October 5, 2012
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Archives for October 5, 2012

Golub Capital Backs Latest Roark Capital Acquisition

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Golub Capital was the Joint Bookrunner and Administrative Agent on a credit facility to support the acquisition of Massage Envy by Roark Capital Group. “Golub Capital provided a compelling financing solution to support our acquisition of Massage Envy,” said Ezra Field, Managing Director at Roark Capital. “They have proven to be a strong financing partner to several of our platforms, and their facility offered a terrific combination of certainty, speed, flexibility and competitive terms.”

Massage Envy is a provider of therapeutic massage that provides professional and affordable therapeutic massage and spa services to consumers with busy lifestyles, at convenient times and locations. Massage Envy has more than 1.25 million members spread across 800 locations in 45 states. In 2012, Massage Envy franchisees will provide more than 16 million massage and facial treatments to members and guests. The company is based in Scottsdale, AZ (www.MassageEnvy.com).

“We are excited to support Roark Capital’s acquisition of Massage Envy,” said Troy Oder, Managing Director at Golub Capital. “Massage Envy is a market leader in a unique consumer niche, and Roark Capital is an ideal partner to support the company’s next phase of growth due to their deep expertise in the consumer services sector. We look forward to continuing our long and successful relationship with the Roark Capital team.”

Golub offers buy-and-hold products ranging from $10 million to $75 million and includes one-loan financings, senior, 2nd lien and subordinated debt, preferred stock and co-investment equity. The firm also underwrites and syndicates first lien loans up to $250 million. Golub Capital will hold up to $150 million per transaction. Industries of interest include consumer products, business and consumer services, defense, manufacturing, value-added distribution, media, healthcare services and restaurants. In addition to its New York headquarters, Golub also has offices in Atlanta and Chicago (www.golubcapital.com).

Roark Capital Group invests in business and consumer service companies with revenues ranging from $20 million to $1 billion. Sectors of interest include franchise, direct marketing, business services and financial services. The firm has more than $3 billion of equity capital under management and is located in Atlanta (www.roarkcapital.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 10-5-12

Joseph Schenk Joins The Carlyle Group as Operating Executive

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Joseph Schenk, former Jefferies Group Chief Financial Officer and most recently Chief Executive Officer of First New York Securities, has joined The Carlyle Group in a consulting role as an Operating Executive in the Global Financial Services Group.

“Joe Schenk is a seasoned financial services executive with deep operational experience in capital markets and we are pleased to welcome him to our team. We look forward to working with him to create value through our new and existing investments,” said Olivier Sarkozy, Carlyle Managing Director and Head of the Global Financial Services Group.

As an Operating Executive, Mr. Schenk will provide strategic guidance to Carlyle professionals throughout the investment process, from sourcing to acquisition to exit, and advise portfolio company executives on management, operational and growth strategies. He joins a group of 27 senior business leaders – with an average of 40 years of experience – who serve as Carlyle Operating Executives across a range of industries.

“I am eager to assist Olivier and his investment team at a time of great opportunity in the global financial services sector. I am impressed by the portfolio of investments they have compiled over the past four years and I look forward to being helping the team to create value,” said Mr. Schenk.

Established in 2007, the Carlyle Global Financial Services Group invests in management buyouts, growth capital opportunities and strategic minority investments in the global financial services sector. Current investments include: BankUnited, the largest banking institution in Florida; Boston Private, a national financial services organization; Bank of Butterfield, Bermuda’s largest independent bank and OzForex, an online foreign exchange payments platform.

Before becoming CEO of First New York Securities, a multi-strategy trading firm. Mr. Schenk was CEO of Pali Capital, a boutique investment banking firm that offered financial advisory and brokerage services. He came to Pali Capital from Jefferies, a global investment banking firm, where he held a number of management and leadership positions over a 15-year period, including Executive Vice President and CFO. He began his career in Price Waterhouse Capital Markets division. Mr. Schenk earned his bachelor’s degree in accounting from the University of Detroit.

The Carlyle Group invests in buyouts, growth capital, real estate and leveraged finance in Africa, Asia, Australia, Europe, North America and South America focusing on aerospace & defense, automotive & transportation, consumer & retail, energy & power, financial services, healthcare, industrial, infrastructure, technology & business services and telecommunications & media. The firm is based in Washington, DC (www.carlyle.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 10-5-12

Fairmount Partners Adds Ed Zabar to Its Technology Team

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Ed Zabar has been hired by mid-market investment bank Fairmount Partners to head the firm’s Media and Telecommunications practice. Mr. Zabar has 20 years of experience as a software entrepreneur, technology focused venture capitalist, and investment banker servicing the media and telecommunications sectors. His focus includes advertising (including ad networks, servers and exchanges), online and social gaming, mobile technologies and the mobile app universe including mobile payments.

Prior to joining Fairmount Partners, Mr. Zabar served as a Managing Director at Oberon Securities, where he focused on M&A advisory and fund raising in the technology, media and telecommunications sectors. Prior to t Oberon he was a Managing Director at National Capital Companies where his primary focus was on M&A and funding of early and expansion stage technology and media companies. Mr. Zabar has also worked as a Vice President at two venture capital firms where he executed multiple technology transactions at various stages of development. He has an MBA from Columbia University and a BS in Finance and Information Technology from New York University.

Fairmount Partners specializes in assisting companies in mergers and acquisitions, capital raising and strategic advice. Fairmount completes most of its transactions in its key focus areas: Technology & Software, IT & Business Services, Healthcare, and Consumer & Industrial, and has completed transactions throughout North and South America, Europe and Asia. The firm is based in the Philadelphia suburb of West Conshohocken (www.fairmountpartners.com).

In the past two months the Fairmount Partners technology team has closed two transactions: the sale of PETRIS, a privately held software business controlled by private equity group Kayne, Anderson, to Halliburton; and the sale of Ditech, a public telecommunications and voice technology business, to Nuance Communications.

© 2012 PEPD • Private Equity’s Leading News Magazine • 10-5-12

Defense Industry Continues to Shrink in First Half of 2012

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According to a new financial report from Deloitte, top global aerospace and defense companies experienced a 1 percent decrease in global revenues in the first half of 2012, on top of a 3.3 percent decline in revenues in 2011. The new report is titled “Mid-year 2012 Top 20 Global Aerospace and Defense Company Financial Performance Analysis”.

“Continuation of domestic budget pressures in traditional economies, particularly in the U.S. and Europe, are resulting in lower defense budgets,” said Tom Captain, Deloitte’s U.S. and Global A&D leader. “Defense contractors are responding with stepped up cost cutting, acquisition activity, growth in adjacent markets and a focus on cyber-security, intelligence, surveillance and reconnaissance technologies.”

On the other hand, commercial aerospace grew at 14.9 percent in the first half of 2012, resulting from record production of new fuel efficient aircraft. This significant increase in revenues for this segment helped the global A&D industry enjoy a 5.5 percent increase in total revenues compared to the first half of 2011, more than making up for the decrease in defense revenues.

Overall, the global A&D industry posted increased operating earnings of 8.8 percent to $20 billion in the first half of 2012, largely due to the positive impact caused by delivery of commercial aircraft, company cost cutting and efficiency initiatives in advance of expected continued declines in defense budgets, and the virtual absence of one time charges.

Due to these reasons, operating margins increased 3.0 percent to 8.4 percent. Commercial aerospace companies enjoyed a significant jump of 29.2 percent in earnings, while the defense segment stayed flat at a nominal increase of 1.5 percent in earnings. Similarly, commercial aerospace operating margins increased 12.4 percent, while defense companies increased 2.6 percent.

The Mid-year 2012 Top 20 Global Aerospace and Defense Company Financial Performance Analysis was compiled by comparing and contrasting the performance of the top 20 global A&D companies’ commercial and defense segments on the metrics of revenue, operating earnings and operating margins. These companies represent approximately 71 percent of total global industry revenue. This report used the latest unaudited data through June 30th, 2012 for each company.

© 2012 PEPD • Private Equity’s Leading News Magazine • 10-5-12

Riordan Lewis & Haden Exits Creative Circle

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Riordan Lewis & Haden (RLH) has sold its portfolio company, Creative Circle, a specialized staffing agency, to Morgan Stanley Global Private Equity. RLH acquired Creative Circle in 2009 and during its ownership the company achieved a three-fold increase in revenue and an even more rapid rise in EBITDA, entirely through organic growth.

This transaction provided a very favorable financial outcome for RLH’s investors while affording the Creative Circle management team the opportunity to continue their global growth strategy in partnership with a new investor. The sale of Creative Circle is the second liquidity event of 2012 for RLH and the second exit from its RLH Investors II fund.

Creative Circle is a specialized staffing agency representing advertising, marketing, graphic communication, and interactive professionals. Customers include advertising agencies, marketing firms, and enterprise clients. Creative Circle is headquartered in Los Angeles and operates in 12 states through 14 offices nationwide (www.creativecircle.com).

Riordan, Lewis & Haden invests in high growth, lower middle market companies. Sectors of interest include business services, healthcare, and government services. The firm currently manages over $600 million of assets and is actively seeking new portfolio companies. Riordan, Lewis & Haden is based in Los Angeles, CA (www.rlhequity.com).

Morgan Stanley Global Private Equity, part of Morgan Stanley Investment Management, makes private equity and equity-related investments of $75 million to $150 million in companies with enterprise values of $100 million to $1 billion. To date, Morgan Stanley Global Private Equity and its affiliated funds have invested over $9 billion of equity across a spectrum of industries. The firm is based in New York (www.morganstanley.com/privateequity).

This transaction represents the twelfth investment for Morgan Stanley Capital Partners V, the most recent fund raised by Morgan Stanley Global Private Equity, and the fourth in the business services sector.

“Creative Circle is the premier creative staffing agency in North America. The rapid expansion of interactive and digital media has created a tremendous demand for highly qualified creative talent as well as a unique opportunity for Creative Circle to build on its strong record of business growth,” said Aaron Sack, Managing Director of Morgan Stanley Global Private Equity.

© 2012 PEPD • Private Equity’s Leading News Magazine • 10-5-12

The Sterling Group Exits Velcon Filters

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Parker Hannifin, a provider of motion and control technologies, has signed an agreement to acquire Velcon Filters, a manufacturer of filtration equipment and a portfolio company of The Sterling Group.

“Velcon is the leader in the jet fuel filtration market with a brand that has become synonymous with the highest standard for safety in the industry,” said Greg Elliott, Partner at The Sterling Group. “Under Sterling’s ownership, Velcon has seen a diversification of end-markets and geographies and has significant growth potential as part of Parker’s Filtration Group.”

Velcon Filters is a manufacturer of filtration equipment and replacement cartridges for the aviation, industrial fuel, and industrial process filtration markets. Velcon reported sales of $115 million for the twelve months ended August 31st, 2012 and has approximately 300 employees globally. The company is based in Colorado Springs, CO (www.velcon.com).

The Sterling Group targets controlling interests in basic manufacturing, industrial services and distribution companies that have enterprise values from $100 million to $500 million. Sterling has sponsored the buyout of 41 platform companies and numerous add-on acquisitions for a total transaction value greater than $9.5 billion. The firm was founded in 1982 and is located in Houston (www.sterling-group.com).

Parker Hannifin is a diversified manufacturer of motion and control technologies and systems for a variety of mobile, industrial and aerospace markets. The company employs approximately 60,000 people in 48 countries around the world. Sales in fiscal year 2012 were $13 billion. Parker Hannifin is based in Cleveland (www.parker.com).

© 2012 PEPD • Private Equity’s Leading News Magazine • 10-5-12

EDG Partners Acquires Health Data Essentials

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Peak Health Solutions, a provider of health information management and a portfolio company of EDG Partners, has acquired the assets of Health Data Essentials.

Health Data Essentials is a consulting firm that serves health care plans contracting with the federal Medicare program or state Medicaid programs. The company’s consulting services promote improved health care delivery by risk-adjusted managed care plans through revenue management and quality improvement initiatives. Health Data Essentials is based in Baltimore (www.hdecompany.com).

Peak Health Solutions provides services to capture and manage health data for health plans and healthcare facilities. Peak offers retrospective and prospective risk-adjustment coding services to healthcare providers and Medicare Advantage plans. The company was founded in 2004 and is based in San Diego (www.peakhs.com).

“The healthcare landscape is changing dramatically and these changes have a significant impact on the revenue stream,” said Steve Roberts, president and CEO of Peak Health Solutions. “The risk adjustment and quality reporting services we offer health plans can help to strengthen both the bottom line and overall performance.”

EDG Partners invests in healthcare companies except those with FDA or medical research risk. Typical investments range from $5 million to $30 million in equity. The firm was founded in 2004 and has offices in Atlanta, GA and Alexandria, VA (www.edgpartners.com).

“Health Data Essentials is an exceptional strategic addition for Peak as both payers and providers recognize the need to deploy advanced data analytic tools to meet the increasing requirements to proficiently manage and report quality and care management initiatives. Both Peak and Health Data Essentials are fortunate to have partnered with EDG which has proven itself as an insightful private equity firm with a rich history of guiding and building industry-leading healthcare companies,” said Keith Devantier of Falcon Capital Partners, who represented both Peak (in its prior transaction with EDG) and Health Data Essentials.

© 2012 PEPD • Private Equity’s Leading News Magazine • 10-5-12

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