically in increments of $100 million to $600 million of equity capital in a single acquisition, borrowing the rest, the Chicago Sun Times reported.

The Sun Times reported that Madison Dearborn has posted average annual returns of 20 percent in the past decade. By contrast, all U.S. buyout firms returned 8.9 percent annually during the past 10 years as of June 30, according to the National Venture Capital Association.