Parthenon Capital Partners: The Dangerous Puppetmaster in the NIGP #CodeGate Controversy? by Jon Hansen

Posted on April 13, 2015

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When I read Procurement Insights EU Editor Colin Cram’s take on the NIGP – Periscope story, and his suggestion that the “need for income may have led the NIGP into what appear to be some shady and unwise deals,” one’s initial reaction would be to ask how could this have happened.  The next obvious question would be “who” had (or has) the most to gain from what appears to be a major conflict of interest relationship?

As I continue to sift through the research material and other related documents that have been forwarded to me in the past couple of weeks, one thing has become crystal clear . . . Parthenon Capital Partners “Control recapitalization of Periscope Holdings” in 2014, was the likely spark for what has become a major creditability crisis for the NIGP.

I have to reiterate that in mid-December, when I wrote the posts Up Periscope? Examining Periscope’s acquisition of BidSync with a “Survivor’s” eye, and Who are those guys? Are these the people who will have the most influence on public sector procurement in the coming years?, I had no indication beyond a curious observation, that the story would evolve beyond the anecdotal musings stage.

In this instance at least, it appears that foresight as opposed to hindsight, was 20/20.

Of course there should be no surprise here, in that once Parthenon entered the financial picture, the potential for the relationship between the NIGP and Periscope to reach the critical tipping point, moving it from questionable to compromised, was inevitable. Or to put it another way, in the evolution of their close ties over the years, both the NIGP and Periscope put the wick in the proverbial powder keg.  All that was needed to light it, was the opportunistically voracious financial appetite of a big time predator like a Parthenon.

It is unfortunately, a scenario that has repeated itself on more than one occasion, and led me to write the November 29th, 2014 post Are investment bankers and Wall Street bad for business?  The scenario to which I am referring is the unhealthy influence that investment bankers and equity players have had on the procurement industry.  The fact that this reach has now extended directly into the public sector through the NIGP, is troubling to say the least.

Putting aside for the moment that I have not yet determined who owns what in what, and where, if any, money has changed hands, the best that anyone could say about the NIGP at this point, is that they simply made bad decisions along the lines of what Cram inferred in his post.

Unintended consequences notwithstanding, this does not absolve the NIGP leadership either today, or going all the way back to 2001 -when the Periscope partnership first began, of bearing the bulk of the responsibility for the mess in which they now find themselves.  But make no mistake, when you follow the money, all roads and influence lead back to Parthenon.  They are potentially – at least at this moment – public sector procurement’s number one enemy.

So who is Parthenon Capital Partners?

Over the coming weeks I intend to find out as much as I can about the private equity investment firm which, according to preliminary research, has approximately $2 billion of capital under management.

However, and in relation to the present NIGP – Periscope saga, I will once again point to the following excerpts from Parthenon’s December BidSync acquisition press release, as well as their 2014 Year-End Review:

Parthenon

Parthenon 2015 Year In Review2

Seeing that the NIGP leadership, and in particular Rick Grimm – who has been the one constant presence throughout the entire period – missed one of these back in 2001, I believe you would call the above a “red flag.”

 

Just started following the NIGP #CodeGate story? Use the following link to access the Post Archive; https://procureinsights.wordpress.com/nigp-codegate/

You can follow my coverage of this story on Twitter using the Hashtags #missbid and #CodeGate

On The Go? You can also listen to the audio version of this post as well as others through @Umano https://umano.me/jhansen

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