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October 30, 2009 6:00 AM

Dealmaker of the Week: Monica Shilling of Proskauer Rose

Posted by Matt Straquadine

Shilling On October 26 L.A.-based business development company Ares Capital announced an agreement to acquire recently-flagging rival Allied Capital, a D.C. company. BDCs are publicly traded nonbank lenders.  Ares's specialty is giving small and midsize businesses access to equity markets by lending to companies that don't trade publicly.

For a relatively small transaction--Ares is paying $648 million in stock--a myriad of lawyers and bankers were involved. On Ares's side were attorneys from Proskauer Rose, Latham & Watkins, Venable, and Willkie Farr & Gallagher; for Allied there were teams from Sullivan & Cromwell and Sutherland Asbill & Brennan. Analysts from Bank of America Merrill Lynch, and Sandler O’Neill & Partners were also involved. Such is the complexity of one BDC buying another: Considered to be "quasi-LBO" firms, BDCs occupy a complex position within securities rules.

One attorney was charged with sorting out the complicated deal: Monica Shilling, an L.A.-based Proskauer partner who had to coordinate among buyer, seller, banks, advisers, and local counsel, all while negotiating a good result for her client, Ares. "This deal wouldn't have happened without her," says Joshua Bloomstein, deputy general counsel for Ares. "She quarterbacked the whole thing."

The recession has been hard on BDCs, courtesy of nosediving markets. Bloomstein says his firm fared better than competitors. Not so for rival Allied, which, according to Bloomberg, received warnings from auditors earlier this year expressing "doubt[s] about the company's ability to continue as a going concern."

Compared to Allied, Ares is a relative newcomer in the BDC world, notes The Washington Post. In fact, Shilling--a former Skadden, Arps, Slate, Meagher & Flom associate--and Ares got their start together, in a sense. “Ares's [2004] IPO was the first deal I worked after leaving Skadden [for Proskauer]," remembers Shilling. "Since then it's been a pleasure to be there with them growing this business."

Bloomstein says that it took a special sort of lawyer to sew up this transaction. "Unlike a lot of other corporate lawyers, [Monica] is incredibly business-friendly," he says. "A lawyer who doesn't understand what a BDC does wouldn't have been able to push this through."

According to a joint statement issued by Ares and Allied, the deal is expected to close in the first quarter of next year. The merged entity will continued to be managed externally by parent company Ares Management.

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