The failure of Jones Apparel Group to find a buyer after a months-long auction process deals a huge blow to the company’s advisers including Goldman Sachs – the top dealmaker for retailers.
A buyout of Jones could have brought in up to $20 million in fees for Goldman, which served as the sole financial adviser for the $5 billion company, which owns Barneys New York and Nine West.
A successful deal would have also bolstered Goldman’s long-held claim of being Wall Street’s best matchmaker even when faced with selling troubled companies like Jones.
Sources close to the deal said the price Goldman recommended to the board was too high for the last remaining bidders – Bain Capital and Texas Pacific Group – to stomach.
Both firms had gotten through a second round of bidding before the auction began to fall apart over Goldman’s advice that Jones accept no less than $34 dollars a share.
The second-round offers from the two private equity firms were several dollars below that target, according to one source.
Jack Levy, co-chairman of Goldman’s global mergers group, who has been involved in several large retail deals this year, was spearheading the firm’s work with Jones, sources said.
Levy did not respond to an e-mail and a spokesman for Goldman declined to comment.
“In this situation, they (Goldman) clearly misjudged the market,” said one banker.
Retail bankers also faulted Goldman for conducting a publicly-announced auction process instead of privately dealing with a handful of potential suitors.
“When you announce a public process,” said one banker, “you’re like Babe Ruth calling his shot and you have to hit a home run.”
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Big leagues
Global retail M&A leaders
Name — Value of deals
1. Goldman Sachs $35.72B
2. J.P. Morgan $28.09B
3. UBS $23.54B
4. Lehman Brothers $21.1B
5. Lazard $19.69B
6. Houlihan Lokey $17.81B
7. Evercore Partners $17.53B
8. Wachovia $17.44B
9. Blackstone $17.36B
10. Credit Suisse $12.93B
Source: Dealogic