Archives for September 11, 2012

Here’s the Latest Data on Holdback Escrows

by

J.P. Morgan Treasury Services has released its 2012 M&A Holdback Escrow Report which details the importance of escrow accounts used as a tool for risk mitigation and asset protection in M&A transactions.

The major trend since the 2010 study is the upward shift in the transaction size of M&A deals utilizing holdback escrows. This shift has increased the value of corresponding escrow deposits, as seen in the analysis of escrow deposit size within the report. For the 2012 study, 33 percent of terminated deals had at least one claim. Other key findings in the 2012 report include:

  • On average, buyers were able to recover 59 percent of their initial claim amount
  • The average escrow holds 9 percent of the underlying M&A purchase price
  • The average underlying M&A transaction size for deals involving financial buyers is more than twice as large as the average for deals with strategic buyers
  • Escrows involving financial buyers were more concentrated in the 13 to 18 month range (55 percent) than those involving strategic buyers (42 percent)

“As advisors continue to seek ways to protect their clients in a volatile market, the 2012 Holdback analysis will help provide a broad look at what are considered market terms,” said Nick Scarabino, Managing Director and Global Head of J.P. Morgan Escrow Services Sales. “The support we’ve received from the M&A legal and advisory community over the years has been invaluable in shaping and refining this report, which is based upon J.P. Morgan proprietary data.”

New in the 2012 M&A Holdback Escrow Report are year-over-year comparisons to recent studies, which provide insight into trends in the market surrounding escrow size, duration, sector breakdown and claim occurrence. Other highlights include a reexamination of the behavioral differences between financial and strategic buyers, a deep dive into the frequency of scheduled disbursements to the seller, and details about account bifurcation and composition.

The 2012 M&A Holdback report reviewed a sample of active J.P. Morgan escrow transactions with publically available acquisition information that originated in the United States in 2011, and terminated deals covering a slightly broader time period.

For additional information about J.P. Morgan’s 2012 M&A Holdback Escrow Report, please visit www.jpmorgan.com/escrow. To obtain a copy of the 2012 M&A Holdback Escrow Report, contact Nicholas Scarabino at [email protected].

© 2012 PEPD • Private Equity’s Leading News Magazine • 9-11-12

Paine & Partners Launches New Life Sciences Platform

by

Paine & Partners has created a new platform investment, Verdesian Life Sciences, to focus on investments in plant health and nutrition. Simultaneous with the formation of Verdesian, the company has completed its first acquisition with the purchase of Biagro Western Sales, which focuses on technologies used to develop plant health and plant nutrition products in agricultural markets globally.

Biagro Western produces plant nutrition products that are used to grow healthier plants and to improve crop yields. The company’s current product portfolio includes Nutri-Phite® phosphite plant nutrition products and Take Off ST. Biagro Western is based in Visalia, CA (www.biagro.com).

“We are pleased to announce that Paine & Partners has formed a new platform company, Verdesian Life Sciences, to invest globally in plant health and nutrition and are excited to have completed Verdesian’s first investment in Biagro Western,” said Kevin Schwartz, a founding Partner at Paine & Partners. “Plant health and nutrition are important aspects of the agribusiness value chain, and we see increasing opportunities for growth and investment in those areas. Biagro Western has a strong management team and proven, proprietary technology that have earned it the reputation for providing the highest quality products in its category. We look forward to working with the Biagro Western team and JJ Grow, an entrepreneur with a proven track record, significant experience and an extensive network in the crop protection industry.”

JJ Grow will serve as Chief Executive Officer of Verdesian. Mr. Grow was Executive Vice President in charge of Sales for Nufarm Americas, where he was responsible for building and maintaining relationships with key national distribution partners. Prior to that, in 2003, Mr. Grow started Gro-Pro/Etigra, a turf, ornamental, aquatic, forestry and crop protection business, before selling to Nufarm Limited in 2008. Earlier in his career, Mr. Grow worked at several other agricultural companies, including United Agri-Products, Novartis Crop Protection, American Cyanamid and Merck Agvet. Mr. Grow received a BS in Food & Resource Economics from the University of Florida. Mr. Grow also recently served as COO of Purfresh, a startup company that provides shippers with innovative atmospheric technology to reduce food ripening and decay without the use of chemicals.

“I am excited to lead Verdesian and to work with Paine & Partners and the Biagro Western team to execute a strategy of growing through disciplined and targeted acquisitions that build on Biagro Western’s strong foundation and create expanded market opportunities,” said Mr. Grow. “Verdesian will leverage the agribusiness expertise and the resources of the Paine & Partners team to expand its infrastructure and enhance Verdesian’s growth capabilities.”

Biagro Western’s management team will continue with Verdesian (www.VLSci.com). Peter Alvitre will serve as Chief Operating Officer of Biagro Western and Nigel Grech will serve as the company’s Chief Science Officer. Ray Copeland, who served as President of Biagro Western, will retire after a long and successful career at the company.

Paine & Partners provides equity capital for management buyouts, going private transactions, and company expansion and growth programs. The firm, with $1.2 billion of capital under management, has offices in San Mateo, CA; New York, NY and Chicago, IL (www.painepartners.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 9-11-12

Prophet Equity Acquires USA Mobile Crane

by

Allegiance Crane & Equipment, a provider of crane and rigging services and a portfolio company of Prophet Equity, has acquired the assets of USA Mobile Crane. “The successful acquisition of USA Mobile Crane accomplishes multiple strategic objectives, including expanding our high quality customer and employee base as well as continuing to enlarge our fleet, diversifying our customer and service offerings and extending our geographic reach and facility base,” said Ross Gatlin, CEO and Managing Partner of Prophet Equity.

USA Mobile Crane is a provider of mobile cranes (60 – 225 tons in capacity) and trucks, trailers and other assets. The company has branch locations in San Antonio and Carrizo Springs, TX (no website found).

Allegiance Crane & Equipment was formed in August 2010 to purchase assets from Gulfstream Crane. Allegiance operates an equipment fleet comprised of over 100 cranes and hoists and a supporting fleet of trucks, trailers and other assets. The crane fleet (ranging from 20 – 600 tons in capacity) includes mobile cranes, crawler cranes and tower cranes. These assets are utilized to provide services to customers in a variety of markets including the oil and gas, petrochemical, refining, marine, power and the commercial and infrastructure construction industries. The company is based in Pompano Beach, FL (www.allegiancecrane.com).

“The continued strong financial performance and industry leading balance sheet of the Allegiance platform, combined with the backing of Prophet Equity, have allowed us to create and expand a uniquely flexible credit facility, enabling acquisitions of strategic add-ons and equipment wherever necessary for our growing business”, said Pelham Smith, Managing Director of Allegiance.

Prophet Equity makes control investments in strategically strong, asset-intensive, underperforming companies in the lower and middle market. The firm seeks to make equity investments of $5 million to $50 million in companies with annual revenues of up to $500 million and enterprise values of $10 million to $250 million. Sectors of interest include financial services; healthcare; manufacturing; natural resources and energy; technology related; automotive & transportation; business and consumer services; consumer products; defense & aerospace; and distribution. The firm is located in Southlake, TX (www.prophetequity.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 9-11-12

O2 Investment Partners Acquires Greco Aluminum Railings

by

Greco Aluminum Railings, a welded aluminum balcony railing manufacturer, announced today that O2 Investment Partners has partnered with Frank and Larry Greco and acquired a majority interest in the company.

Greco is a manufacturer of welded aluminum balcony railing systems for the North American multifamily housing market. Greco serves both the new construction and restoration markets for high, medium and low-rise condominiums, apartment buildings, hospitality and senior living facilities. The company was founded in 1991 and has 40 employees. Greco is headquartered in Windsor, ON with offices in Toronto and Bloomfield Hills, MI (www.grecorailings.com).

“We are very pleased by the confidence that O2 Investment Partners has shown in Greco Aluminum Railings and we look forward to working with O2 to further grow our business, both in Canada and the U.S. markets,” said Frank Greco, President of Greco Aluminum Railings. “As Larry and I looked for partners to help us take Greco to the next level, it was important to us and to our business that we have an investor and partner who shares our vision for growing the business. In addition to O2 Investment Partners’ experience in building manufacturing businesses, several of its principals also have significant experience in the real estate, construction and multifamily housing markets.”

O2 Investment Partners makes control investments in companies with EBITDAs from $2 million to $8 million located anywhere in the US and Canada but has a preference for the Midwest and the Great Lakes regions. The firm’s typical transaction size is $5 million to $50 million. Industries of interest include manufacturing, niche distribution, select service and technology businesses. O2 Investment Partners is based in Bloomfield Hills, MI (www.o2investment.com).

“We are very pleased with our investment in Greco and its employees. The vision that Frank and Larry Greco and their management team have developed for this business are truly exciting and we look forward to supporting the Greco team in achieving their plan,” said Jay Hansen, President of O2 Investment Partners. “We believe that Greco has the right combination of a talented and experienced workforce, efficient manufacturing processes, diversified customer base, and diversified markets to be extremely competitive in the North American multifamily housing market, which we expect to present significant growth opportunities in the years ahead. With this team and the support of our financial partners, such as Comerica and Penn Mezzanine, we are very optimistic about realizing these growth opportunities.”

© 2012 PEPD • Private Equity’s Leading News Magazine • 9-11-12

North Castle Partners Invests in Curves International

by

North Castle Partners has completed an investment in Curves International, a women’s fitness club franchisor. “Bringing in a partner, the right partner, can be an arduous process. We set out to find a partner with a commitment to values and the knowledge and experience to guide our company to its next level of success. When we met North Castle, we knew that they understood not only our industry but the passion that has driven us to create Curves. We believe our partnership with North Castle will allow us to continue to improve the lives of women,” said Gary Heavin, Curves co-founder and CEO.

Curves International is a fitness club franchisor with approximately 7,300 locations in 90 countries of clubs specifically designed for women. Curves’ clubs average about 1,200 to 2,500 square feet and are generally located in strip malls. The company was founded by Gary and Diane Heavin in 1992 and is based in Woodway, TX (www.curves.com)

“As a firm focused on businesses that promote Health, Wellness, and Active Living, an investment in Curves was natural for us,” said Chip Baird, North Castle’s Founder and Managing Partner. “We are excited to partner with the company’s founders, Gary and Diane Heavin, to reinvigorate this world renowned company by applying our knowledge and experience in fitness and wellness from our current and prior investments, including International Fitness, Equinox Fitness, EAS and Octane Fitness.”

North Castle makes control investments in consumer-driven product and service companies located in North America with enterprise values ranging from $50 million to $500 million. Sectors of interest include: aesthetics and personal care; consumer health; fitness and recreation; home and leisure; and nutrition. North Castle is headquartered in Greenwich, CT (www.northcastlepartners.com).

The firm’s investments in the fitness space have included International Fitness, the leading operator of fitness clubs in Alberta, Canada; Equinox Fitness, the leading premium brand of health clubs in the United States; EAS, a leading marketer of sports nutrition products including protein bars and shakes; and Octane Fitness, a designer and marketer of low-impact cardio exercise equipment.

“Curves is the number one brand in the world in women’s fitness,” said Jon Canarick, North Castle Managing Director. “The concept of creating a safe environment specifically designed for women where participants can work out in comfort was revolutionary and that’s in part why Curves grew so rapidly and why it remains in demand. We believe Curves can evolve to continue to address the changing needs of today’s consumer in the U.S. and abroad by offering a more complete solution for women to meet their all-around wellness goals. In addition, Curves has a strong growing business in many international markets, including the leading position in Japan, with considerable white space for expansion throughout Asia.”

© 2012 PEPD • Private Equity’s Leading News Magazine • 9-11-12

Resilience Capital Partners Acquires R&D Enterprises

by

Thermal Solutions Manufacturing, a manufacturer and distributor of heavy duty and light truck heat exchangers and a portfolio company of Resilience Capital Partners, has acquired R&D Enterprises, a manufacturer of heat exchanger and cooling products. This is the first add-on acquisition by the firm’s Thermal Solutions Manufacturing investment platform which it acquired in February 2012.

R&D Enterprises is an original equipment manufacturer of heat exchange and cooling products serving the off-road, marine, on-highway and industrial end markets. The company is based in Plymouth, MI (www.rdent.net).

Thermal Solutions Manufacturing is a manufacturer and distributor of heavy duty and light truck heat exchange and temperature control products for the aftermarket and OEM off-road, on highway and industrial end markets. The company has eight manufacturing facilities and 23 distribution branches located throughout North America supplying radiators, condensers, air coolers and evaporators to multiple customer segments, including installers, commercial distributors, specialty retailers, OEMS and jobbers. The company is based in Nashville, TN (www.thermalsolutionsmfg.com).

“The acquisition of R&D Enterprises fits squarely within our investment thesis of growing the Thermal Solutions Manufacturing platform investment with complementary companies that expand our product offerings and diversify our customer base. R&D Enterprises’ talented management team and strong customer-centric culture should prove to be an invaluable asset as we look to further strengthen our core business and create value through organic profit enhancement initiatives and additional accretive acquisitions,” said Michael Cavanaugh, a Principal at Resilience Capital Partners.

Resilience Capital Partners specializes in investing in lower middle market companies within a range of industries. Resilience’s value oriented investment strategy is to acquire companies in a variety of special situations including underperformers, corporate divestitures, turnarounds, and orphan public companies. Since its inception in 2001, Resilience has acquired 24 companies under 18 platforms with over $2 billion in revenue. The firm is based in Cleveland, OH (www.resiliencecapital.com).

“R&D Enterprises has an outstanding reputation in the industry as creative problem solvers in working with companies of all sizes. The creativity they bring to the table will make Thermal Solutions Manufacturing even stronger and expand its footprint in the marine sector,” said Robert Potokar, CEO of Thermal Solutions Manufacturing and Operating Partner of Resilience Capital Partners, “R&D Enterprises is a perfect match and will benefit our growing company and, more importantly, our customers.”

© 2012 PEPD • Private Equity’s Leading News Magazine • 9-11-12