Mouse House Gets New Entertainment Chief: Walt Disney Co. on Friday named Paul Lee, the head of its ABC Family cable-television channel, to fix its ailing ABC network.

Toyota Docs Blocked: Department of Transportation has temporarily blocked release of findings by auto-safety regulators that could favor Toyota.

NJ May Say No to Advisors: New Jersey, the third-most indebted U.S. state, is considering handling future bond sales without financial advisers.

Goldman Comes in 2nd: Goldman Sachs isn’t the best place to work but the second best place, from Dealbreaker.

Cuban Bidding for Texas Rangers: A bankruptcy judge rules that auction for Texas Rangers may proceed. Mark Cuban, owner of the Dallas Mavericks, exptected to bid.

Mergers Crawl to Close: Deals are taking longer to forge and longer to get regulatory approval.

Apple files Patents: Apple has filed patents to cover travel- and shopping-related apps, from CNET.

New York-based Charterhouse, a middle-market buyout shop, focuses on consumer, healthcare and business services. It typically invests about $30 million to $60 million equity per transaction.

The firm raised $450 million for its fourth fund in 2004. Most of the fund is now invested, with 12 current platform companies and 30 add-ons. It also has experienced several exits: Two came in 2007, and Amerifit Brands was sold earlier this year. Earlier today, Charterhouse announced it was selling NewPath Networks Inc. to Crown Castle International for $115 million.

News of the Charterhouse fundraising was first reported by Private Equity Insider. Officials for Charterhouse declined comment.

On Friday, THL Partners said it was buying Intermedix, a provider of emergency billing services, from Parthenon Capital Partners. Water Street Healthcare Partners also announced its purchase of Medical Specialties Distributors. Other recent examples:

• Vestar Capital, earlier this week, agreed to acquire Health Grades Inc., which provides reports and ratings on doctors and hospitals, for roughly $294 million.
• The Jordan Co. inked a deal to sell Harrington Holdings, operator of Edgepark Medical Supplies, to Clayton, Dublier & Rice and GS Capital Partners for $850 million.
• Executive Health Resources, which is owned by ABRY Partners, is in talks to sell itself to UnitedHealth Group for $1.5 billion.

So far this year, there have been 372 U.S. announced mergers in the healthcare sector, raising $46.5 billion as of July 30. The valuations are down significantly from last year when 424 transactions raised about $148.5 billion, according to data from Thomson Reuters.

However PE -backed deals appear to be flourishing. There were 50 healthcare mergers involving buyout shops, raising about $7.8 billion as of July 30. This compares to 2009 when 45 PE-backed deals raised a mere $428.6 million, Thomson Reuters said.

Two of the top 10 healthcare mergers involved buyout shops. BC Partners and Silver Lake are buying Multiplan for about $3.1 billion while The Carlyle Group is acquiring NBTY for about $3.8 billion.

Healthcare deals are rising because the industry is highly fragmented, both on the devices and the services side, says Stewart Kohl, Co-CEO of the Riverside Co. The sector also went on hiatus as companies waited to see if healthcare reform would become a reality. “Now, there is more certainty and the pent up demand among buyers and sellers is playing out,” he says.

With the reform, more than 30 million more Americans will be covered which will increase the demand for products and services, Kohl says.

PE firms like healthcare companies because they are typically a defensive play. “You can typically load a decent amount of debt on them,” says a second buyout executive.

Charterhouse wasn’t planning to sell NewPath, which places antennas in areas where it’s physically unable to put a conventional tower, says David Hoffman, a Charterhouse managing director. This spring, Charterhouse went out to do a capital raise for NewPath but instead received multiple offers from strategics. “We decided to sell the business, which we had not expected,” he says.

Earlier this year, Charterhouse sold Amerifit Brands Inc., a consumer health and wellness firm, to Martek Biosciences Corp. in a deal valued at $200 million. It had bought Amerifit for roughly $75 million in 2005. The PE firm is expected to announce more exits later this year.

Most of Charterhouse Equity Partners IV is invested, Hoffman says. Fund IV has made 12 platform investments and roughly 40 add on deals. Two companies were sold in 2007 as well as the two deals this year (Amerifit and NewPath). “We are continuing to do add-on acquisitions,” Hoffman says.

Citi Global Markets advised Charterhouse on the sale. Other NewPath shareholders include Meritage Funds and NewPath chairman Bill Marraccini — both of whom also are selling to Crown Castle.

First up is Floodgate, the firm formerly known as (Mike) Maples Investments. It has raised $73.5 million for its third fund, which more than doubles the $33 million raised for Fund II back in 2008.

Next we have Dave McClure, who is raising up to $30 million for a fund called 500 Startups (which would work out to $60k per startup — but I’m thinking it’s more a play off the name of his blog). The filing does not indicate any commitments yet, nor any partners beyond McClure…

As an aside: I last saw both Maples and McClure at a Silicon Valley event hosted by TheFunded back in February. The basic explanation for raising institutional funds was as follows:

• Angels can usually move quicker than can traditional VC firms, due to more centralized decision-making (i.e., one guy). That gives angels an advantage, since startups need cash now.
• In many cases, however, a single angel won’t do. You need a syndicate of angels in order to size a round properly. That involves lots and lots of phone calls, thus reducing the “time” advantage.
• An institutional fund either eliminates — or at least reduces — syndication needs.

Such it is with Internet gambling. No, not because both VCs and LBO pros like to play online poker, but rather because the House Financial Services Committee this week passed a bill that would lift the ban on (non-sports) Internet gambling. Got to find that tax revenue under every rock…

So how does this affect both VC and LBO? Because the former has sponsored dozens of social gaming companies (like Zynga) currently restricted to virtual currency, and the latter owns big casino chains like Harrah’s (Harrah’s).

The repercussions of Congressional action could be both independent and combined. For social gamers, betting real money could represent a huge new revenue stream. Remember, for all the talk about FarmVille, Zynga has millions of Texas Hold ‘Em players (many of whom already have trusted Zynga with their credit card digits).

For a company like Harrah’s, it means both generating more online and offline revenue. One might think that online gaming would cannibalize physical casinos, but check out these figures: Internet gambling really took off in around 2003, at which point there were 383 poker tables in Nevada. It added 100 tables in 2004 and was up to 701 tables in 2005. In fact, the increases ended in 2006 – which is the same year that Congress instituted its ban. Correlational instead of causational, but still…

Anyway, back to the combo options: Dave Schwartz, director of the UNLV Center for Gaming Research, believes that no ban could result in consolidation of social gamers with casino companies. If not formal mergers, then partnerships. “Maybe Harrah’s pools its customer database with Zynga’s customer database, or outsources its online operations to Playdom,” he says. “There are lots of ways you can get creative.”

For example, just yesterday Harrah’s partnered with Playdom to release a W1orld Series of Poker game on social networks like Facebook (basically a rebanded version of Playdom’s Poker Palace). One thing Schwartz doesn’t expect to see, however, is casino companies creating too many social games that don’t have an on-site mirror.

“If casino companies create social games, they’ll skew older than most of what companies like Zynga offer,” he says.

Seems I heard the first part (final closing for BCP VI) and not the contradictory second part. But I got kind of curious, when the Oregon Investment Council approved a $200 million commitment to BCP VI this week. And then an LP source noted that Oregon was not the only LP that hadn’t made a final decision as of James’ pronouncement.
So what gives?

It would appear that James veered a bit off script during the media call – he was more exact in the subsequent analyst call – and overstated the situation. The $13.5 billion figure is not what already is in hand, but rather is what Blackstone expects (based on conversations, etc.). In a follow-up statement today, Blackstone spokesman Peter Rose said:

“We have held our targeted close on BCP VI as of June 30th. There are a small number of investors, like Oregon, which had expressed a strong interest in the fund before June 30th but had not completed diligence, documentation or other administrative procedures, who will be permitted to invest after that date.”

In related news, there was a report yesterday that the Oregon commitment came with sweetened terms. No specifics were offered, but my understanding is that there was no change to the 65/35 fee split option (it was 50/50 on BCP V). Any sweetener would have to be retroactively applied to earlier LP commitments – via “most favored nations” clauses – so I’m skeptical that anything significant changed.

Matthew Ingram described DST as a “mutual fund of hot startups.” He’s largely right, except that mutual funds disclose financial information on underlying portfolio companies (or at least it’s easy to find, since the companies are publicly-traded). DST, on the other hand, may not be required to tell shareholders much more than company name and date of investment.

In other words, a DST IPO won’t open the Pandora’s Box that worried so many VCs during the public pension transparency debatse of 2002 and 2003.

Laurie Cerveny, a partner with law firm Bingham McCutchen, says that a company like DST typically would not be required to disclose underlying asset valuation (e.g., Facebook’s revenues) unless: (1) DST holds at least a 20% stake in the underlying asset; or (2) The underlying asset represents a certain percentage of DST’s total assets under management (I think she said 20%, but am not certain).

We can’t know if Facebook/Zynga/Groupon would qualify until DST actually files, but it’s highly unlikely. If they were to qualify, however, don’t expect confidentiality agreements in original funding docs to serve as shields. Those clauses almost always have “unless required by law” language that would apply to SEC reporting regs.

Professor Nada Nasr of Bentley University suggests that at a basic level sustainability is the capacity to endure. It’s obvious that a business must be profitable over the long-term in order to endure. Reviewing the balance sheet and income statement is the standard approach to measuring a business’ capacity to endure. Unfortunately, the current method of accounting for profits does not include a business’ external costs which are the negative consequences of corporate behavior that don’t show up as liabilities on the balance sheet.

The prevailing economic model ignores the cost of externalities like pollution foisted on the commons and society in general. The belief that the earth is there for the taking of raw materials and the dumping of waste is an acceptable tenet of business. This attitude is changing as businesses like BP discover that it matters how profits are made because there are consequences to such behaviors. True sustainability is becoming about creating profitable businesses that both endure and eliminate the cost of their externalities.

Professor John Sterman of the MIT Sloan School of Management expands the definition of sustainability to include three new components. First, businesses shouldn’t use renewable resources like forests or fisheries faster than they can regenerate. Second, businesses shouldn’t emit pollution and waste faster than natural processes can render them harmless. Third, businesses shouldn’t use non-renewable resources faster than renewable substitutes can be introduced. A business that follows these new tenets will reduce and eliminate its external costs and be more likely to endure over the long-term.

Professor Sterman’s expanded definition suggests the need to replace the prevailing “cradle to grave” manufacturing paradigm of the Industrial Age that transforms raw materials in waste emitting processes into goods that are used and then discarded as trash. Sustainability invites a new circular paradigm that reduces or eliminates waste and trash by reducing, recycling and reusing the raw materials used to make goods, and by using renewable resources. William Mc Donough’s and Michael Braungart’s Cradle to Cradle: Remaking the Way We Make Things provides a compelling alternative and suggests how the new paradigm will work. The authors recently co-founded The Green Products Innovation Institute to help the state of California create the world’s first sustainable economy.

Ray Anderson’s Confessions of a Radical Industrialist: Profits, People, Purpose – Doing Business by Respecting the Earth tells the story of how this emerging paradigm has completely transformed Interface Inc.’s carpet business. Interface’s vision is to “be the first company that, by its deed, shows the entire industrial world what sustainability is in all its dimensions: people, process, product, place and profits” (see www.interfaceglobal.com). The company’s website contains a wealth of information about how a company can use a cradle-to-cradle approach on its path to sustainability.

It’s helpful to have a mental map of sustainability in order to see the big opportunity. Stuart Hart’s Capitalism at the Crossroads: Aligning Business, Earth and Humanity discusses the opportunity inherent in two trends, developing clean technology and lifting the 4 billion people who live on $1 per day out of poverty. Where these trends converge is what Mr. Hart, who is a professor at Cornell University’s Johnson School of Management, calls “The Green Leap”. Lifting those four billion people at the ‘base of the pyramid’ out of poverty provides a bigger potential market oppo8rtunity than the opening of China to capitalism. Developing base of the pyramid businesses using clean technologies amplifies the opportunity and may invite the development of new capitalist business models.

The food and retail industries are at the vanguard of sustainability. Gary Hirshberg started Stonyfield Farms, a producer of organic yogurt, in 1983 with the question: can we create an enterprise where everything wins? His book, Stirring it Up: How to Make Money and Save the World, tells the inside story of how to create a sustainable business. Gary’s epiphany in the first chapter, which led to the founding of the company, also captures how he was inspired to become a more conscious capitalist. Stonyfield has higher costs than conventional yogurt producers because it pays more for organically produced milk but its net margins are higher than its competitors because its story is so compelling that it can spend almost nothing on marketing.

Gary’s story also suggests a new model for preserving a company’s unique culture after an acquisition. When Group Danone acquired an 80% ownership interest in Stonyfield, it left Gary with majority voting control so he could continue to run the company to innovate freely and provide inspiring leadership. By preserving Stonyfield as an independent entity, Group Danone uses the company as an incubator and a model for sustainable business practices in its other operations.

It is hard enough to build a successful company without making it sustainable. There is no question that making a business sustainable takes more effort, but the results produced by some of the pioneers of sustainable business practices like Ray Anderson and Gary Hirshberg suggest that it is well worth the extra effort. Gary seems to have answered his initial question that it is possible to create a sustainable enterprise where everything wins. Professor Dipak Jain, the former Dean of the Kellogg School of Management, believes that sustainable businesses will win by creating wealth, promoting social welfare and preserving the environment to create global prosperity.

John Montgomery is a partner with Silicon Valley law firm Montgomery & Hansen. Read his prior posts here.

* Lee Hower: Social games have been institutionalized (deal with it)

* SEC charges the Wyly brothers with insider trading fraud that reaped $550 million

* Morning Call: U.S. futures slip ahead of GDP data, London falls early, European shares keep slipping and the Nikkei loses 1.6%.

* For Apple followers, it’s a matter of faith

* Tony Hayward is a narcissistic nutjob

* Ratings agencies voice concerns about take-privates

* Paul Graham says that traditional VC round structures are going way. In related news, Paul Graham seems to keep forgetting that not every startup is an IT startup.

* Ben Smith: “Peter Orszag may have had the shortest tenure of any member of the Obama Cabinet, but in an administration dominated by a powerful White House staff, he left as deep a mark as almost anyone in it.”

* Neil Unmack: Big is beautiful in hedge fund land… for now

* Tweet of the Day: @EpicurianDeal To Hume will Carlyle sell Philosophy? I’m sure they’ll be able to Russell up a bunch of buyers. Moore is always better.

* She’s baaaack… “Valley Girl” Jesse Draper interviews Ted Turner: