Cypress Group

The Cypress Group is a private equity company focused on leveraged buyout investments in companies across a range of industry sectors. At its peak in the late 1990s and early 2000s, Cypress was among the largest US private equity firms, although by the end of the decade the firm would find itself in the process of winding down its operations.[1]

The Cypress Group
TypePrivate
IndustryPrivate equity
Founded1994 (1994)
FounderJim Stern, Jeff Hughes, Jamie Singleton and David Spalding
HeadquartersNew York, New York, United States
ProductsLeveraged buyout
Total assets$3.6 billion
Number of employees
20+
Websitewww.cypressgp.com

The firm, based in New York City, was founded in 1994 by the four senior members of Lehman Brothers' merchant banking group, Jim Stern, Jeff Hughes, Jamie Singleton and David Spalding.[2]

Cypress has raised approximately $3.6 billion since its inception across two funds raised in 1996 and 1999.

History

The Cypress Group was founded in 1994 by Jim Stern, Jeff Hughes, Jamie Singleton and David Spalding, who had served previously as the senior managing directors of Lehman Brothers' merchant banking group.[2] The four founders were responsible for restarting Lehman's merchant banking efforts after the departure of Pete Peterson and Stephen A. Schwarzman to found The Blackstone Group, a private equity and investment banking firm.

The Cypress Group raised its first institutional private equity fund in 1996 with $1.05 billion of investor commitments.[3]

History of private equity
and venture capital
Early history
(origins of modern private equity)
The 1980s
(leveraged buyout boom)
The 1990s
(leveraged buyout and the venture capital bubble)
The 2000s
(dot-com bubble to the credit crunch)
The 2010s
(expansion)
The 2020s
(COVID-19 recession)

In 1999, the firm completed fundraising for Cypress Merchant Banking Partners II, with $2.5 billion of investor commitments. At the time it was raised, the firm's new fund ranked among the largest raised for leveraged buyout transactions. Ultimately, Cypress II would prove to be the firm's final fund when it announced in 2007 that it would abandon further plans to raise a successor fund.[4]

Cypress had indicated its intentions to raise $1.5 billion. However, a series of weak investments, particularly in Cypress II, severely impacted the firm's plans to raise a third fund. By 2007, Cypress had lost a significant number of its senior investment professionals.[4] As of 2009, the firm is still managed day-to-day by two of its original founders, Jim Stern and Jeff Hughes. David Spalding assumed a role at his alma mater Dartmouth College and Jamie Singleton still remains on the firm's board.

In October 2009, the firm's Cypress Merchant Banking Partners II will reach the end of its original 10-year term. While the firm is seeking to extend the life of the fund, investors in the fund are currently negotiating an orderly wind-down of the investments in the portfolio.[1][5]

Investments

Since inception in 1994, Cypress has invested more than $4 billion of equity in more than 30 companies through transactions totalling in excess of $22 billion in size. Historically, Cypress employed an industry-based investment strategy and the firm was structured into six industry groups covering large segments of the economy, including:

  • Packaging, Building Products, Construction Materials & Retail
  • Automotive & Aerospace/Defense
  • General Industrial & Services
  • Healthcare & Financial Services
  • Media & Entertainment, Lodging & Leisure
  • Consumer Products

Among the firm's notable investments include:

References
  1. Cypress Group Faces Vote For Survival. New York Post, August 7, 2009
  2. Lehman, Seeking Higher Profit, Returns to Merchant Banking. New York Times, November 12, 1996
  3. Cypress Closes Funds. New York Times, February 22, 1996
  4. Winding down at Cypress Group. Wall Street Journal, June 18, 2007
  5. Fate of Cypress Group Said to Be in Investors’ Hands. New York Times, August 7, 2009
  6. DANA REDUCES SALE PRICE OF ITS AUTO PARTS UNIT. New York Times, November 3, 2004
  7. DANA SELLS REPLACEMENT PARTS BUSINESS TO CYPRESS. New York Times, July 10, 2004
  8. CYPRESS GROUP TO PURCHASE AMTROL. New York Times, August 30, 1996
  9. COOPER TIRE SELLS AUTOMOTIVE UNIT FOR $1.2 BILLION. New York Times, September 18, 2004
  10. GENERAL ELECTRIC TO SELL BOND INSURANCE UNIT. New York Times, August 5, 2003
  11. EQUITY FIRM BUYS CAT FOOD COMPANY FOR $425 MILLION. New York Times, October 15, 2003
  12. Del Monte to Buy Meow Mix And Sell Some Food Units. New York Times, March 3, 2006
  13. BUYOUT FIRM JOINS WESCO MANAGERS IN TAKEOVER. New York Times, April 25, 1998
  14. WILLIAMS SCOTSMAN SALE SET FOR $675 MILLION. New York Times, April 15, 1997
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