Summit Partners, having flipped Physicians Formula public at a surprising multiple of more than three times sales, is looking to do the same with herbal cold remedy Airborne, according to people familiar with the matter, after likewise providing the marketing capital and talent to propel the brand to No. 1 in the cough-cold category. One competitor executive notes ruefully that in focus groups, "Airborne is the name that comes up over and over again."
Private equity isn't just lifting upstarts, though; it's also threatening big players directly. Besides investor Kirk Kerkorian's now-abandoned campaign to reshape General Motors Corp., Unilever-which has been pressured by Shansby Group's Smart Balance to remove trans fats from its margarines-has had private-equity firms mulling a buyout, according to people familiar with the matter. A Unilever spokesman noted that such speculation subsided in recent quarters as the company turned in stronger top-line growth.
Similarly, Colgate-Palmolive attracted interest from private-equity funds in 2004 following marketplace disappointments, though a quick restructuring-fed turnaround ended such interest fairly quickly. Next on private equity's radar among big package-goods companies, according to people familiar with the matter, is Sara Lee, as its stock languishes in year two of a restructuring.