{{Infobox company | name = Allied Capital | logo = Allied Capital logo.png | type = Private | foundation = 1958 | founder = | location = Washington, DC, United States | industry = Private equity | products = Leveraged buyout, Mezzanine capital | homepage = [http://www.alliedcapital.com/ www.alliedcapital.com] | num_employees = 150 | revenue = {{loss}} US$-258 Million <small>(''FY 2009'')</small><ref name = 09IncomeStatement>[https://web.archive.org/web/20110602184158/http://www.wikinvest.com/stock/Allied_Capital_(ALD)/Data/Income_Statement Allied Capital (ALD) annual SEC income statement filing via Wikinvest]</ref> | net_income = {{loss}} US$-521 Million <small>(''FY 2009'')</small><ref name= 09IncomeStatement/> | assets = {{decrease}} US$2.67 Billion <small>(''FY 2009'')</small><ref name = 09BalanceSheet>[https://web.archive.org/web/20110602184148/http://www.wikinvest.com/stock/Allied_Capital_(ALD)/Data/Balance_Sheet Allied Capital (ALD) annual SEC balance sheet filing via Wikinvest]</ref> | equity = {{decrease}} US$1.20 Billion <small>(''FY 2009'')</small><ref name = 09BalanceSheet/>| | parent = Ares Capital Corp. }} '''Allied Capital''' was a private equity investment firm and mezzanine capital lender providing debt and equity capital for leveraged buyouts, acquisitions and restructurings of established businesses. Allied operated as a Business Development Company, a form of publicly traded private equity company, and was among the largest BDCs. The firm was headquartered in Washington, DC with offices in New York City.
Allied invested primarily in middle-market companies in the business services, financial services, consumer products industrial, health care, retail and energy sectors.
The company was purchased by Ares Capital in 2010.<ref name="merger">{{cite web |url=https://seekingalpha.com/article/195825-ares-buys-allied-capital-whats-next |title=Ares Buys Allied Capital: What's Next? |last=Marshi |first=Nicholas |date=March 26, 2010 |publisher=Seeking Alpha |accessdate=November 21, 2018}}</ref>
==History== Allied Capital Corporation was founded in 1958 and completed its first public offering of stock in 1960 on the OTC.{{Citation needed|date=January 2020}}
In February 1997, Chairman and CEO David Gladstone resigned.<ref>{{cite web|url=http://www.bizjournals.com/washington/stories/1997/02/03/daily3.html|archiveurl=https://web.archive.org/web/20080726124302/http://www.bizjournals.com/washington/stories/1997/02/03/daily3.html|title=Allied Capital chairman and CEO resigns post|website=Washington Business Journal|archivedate=July 26, 2008|date=February 3, 1997|accessdate=March 6, 2024}}</ref>
In 2001, Allied was listed on the New York Stock Exchange. Allied's stock was repeatedly noted for a high dividend yield.<ref>Ben Stein. [https://www.nytimes.com/2006/03/12/business/yourmoney/12every.html Finding the Meaning of Life, Along With a 7% Return]. ''The New York Times'', March 12, 2006</ref>
===Allied and Short Sellers=== Between 2002 and 2008, David Einhorn, the manager of Greenlight Capital, a hedge fund engaged in heavy short selling of Allied's stock as he tried to demonstrate that the company's valuation of its illiquid securities was inflated. This activity led to a highly publicized feud between Einhorn and the company.<ref>[https://www.nytimes.com/2006/11/08/business/08hedge.html A Company, a Fund and a Feud]. ''The New York Times'', November 8, 2006</ref>
As early as 2003, Allied complained publicly about Einhorn's activities.<ref>[https://www.nytimes.com/2003/01/26/business/market-watch-if-short-sellers-take-heat-maybe-it-s-time-to-bail-out.html If Short Sellers Take Heat, Maybe It's Time to Bail Out]. ''The New York Times'', January 26, 2003</ref> Einhorn's activities in relation to Allied were also examined by the SEC to determine whether his statements about the company were intended to manipulate its stock price.<ref name=clues/>
In 2004, Allied came under scrutiny.<ref>[https://www.nytimes.com/2004/12/28/business/28loan.html U.S. Criminal Inquiry Focuses on Allied Capital Loan Unit]. Reuters, December 28, 2004</ref><ref>{{cite news|author=Floyd Norris |url=https://www.nytimes.com/2005/07/15/business/keeping-shareholders-in-the-dark.html|title=Keeping Shareholders in the Dark|work=The New York Times |date=July 15, 2005}}</ref>
In June 2007, the S.E.C. found that Allied broke securities laws relating to the accounting and valuation of illiquid securities it held. However, it did not issue any fines or penalties, and Allied settled without admitting or denying the allegations.<ref name=clues>[https://www.nytimes.com/2009/02/01/business/01gret.html Following Clues the S.E.C. Didn’t]. ''The New York Times'', January 31, 2009</ref><ref>[https://www.nytimes.com/2007/06/21/business/21allied.html Allied Capital Settles S.E.C. Inquiry]. Reuters, June 21, 2007</ref>
In 2008, Einhorn authored "Fooling Some of the people All of the Time,"<ref>Einhorn, David. ''Fooling Some of the people All of the Time''. ({{ISBN|978-0-470-07394-0}})</ref> describing his concerns about the company's accounting practices and his encounters with the company over those years.<ref>{{Cite web |url=https://www.forbes.com/books/2008/05/16/einhorn-allied-capital-oped-books-cx_hc_0516bookreview.html |title=Einhorn Throws The Book At Allied |access-date=2017-08-24 |archive-date=2008-12-08 |archive-url=https://web.archive.org/web/20081208171022/http://www.forbes.com/books/2008/05/16/einhorn-allied-capital-oped-books-cx_hc_0516bookreview.html |url-status=dead }}</ref> In his book, Einhorn explains how he uncovers the fact that Allied Capital is basically run as a ponzi scheme and in order to keep the appearances of a valid investment proposition, Allied Capital is forced to cook the books by constantly overpricing its loans and the value of its subsidiaries.<ref>{{cite news|title=GaveKal Book Review: Fooling Some of the People All of the Time|url=http://gavekal.com/CRM/attachment.cfm?MediaDocID=76|accessdate=4 December 2014|work=GaveKal|date=2 June 2008}}</ref>
In 2008, Allied came under wider criticism for aggressive accounting policies.<ref name=clues/>
===The 2007-2009 Credit Crunch=== As the credit markets began to slow in 2007, Allied appeared to be unaffected.{{Citation needed|date=January 2020}} In January 2008, Allied completed a structured secondary transaction with Goldman Sachs.<ref>{{Cite web|title=Allied Capital inks investment agreement with Goldman Sachs|url=https://www.bizjournals.com/washington/stories/2008/01/21/daily23.html|url-status=live|archive-url=https://web.archive.org/web/20080127140250/http://www.bizjournals.com:80/washington/stories/2008/01/21/daily23.html |archive-date=2008-01-27 |access-date=2020-12-21|website=The Business Journals}}</ref> Goldman and Allied created AGILE Fund I, LLC, a new special purpose vehicle to acquire $170 million of private equity and mezzanine capital interests from Allied Capital, representing 13.7% of Allied's equity portfolio. Goldman also agreed to invest $125 million in future investment vehicles managed by Allied. Allied also sold a portfolio of venture capital and private equity fund interests.<ref>[http://www.altassets.com/news/arc/2008/nz12584.php Goldman Sachs establishes relationship with Allied Capital] {{Webarchive|url=https://web.archive.org/web/20080612064958/http://www.altassets.com/news/arc/2008/nz12584.php |date=2008-06-12 }}. AltAssets, January 2008</ref>
On September 30, 2008, Allied Capital shares fell by more than half their value as Ciena Capital, one of its portfolio companies, filed for bankruptcy.<ref>[http://www.marketwatch.com/news/story/allied-capital-slumps-50-ciena/story.aspx?guid=%7B9EFC65B7-F139-4942-AF42-28B3E41811B1%7D Allied Capital slumps 50% as Ciena Capital goes bust]. Marketwatch, September 30, 2008</ref><ref>[https://www.forbes.com/2008/09/30/allied-capital-ciena-markets-equity-cx_md_markets24.html Allied Capital's End Run]. Forbes, September 30, 2008</ref>
===Sale to Ares Capital=== In late 2009, Allied agreed to be purchased by Ares Capital.<ref name="mergeagree">{{cite press release |url=https://www.businesswire.com/news/home/20091026005749/en/Ares-Capital-Corporation-Acquire-Allied-Capital-Corporation |title=Ares Capital Corporation to Acquire Allied Capital Corporation |date=October 26, 2009 |agency=Business Wire |publisher=Ares Capital |accessdate=November 21, 2018}}</ref> Prospect Capital submitted a competing bid in early 2010, but was rejected by Allied management. The sale to Ares was approved by shareholders on March 26, 2010,<ref name="merger"/> and was finalized on April 1 with Allied closing for the last time at $5 a share.
== References == {{Reflist|2}}
==External links== *[https://web.archive.org/web/20090129170353/http://alliedcapital.com/ Allied Capital] (company website) - This website is no longer a valid reference
{{private equity firms}} {{Authority control}}
Category:Private equity firms based in Washington, D.C. Category:American companies established in 1958 Category:Financial services companies established in 1958 Category:Financial services companies disestablished in 2010 Category:1958 establishments in Washington, D.C. Category:2010 disestablishments in Washington, D.C. Category:2010 mergers and acquisitions Category:Financial services companies based in Washington, D.C.