Tips on giving gifts of money to children Rise may

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Two area firms already big in the organic-meat market feel the competition.
Rise may
hold seeds
of its fall
“Barbarians at the Gates” was the
label pinned two decades ago on private-equity buyout firms then shaking
up the corporate world.
By those standards, you could say
today that the barbarians haven’t just
broken down the gates: They’ve
stormed the palace, sacked the wine
cellar, and are making merry in the
royal bedchamber.
But anyone who slogged through all
592 pages of the 1990 book by that
title — which chronicled the battle for
control of RJR Nabisco — knows the
plunder-and-destruction metaphor
can be a stretch.
Private equity can actually be as
prosaic as any other financial topic.
Yet because they act as agents of
change — and occasionally make
piles of money doing it — private-equity players periodically catch the popular imagination.
Depending on who’s telling the
story, they can appear as swashbuckling capitalist heroes, or dastardly
capitalist villains.
Either way, they’re definitely on the
rise.
Private-equity firms such as the
Blackstone Group and Kohlberg
Kravis Roberts (KKR) have been
making deals at a record clip, stunning financial markets with recent
announcements such as the $36 billion takeover of Equity Office Properties Trust, a $32.9 billion buyout of
hospital chain HCA Inc., and many
more.
Estimates of the total flow of private-equity dollars run well into the
hundreds of billions, helping fuel a
worldwide surge of mergers and acquisitions. Firms such as Blackstone, KKR and the Carlyle Group
are emerging as 800-pound gorillas,
reshaping entire industries and influencing the pace and tone of the
economy.
So what is private equity, anyway?
Defined broadly, it’s simply any
form of business ownership that
doesn’t involve the sale of stock to the
public. The owner of your corner dry
cleaners, technically, holds private
equity in that business.
But in recent decades, private-equity firms have developed particular
forms and niches that make them particularly potent in the current investment climate.
The typical private-equity firm today raises money from institutional
investors such as pension funds, and
augments that by borrowing from
banks. The money is then used to buy
existing firms, including those with
publicly traded stock.
See CASSEL on E5
Natural Growth Spurt
By Harold Brubaker
INQUIRER STAFF WRITER
GERALD S. WILLIAMS / Inquirer Staff Photographer
At Martin’s Specialty Sausage Co., of Mickleton,
above, Vanessa Rodriguez stuffs chorizo sausages.
Beside her are president Martin Giunta (right) and
Wellshire Farms president Louis B. Colameco 3d,
who was visiting. Wellshire is one of the area’s
biggest natural-meat sellers. The other is
Applegate Farms, founded by Stephen McDonnell,
below, at his home in Upper Bucks.
When Hormel and Oscar Mayer introduced “natural” deli meats this year, they were muscling into
a niche dominated by two companies with strong
ties to the Philadelphia region.
Applegate Farms and Wellshire Farms accounted for half of the $154 million in frozen and refrigerated meat and seafood sold in natural-foods
stores during the 52 weeks ended Oct. 7, according
to data tracker Spins.
Combined sales of Applegate and Wellshire increased 22.3 percent to $78.6 million during that
period, compared with 13.9 percent for the whole
category.
Now the privately held companies are wrestling
with an explosion in retailer demand — beyond
traditional natural-foods stores — for meat products from animals raised without antibiotics and
without animal byproducts in their feed and processed without nitrates or chemical preservatives.
“It’s kind of fun to be a big fish in a small pond,”
said Applegate chief executive officer Stephen McDonnell, who manages the business from his
Bucks County home near Point Pleasant. However,
he said, “the pond is getting larger,” and he wants
Applegate to hold its market position.
To that end, McDonnell — who graduated in 1979
from Hampshire College, a hippie haven in Amherst, Mass., where he ate bean sprouts and made
See NATURAL on E8
What’s Natural?
Here are the USDA
definitions for:
Natural: The meat is
minimally processed
with no chemical
preservatives, no
artificial flavorings,
and no artificial
coloring.
No hormones: The beef
cattle are not given
additional hormones.
When this label is
used on pork and
poultry, it must have
an asterisk indicating
that federal
regulations prohibit
the use of hormones
with such animals.
Vegetarian-fed: This
term is not defined by
regulators. Most
poultry and livestock
feed includes animal
fat and protein
because it is an
inexpensive way to
accelerate weight
gain.
SOURCES: U.S. Department of
Agriculture and Inquirer research.
JOHN SLAVIN / Inquirer Suburban Staff
Inside
Gem dilemma:
Holiday shoppers
face choice as
new movie puts
focus on conflict
diamonds. E11.
tech.life@inquirer:
Google turns to
classrooms to put
its newest online
software to the
test. E6.
GM remodel:
Automaker gets
rid of the old,
relies on new
factories, ideas
in Lansing. E3.
Tips on giving gifts of money to children
When my son was 7 or 8, I spent several dreadful afternoons attending birthday parties at a
place called Chuck E. Cheese. Dreadful for me,
that is — the children loved the noise, the pizza,
and the beeping arcade games.
Game-winning play was rewarded with tickets
that could be cashed in for prizes such as balsa
airplanes and decks of cards.
Boy, I thought, this is a pricey way to get a
cheap toy — and a great way to ignite a lifelong
gambling addiction.
Children are barraged with bad-personal-finances influences. On Friday, I got a news release
from a firm called PAYjr touting a credit-card-like
product for 13-year-olds. It draws on a prepaid
account set up by parents and can be used anywhere that takes MasterCard.
Just what we need — to instill a loose-spending
habit as young as possible.
With the holidays upon us, lots of financial gifts —
money, savings bonds, stocks and so on — will be
ending up in little hands. And lots of givers have some
sort of personal-finance goal on top of ordinary giving.
So I have a suggestion or two.
For starters, it isn’t necessary for every financial
See BROWN on E8
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