Archives for January 2013

Audax Group Acquires Rough Country Suspension Systems

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Audax Group has completed a recapitalization of Heckethorn Products (dba Rough Country Suspension Systems), a provider of off-road SUV and truck suspension systems.

“We are excited to have Audax as our new partner.  Its operational expertise and successful track record of sourcing and integrating add-on acquisitions will enhance our ability to grow while continuing to build on our brand’s reputation of market-leading value and customer service,” said Ken Dunn, CEO of Rough Country. 

Rough Country is a provider of suspension systems to the off-road SUV and truck market. Rough Country’s systems raise the ride height of vehicles to enable steeper approach, higher ground clearance, accommodate larger wheels and tires, and create a more aggressive appearance for the vehicle.  The company is headquartered in Dyersburg, TN (www.roughcountry.com). 

“Rough Country is a leading supplier of suspension systems to the fragmented SUV and truck enthusiast market. It has excellent brand awareness and customer service. We look forward to working with Ken Dunn and his team to build the business by developing new products and executing strategic add-on acquisitions,” said Geoffrey Rehnert, Co-CEO of Audax Group. 

Hilliard Lyons Investment Banking (www.hlinvestmentbanking.com) advised Rough Country. GE Capital Corporation and BMO Capital Markets provided senior debt financing and Arrowhead Mezzanine provided junior debt financing to support the transaction. 

The Audax Group makes control investments of $10 million to $100 million in middle market companies with transaction values of $25 million to $500 million. Sectors of interest include industrial manufacturing; energy; outsourced industrial services; consumer products; healthcare devices and services; non-asset based logistics; technology; aerospace and defense; business services; and direct marketing.  The firm was founded in 1999 and has offices in Boston and New York (www.audaxgroup.com). 

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-29-13

Boathouse Capital Acquires Direct Impressions

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Colortree Group, a portfolio company of Boathouse Capital and a supplier of high definition color envelopes and direct marketing materials, has acquired Direct Impressions, a specialty printing company. 

Direct Impressions is a specialty printing company that specializes in direct mail and commercial products, such as continuous forms, folded inserts and cut sheets. The company maintains a full-service prepress department that offers a variety of printed pieces on coated and uncoated papers. Founded in 1997, Direct Impressions has 75 employees and is based in Richmond, VA (www.directimpressionsinc.com). 

Direct Impressions was represented by Dominion Partners, a mid-market investment bank located in Glen Allen, VA (www.dominionpartners.com). 

Colortree is a manufacturer of full-color direct mail envelopes, fliers, brochures, letters, newsletters, self-mailers, business reply cards, and other printed products, primarily for the direct mail industry.  In September 2011, Boathouse Capital invested $5.5 million in subordinated debt and equity along with capital from Colortree CEO Pat Patterson in support of a management buyout from Colortree’s founders. Colortree was founded in 1988 and is based in Richmond, VA (www.colortree.com). 

Boathouse Capital invests mezzanine debt and equity in lower middle market companies in partnership with management teams and private equity funds. Boathouse will consider investments from $3 million to $10 million in either mezzanine debt or equity capital in companies with revenues of at least $10 million, EBITDAs of $2 million or greater and EBITDA margins of at least 10%. The firm is based in Wayne, PA (www.boathousecapital.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-29-13

TSG Invests in My Fit Foods

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TSG Consumer Partners has made a minority equity investment in My Fit Foods, a chain of retail outlets providing fresh, healthy foods at affordable prices. TSG’s investment in My Fit Foods will be used to fund the company’s expansion into new markets, enhance its brand and promote its further development.

My Fit Foods is a retail chain that provides healthy, balanced, pre-portioned meals and snacks. The staff at each My Fit Foods location weighs every single ounce of protein and carbohydrates to make sure the body is always getting the right amount of nutrients it needs in its fresh pre-portioned, gluten free meals to go. With over 60 meals to choose from, including breakfast, lunch, dinner and snacks items, My Fit Foods makes eating healthy convenient and affordable, allowing consumers the freedom of a self-directed diet. My Fit Foods operates 60 locations across the country.  The company was founded in 2006 by Mario Mendias and is now led by Mr. Mendias and Mr. Anthony Milton and is based in Houston (www.myfitfoods.com).

“Having TSG as partners in our company, in addition to capital, will avail us of their vast expertise in branded food and beverage, and especially in the health and wellness categories,” said Mr. Mendias.

TSG Consumer Partners makes control and non-control investments of $15 million to $100 million in companies with EBITDAs of $3 million to $50 million where there is an opportunity to enhance value by extending brand, expanding distribution and/or improving operations.  The firm is headquartered in San Francisco (www.tsgconsumer.com).

“We are delighted to partner with Mario and Anthony in what is an especially exciting and proven successful approach to bring good eating and nutrition to the tables of individuals, including those seeking to control their weight and those desirous of generally improving and maintaining their health,” said TSG Managing Director Blythe Jack.

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-28-13

Armory Capital Invests in Jim’s Formal Wear

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Jim’s Formal Wear, a wholesale formal wear rental company, has received an investment from Armory Capital.

“One of the most important times for a family business comes when it’s time for one generation to help the next move into owning and leading the business, and it is now time for my son, Steve Davis, to lead this company into the future,” said Gary Davis, Chief Executive Officer. “Frequently, a transition like this involves new financing arrangements, and we are fortunate to have Armory Capital partner with us because they share our values. With the merger of these two family-owned companies, it’s ‘business as usual’ for Jim’s Formal Wear.”

The company has a history of growth by acquiring other companies or operations that are a good fit with Jim’s Formal Wear business. “This partnership with Armory Capital will ensure that the resources are available when those opportunities present themselves,” said Gary Davis.

Jim’s Formal Wear is a wholesale formal wear rental company that serves nearly 6,000 menswear stores, bridal shops and other formalwear-related retailers in the country.  The company has 600 employees and 9 regional service centers and operates a state-of-the-art 102,000-square-foot facility at its headquarters in Trenton, IL.  Jim’s Formal Wear was founded in 1922 (www.jimsformalwear.com).

The financial arrangement with Armory Capital enables the Davis family to continue to have a significant investment in Jim’s Formal Wear. Steve Davis will transition from the role of President and COO to CEO over the next 12 months. Gary Davis will work closely with Steve Davis during the transition and then enter into a long-term consulting contract to help with the transition and provide continuity.

Steve Davis, COO of Jim’s Formal Wear, said that the Davis family was very careful in interviewing and selecting Armory Capital as the new financial partner for Jim’s Formal Wear.  “One of the top priorities was to ensure that our new partner would maintain our culture and the high level of commitment to sharing the company’s success with our team members and providing quality merchandise and service to our customers.”

Armory Capital is a family investment office founded by Jacob Ambrose, Rusty Freeland and Greg Lykins to manage the investments of the Meyer family.  The firm invests from $5 million to $25 million in companies with revenue of at least $10 million and cash flow of at least $2 million.  Sectors of interest include agribusiness, business services, consumer products and retail, financial services, healthcare services, manufacturing, media, and transportation. Armory Capital is based in Champaign, IL. To visit the Armory Capital website click HERE. http://web01.kfmb.com/armory_capital/index.php

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-28-13

Here’s the Enabling and Disrupting Tech Trends of 2013

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Deloitte has published its 4th Annual Tech Trends Report “Elements of Post-digital,” highlighting the top 10 enabling and disrupting technology trends that are expected to be drivers for businesses as they move toward achieving the potential of the post-digital enterprise.  The report examines the convergence and controlled collision of five forces: analytics, mobile, social, cloud and cyber, where all five forces are mature, implemented, integrated and baked-in instead of bolted on.

“The post-digital era, like the post-industrial era, reflects a ‘new normal’ for business and a new basis for competition,” said Mark White, principal and CTO, Deloitte Consulting. “In post-industrial times, we didn’t forego industrialization, we embraced it. The post-digital era is similar, but with digitalization as its core. Our report outlines the core technology trends for which forward-thinking organizations should consider developing an explicit strategy. Whatever organizations may decide, they do not want to get caught unaware or unprepared.”

Deloitte’s annual report examines the top 10 topics that have the potential to impact businesses over the next 18 to 24 months. The trends are divided into two categories. “Disruptors” are opportunities that can create sustainable positive disruption in IT capabilities, business operations, and sometimes even business models. “Enablers” are technologies in which many CIOs have already invested time and effort, but which warrant another look because of new developments or opportunities.

The top 10 technology trends for 2013 include:

Disruptors

  • CIOs as the Postdigital Catalyst: Catalyzing value from the elements of mobile, social, analytics, cloud and cyber.
  • Mobile Only (and beyond): The enterprise potential of mobile is greater than today’s smartphone and tablet apps.
  • Social Reengineering by Design: How work gets done is no longer constrained by 19th century platforms.
  • Design as a Discipline: Inherent, pervasive and persistent design opens the path to enterprise value.
  • Internet Protocol Version 6 (IPv6 – the latest revision of the Internet Protocol, the communications protocol that routes traffic across the Internet). Ubiquitous connected computing is straining the underlying foundation of the Internet.

Enablers

  • Finding the Face of Your Data: Fuse people and technology to discover new answers in data – and new questions, too.
  • Gamification Goes to Work: Drive engagement by embedding game mechanics in day-to-day business processes.
  • Reinventing the ERP Engine: Revving up data, hardware, deployment and business model architectures at the core.
  • No Such Thing as Hacker-proof: If you build it, they will hack it. How do you deal with that?
  • The Business of IT: After reengineering the rest of the business, IT’s children deserve some shoes.

“What really stands out this year is the accelerated pace at which core trends like mobile, social, cloud, analytics and cyber are converging and being applied to create immediate, competitive impact,” said Bill Briggs, deputy CTO and global lead, Deloitte Digital. “All industries are affected and are taking advantage of these forces to incrementally improve their existing processes and offerings and fundamentally reshape their operating models, business models and marketplaces. Companies are not just doing the same things differently, but doing different things. Companies can no longer afford to sit on the sidelines.”

Each chapter of the report includes a “Lessons from the Frontlines” section that provides an in-depth overview of three examples of real-life implementation of each trend in the market today, representing a range of industries. Additionally, a “My Take” is provided by CIOs, academics and other luminaries to provide additional perspective about the utility of the trend in business.

“Postdigital’s potential can spur both offensive and defensive responses,” said Mr. Briggs. “On one side lies opportunity for innovation. On the other, the existential threat of disruption. Every industry may be affected by the underlying digital forces. Every market may be reshaped by their controlled collision.”

“The role of the CIO hangs in the balance,” concluded Mr. White. “These trends are ready to be put to use in the business. But who will lead the charge? The reports of IT’s demise may be exaggerated, but there is often truth behind the rhetoric. How will CIOs reimagine their roles in business strategy? What will the corresponding IT department look like? One thing is for certain: the elements of postdigital will play a role.”

To download the complete report and view videos that provide insightful perspectives for each chapter, click HERE.

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-28-13

The Top 10 Largest Private Equity Deals of 2012

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PrivCo, a financial data provider has just published its annual rankings of the Top 10 Largest Private-Equity Deals of the Year.

“Noticeable in last year’s Top 10 Largest Private Equity Deals was the preponderance of secondary sales.  In addition, in 2012 we saw the return of the use of high debt levels in leveraged buyouts by private equity firms, as leveraged financing and high yield debt markets for private equity deals unfroze. 2012’s Top 10 Largest Private-Equity Deals made it clear that — after a several year lull during the recession — multi-billion-dollar private equity deals, as well as debt-heavy leveraged buyouts, are back,” said PrivCos’ CEO & Founder Sam Hamadeh.

The Top 10 Largest Private-Equity Deals for 2012:

1. $7.2 Billion – EP ENERGY CORP (Headquarters: Houston, TX) Acquired By P.E. Buyers: Apollo, Riverstone, Access Industries, Korea National Oil Corporation

2. $6.6 Billion – CEQUEL COMMUNICATIONS (St. Louis, MO) Acquired By BC Partners, Canada Pension Plan Investment Board

3. $4.9 Billion – DUPONT PERFORMANCE COATINGS (Wilmington, DE) Acquired By Carlyle

4. $3.7 Billion – FOCUS MEDIA (Shanghai, China) Acquired By Carlyle, Fountainvest, China Everbright, CITIC Capital, Jason Nanchun Jiang

5. $3.5 Billion – HAMILTON SUNDSTRAND INDUSTRIAL (Windsor Locks, CT) Acquired By Carlyle, BC Partners

6. $3.3 Billion – GETTY IMAGES (Seattle, WA) Acquired By Carlyle, Getty Images management, the Getty Family

7. $3.2 Billion – TRANSUNION (Chicago, IL) Acquired By Goldman Sachs Capital Partners, Advent International

8. $2.7 Billion – PARTY CITY (Elmsford, NY) Acquired By Thomas H. Lee Partners

9. $2.5 Billion – MCGRAW-HILL EDUCATION (New York, NY) Acquired By Apollo

10. $2.3 Billion – USI INSURANCE (Briarcliff Manor, NY) Acquired By Onex Corporation

To access detailed deal terms of each of PrivCo’s Top 10 Largest Private-Equity Deals for 2012 click HERE.

PrivCo is a provider of private company financial data and business research. PrivCo publishes financial data on over 164,000 private companies, as well as over 45,000 private company deal details, including private company M&A, private equity and venture capital investments, leveraged buyouts, pre-IPO activity, and restructurings.  The company is based in New York (www.privco.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-28-13

Food and Beverage Pro Joins Altamont Capital Partners

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Altamont Capital Partners, a San Francisco Bay based middle market private equity firm, has added Tim Bruer as a new Operating Partner. Mr. Bruer will focus primarily on investment opportunities in the food and beverage sectors.

“We are excited to welcome Tim to our team. We have known and worked with Tim over the years and we believe his extensive experience in the food and consumer sectors will present attractive investment opportunities that fit well with Altamont’s strategy,”  said Jesse Rogers, Managing Director of Altamont.  “Tim’s industry expertise and network of relationships, together with his track record of success as an operator, will make him a valuable partner as we grow our presence in these sectors.”

Mr. Bruer has operational and CEO experience with multiple food companies, including Genisoy Food Co. and Nonni’s Food Co., where he grew sales from $20 million to $155 million in four years. As Vice-President/General Manager for the Culinary Products Division of Nestle, Mr. Bruer led a turnaround from $17 million to $20 million of operating profit in two years. Mr. Bruer’s expertise extends to the infant products space, as his most recent role was CEO of ERGObaby Carrier, a designer of baby carriers and accessories. Early in his career, Mr. Bruer was a Vice-President at Bain & Co., focusing on business strategy for consumer product companies, corporate acquisitions, post-merger integration, and supply chain management. He served on the Board of Directors for Del Monte Foods and Authentic Specialty Foods. Mr. Bruer holds an MBA in Marketing and Finance from the University of Chicago, and a BA in Economics from Stanford University.

“I am excited to join the great team at Altamont, many of whom I worked with in the past at Bain and later when I was at Nestle. Altamont has an outstanding record in pursuing and adding value to middle market investments, and I feel fortunate to join them in extending this effort to the food/consumer product sector,” said Mr. Bruer.

Altamont Capital Partners invests in middle market businesses with specific interest in the financial services, consumer/retail, industrials, healthcare and business services sectors. Altamont was formed in 2010 by Jesse Rogers, Randall Eason and Keoni Schwartz who previously worked together at Golden Gate Capital and Bain & Company. The firm closed its first fund with $500 million of commitments in 2010. Altamont Capital Partners is based in San Francisco (www.altamontcapital.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-25-13

Lee Rash Promoted to VP

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Cotton Creek Capital has promoted Lee Rash to Vice President.  “Cotton Creek is excited to promote Lee to Vice President in recognition of his contributions to the firm, as well as the continued growth of Cotton Creek,” said Antonio DiGesualdo, Managing Director of Cotton Creek.

Mr. Rash joined Cotton Creek Capital in early 2012 and is responsible for evaluation and execution of investment opportunities, as well as post-closing and operational initiatives with several of Cotton Creek’s portfolio companies. Prior to joining Cotton Creek, Mr. Rash was an Associate in the Mergers and Acquisition Advisory Group at Blackstone.  Mr. Rash attended the University of Chicago Booth School of Business and earned a Master of Business Administration degree, with a concentration in economics and finance. Mr. Rash also earned a Bachelor of Science degree in Accounting and a Master of Science degree in Finance from Texas A&M University.

Cotton Creek Capital invests in lower middle market companies with enterprise values between $15 million and $200 million. Sectors of interest include manufacturing, value-added distribution, industrial services, energy, business services, healthcare services and consumer staples.  Cotton Creek Capital is affiliated with Brownlie & Braden, a provider of financial advisory services to high net worth families. The firm is based in Dallas (www.cottoncreekcapital.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-25-13

Duane Morris Expands Corporate Practice Group

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David Sussman has joined the Duane Morris’s Corporate Practice Group as a partner in its Newark office. Mr. Sussman strengthens Duane Morris’ corporate practice, particularly in the area of private equity transactions. He joins Duane Morris from Day Pitney where he was co-chair of that firm’s private equity and investment funds practice group.

Mr. Sussman regularly advises investment advisers and others in connection with launching investment partnerships, including hedge funds, private equity funds, venture capital funds and real estate funds. He regularly advises middle market investment banking firms in connection with private placement matters for middle market companies. He advises investors in secondary market purchases and sales of private equity fund interests. In addition, Mr. Sussman represents clients in transactional tax work. His corporate tax practice encompasses all aspects of corporate taxation, including tax-free spin-offs and taxable and tax-free mergers and acquisitions of subchapter C corporations and subchapter S corporations, including forward subsidiary mergers, reverse subsidiary mergers and taxable stock sales. Mr. Sussman represents partnerships in matters related to forming and negotiating sophisticated and complex joint ventures, including the preparation of partnership and limited liability company agreements and the purchase and sale of partnership and limited liability company interests. His clients include private equity funds and other public and private companies.

Mr. Sussman earned his JD in 1996 from the New England School of Law and earned his LLM in 2001 from New York University School of Law in Taxation. He graduated with a BA in Political Science in 1992 from the University of North Carolina.

Duane Morris is a global law firm with more than 700 attorneys in offices across the United States and around the world.  The firm was founded in 1904 and is headquartered in Philadelphia (www.duanemorris.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-25-13

Mason Wells Acquires A&R Logistics

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Mason Wells has acquired A&R Logistics, a provider of dry bulk transportation services, from private equity firm FdG Associates.  Joining Mason Wells in the acquisition are industry executives and investors Mark Holden and Rich Mitchell, members of the existing A&R management team, and other investors.

“We are very excited about partnering with the A&R team,” said Mark Holden. “We view the investment in A&R as the first step in our long-term goal of building a diversified, global transportation and logistics company focused on bulk materials.”

A&R Logistics is a provider of dry bulk transportation, packaging, distribution, and logistics services to multinational companies within the chemical, plastics, and dry bulk food industries. Services include over-the-road transportation, transloading, packaging, warehousing, and end-to-end outsourced transportation management through a nationwide network of 25 facilities; a combination of company-owned equipment and owner operators; and a non-asset based transportation management division. A&R Logistics is headquartered in Morris, IL (www.artransport.com).

“We are excited about the opportunity to work with Mason Wells, Mark Holden, and Rich Mitchell,” said Jeff O’Connor, President & CEO of A&R Logistics.  “The industry resources Mark and Rich bring with them, coupled with the strong financial support of Mason Wells will enable us to continue serving our customers at a very high level while expanding our leading market position in the chemical, plastics, and bulk food industries.”

Mason Wells makes investments in Midwest-based companies with revenues of  $25 million to $300 million and EBITDAs of at least $5 million.  Sectors of interest include consumer packaged goods, packaging materials & converting, engineered products & services and outsourced business services.  The firm was founded in 1982 and is based in Milwaukee (www.masonwells.com).

FdG Associates invests from $15 million to $50 million in companies that have a minimum of $8 million in EBITDA.  Sectors of interest include business services; construction & industrial services; consumer products & services; value-added distribution; light manufacturing; retail; and transportation & logistics.  The firm was co-founded by David Gellman and Charles de Gunzburg in 1995 and is headquartered in New York (www.fdgassociates.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-25-13

O2 Investment Partners Acquires Mercury Manufacturing

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O2 Investment Partners has acquired Mercury Manufacturing Company, a manufacturer of pressure relief valves.  The acquisition broadens O2’s portfolio of niche manufacturing companies and provides a new platform investment in the valve product segment.

Mercury Manufacturing Company is a manufacturer of pressure relief valves, check valves, precision machined components and assemblies serving the automotive, heavy duty truck, air conditioning and refrigeration markets.  The company was founded in 1964 and is based in Wyandotte, MI (www.mercurymfg.com).

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).

Amherst Partners acted as the exclusive investment banker to Mercury Manufacturing Company.  After 48 years of ownership, Mercury’s sole shareholder desired a liquidity event for estate planning purposes.  Mercury engaged Amherst to lead a sale process focused on maximizing value and identifying a buyer with the capital and resources to grow Mercury’s current platform.  Founded in 1994, Amherst Partners is a middle market investment bank with offices in Birmingham and Ann Arbor, MI; and Chicago (www.amherstpartners.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-25-13

Larsen MacColl Exits S&S Worldwide

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Larsen MacColl Partners has sold a majority stake in its portfolio company, S&S Worldwide, a designer and manufacturer of roller coasters, to Sansei Yusoki Co.

Larsen MacColl made its original investment in S&S in 2009 and supported S&S’s subsequent growth with additional financial resources and strategic guidance as S&S expanded its customer base and product offering in Europe and Asia.

S&S Worldwide is a designer and manufacturer of roller coasters, tower rides and other thrill rides for the global amusement park industry. S&S has installed over 150 amusement rides and coasters in 27 countries.  The company is based in Logan, UT (www.engineeringexcitement.com).

Larsen MacColl invests in companies with $5 million to $40 million in revenue.  Sectors of interest include transportation and logistics, specialty manufacturing and distribution, consumer products and business services. Larsen MacColl is investing out of its second committed fund. The firm is headquartered in Radnor, PA (www.larsenmaccoll.com).

Brookwood Associates acted as the lead financial advisor to Larsen MacColl and S&S.  “Brookwood was a tenacious partner in this process. Their senior attention was evident in positioning S&S to attract the right interest from a global buyer universe, and navigating extremely complex issues in a cross-border context,” said Tim MacColl, Managing Partner of Larsen MacColl.  “Brookwood was more than a banker…they were a trusted advisor critical to the success of this transaction.”  Brookwood Associates was founded in 1989 and has offices in Atlanta, GA and Charlotte, NC.  The firm has 24 professionals and offers merger, acquisition, corporate financing, restructuring, fairness opinions and other related advisory services (www.brookwoodassociates.com).

Sansei Yusoki is a manufacturer of elevation equipment, stage equipment and amusement rides. Products include elevators, escalators, parking devices and revolving restaurants, as well as stage machinery, hanging devices, roller coasters, and fast slides. The company is headquartered in Osaka, Japan (www.sanseiyusoki.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-25-13

DFW Capital Partners and PineBridge Acquire Covenant Surgical Partners

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DFW Capital Partners and PineBridge Investments have acquired Covenant Surgical Partners, an acquirer and operator of single and limited-specialty ambulatory surgical centers. Iroquois Capital, a founding investor in Covenant, also invested alongside DFW and PineBridge.

DFW sourced and led the transaction, partnering with PineBridge Investments and Iroquois Capital to acquire a majority interest in Covenant via a $35 million senior preferred equity investment, the proceeds of which were used to facilitate the acquisition of five new ambulatory surgical centers and an increase in its senior credit facilities to support future acquisitions.  Concurrent with the equity funding, SunTrust Bank led a $76.5 million senior credit and acquisition facility for Covenant.

Covenant Surgical Partners operates 19 ambulatory surgical centers (ASCs) focused on certain core medical specialties that are driven by both managed care cost containment and the ageing of the population – principally gastroenterology, ophthalmology and interventional pain management.  Covenant’s recent model has been to acquire majority interests in single or limited specialty ASCs across a broad geography, with a significant minority investment retained by the center’s affiliated physicians or physician groups. Covenant seeks to bring new systems and procedures to bear in such acquired centers, and also consolidates financial, administrative, regulatory, contracting and human resources management functions – allowing its affiliated physicians to concentrate on the practice of medicine and efficient scheduling and utilization of the centers. Covenant Surgical Partners is headquartered in Nashville (www.covenantsurgicalpartners.com).

Covenant Surgical Partners is led by Rick Jacques, its founder and CEO. He formerly was SVP of Corporate Development at Amsurg (NASDAQ:AMSG), the nation’s largest consolidator and operator of ASCs. “We are excited to work with DFW and PineBridge to fulfill our long-term vision of building the leading single and limited-specialty ASC operator in the industry. With our increased equity capital base and senior credit capacity, as well as critical scale achieved with the concurrent center acquisitions, we have developed a formidable platform for further growth,”  said Mr. Jacques.

DFW was attracted to the Covenant Surgical Partners opportunity based on its long-term view that lower-dollar surgical procedures (like colonoscopies, cataract surgeries, etc.) will continue to move toward lower-cost, non-hospital settings given their superior cost profile for payers, convenience of experience for patients, and clinical and logistical benefits to providers. Covenant has proven its ability to improve revenues at its acquired centers by providing patient marketing resources and programs as well as providing access to improved ancillary services. Further, DFW believes that the increasing complexity and regulatory environment facing smaller operators creates a compelling consolidation opportunity over the coming several years where Covenant can alleviate financial and operating pressures on physicians by acquiring a majority interest.

“We are delighted to partner with Rick Jacques and the Covenant team in this exciting investment opportunity. We have been students of the surgery center space for several years, and were fortunate to uncover Covenant – a company with a superior integration and business model and focused on a segment of the procedure market that stands to benefit from demographic and economic forces currently at work within the overall healthcare market” said Keith Pennell, DFW’s Managing Partner.

DFW Capital Partners invests in lower middle market companies. Sectors of interest include outsourced healthcare and business services, including clinical services, specialty distribution, automated dispensing and pharmacy technology.  DFW is headquartered in Teaneck, NJ, and maintains an office in Chevy Chase, MD (www.dfwcapital.com).

PineBridge Investments manages $69 billion in assets for institutional and individual clients in listed equity, fixed income, private equity and hedge fund markets. The firm has approximately 800 employees in 32 countries and is based in New York (www.pinebridge.com).

Iroquois Capital Group is a merchant banking company led by business executives who have been CEOs and have extensive finance and M&A experience. Using this experience, Iroquois identifies and works with companies in the healthcare and financial services industries, sometimes investing its own capital and the capital of its more than 500 investing clients. The firm is based in Nashville (www.iroquoiscapitalgroup.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-25-13

Clearview Capital Exits Hillsdale Furniture

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Clearview Capital has exited its investment in Hillsdale Furniture with the sale of the company to an investor group led by Brookside Equity Partners and management.

Hillsdale Furniture is a designer, importer and marketer of residential furniture.  Hillsdale Furniture was created when Clearview, in partnership with management, acquired Hillsdale House and Hillstreet Furniture in October 2003. The transaction facilitated the combination of the two companies which had had a cooperative arrangement since the founding of Hillstreet in 1997.  Hillsdale Furniture is based in Louisville, KY (www.hillsdalefurniture.com).

“Despite an extraordinarily difficult environment for furniture companies that resulted in wrenching change throughout the industry, Hillsdale’s terrific management team achieved market share gains and consistent profitability during the course of our investment”, said Calvin Neider, Co-Managing Partner of Clearview Capital. “We part with Hillsdale knowing the company will continue to thrive with its new equity partners.”

Green, Holcomb & Fisher served as financial advisor and Loeb & Loeb served as legal advisor to Hillsdale Furniture.

Clearview Capital invests in mid-sized manufacturing and service companies that have cash flow between $4 million and $20 million. Clearview has in excess of $250 million under management and is currently making investments through its committed fund, Clearview Capital Fund II, LP. The firm is headquartered in Old Greenwich, CT (www.ClearviewCap.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-25-13

Endeavour Capital Invests in Arizona Nutritional Supplements

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Arizona Nutritional Supplements has completed a recapitalization to form a partnership between the founders of the company, Aaron Blunck and Jonathan Pinkus, and Endeavour Capital.  After a period of strong growth, the founders of Arizona Nutritional Supplements sought a partner to provide partial liquidity and to facilitate the company’s continued expansion.

Arizona Nutritional Supplements (ANS) provides contract and private label manufacturing and packing services for the vitamins, minerals and supplements industry. The company was founded in 1996 and is based in Chandler, AZ (www.aznutritional.com).

Investment bank Green Manning & Bunch (GMB) served as the exclusive financial advisor to ANS in the transaction. “I was impressed by GMB’s practical advice during the process. The GMB team was able to orchestrate a large marketing process for the company that balanced the needs of the parties that were interested in us with our need to continue to successfully run the business and maintain appropriate relationships with our employees and customers. In the end, the transaction was a win-win for all involved. I couldn’t be more pleased,” said ANS co-founder Jonathan Pinkus.

Endeavour Capital invests from $25 million to $100 million of equity in middle market companies with EBITDA’s of $5 million to $50 million.  Sectors of interest include: transportation and logistics; food and consumer; education and training; niche manufacturing; business services; and healthcare.  Endeavour is currently investing its fifth fund and has over $1 billion of committed capital. The firm was founded in 1991 and has offices in Portland, Seattle, Denver and Los Angeles (www.endeavourcapital.com).

“We were attracted to ANS’ unparalleled commitment to quality, safety and customer service and attractive customer list. GMB ably presented a compelling investment opportunity that resulted in a partnership of shared vision to create the leading high quality manufacturer of innovative vitamins, minerals and supplements product solutions,” said Mark Dorman, managing director of Endeavour Capital.

Green Manning & Bunch specializes in mergers and acquisitions, private placements of equity and debt, and strategic financial advisory services for middle market companies and has closed transactions totaling more than $17 billion. The firm is based in Denver, CO (www.gmbltd.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-24-13

Tricor Pacific Capital Acquires Commerce Corporation

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BFG Supply Company, a portfolio company of Tricor Pacific Capital, has acquired certain assets of Commerce Corporation, a lawn and garden products distributor.

Commerce Corporation supplies lawn and garden products to the garden centers. Products include pots, fire pits, gliding chairs; tidings; seeds; aquatics; and wild bird care products. The company was formerly known as Commerce Distributors and changed its name to Commerce Corporation in 1994. Commerce Corporation was founded in 1923 and is based in Baltimore, MD (no active website found).

In connection with the transaction, BFG Supply Company (BFG) has expanded its operating footprint with the addition of Commerce’s former Grand Rapids, MI facility, as well as the hiring of 50 employees.  With over 200,000 square feet of warehouse space, the Grand Rapids facility augments BFG’s existing network of 12 distribution centers.

BFG Supply Company is a distributor of supplies to the US greenhouse growing, nursery and professional turf industries.  BFG services a varied customer base consisting of commercial greenhouse and nursery growers, lawn and garden centers, and professional turf customers across the Midwest and Mid-Atlantic US.  BFG’s product line covers consumable items such as containers, chemicals, fertilizers, live plants, seeds and growing media, and capital items such as greenhouse structures and irrigation equipment. The company is based in Cleveland (www.bfgsupply.com).

Tricor Pacific invests in middle-market companies with enterprise values from $25 million to $250 million in the manufacturing, service, distribution and consumer product sectors that are located in the west and mid-west regions of Canada and the United States. The firm currently manages approximately $1 billion of capital and is investing its fourth fund with $555 million in committed capital. Tricor Pacific was founded in 1996 and is headquartered in Vancouver with an additional office in Chicago (www.tricorpacific.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-24-13

Kidd & Company Acquire Imaginetics

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Kidd & Company has acquired Imaginetics, a manufacturer of precision metal components and assemblies for the aerospace industry.

Imaginetics provides CNC machining, sheet metal fabrication and assembly to its customers which include Boeing Commercial Airplanes, Boeing Defense Services, Hexcel Corporation, Spirit Aerosystems, and Zodiac Aerospace, among others.  Imaginetics has 90 employees at its 52,000 square foot manufacturing facility located in Auburn, WA (www.imagineticsinc.com).

Centerfield Capital Partners (www.centerfieldcapital.com) provided subordinated debt and equity to support the transaction. BMO Harris Bank provided senior debt.

“We are impressed by the breadth of the company’s capabilities, spanning metal fabrication, CNC machining and part-to-part and final assembly, to offer customers a single-vendor solution for a variety of complex manufacturing needs,” said Donald Hardie, a Partner at Kidd & Company. “We are excited to partner with the management team to build on the terrific foundation they have created and, together, plan to continue to grow Imaginetics by serving the increasing demands of its customer base.”

In connection with the transaction, Imaginetics has promoted Scott Strong to President and Pat Prince to Vice President of Operations, while adding Bob Mozzacavallo as the company’s new Chief Financial Officer and Michael Cook as the new Vice President of Sales, Marketing and Contracts.

“We are very excited about our new partnership with Kidd & Company. There are many growth opportunities for Imaginetics and we are confident in our ability to capitalize on them with the help of our newly expanded management team and the additional resources that come from the Kidd & Company team,” said Mr. Strong.

Kidd & Company is the private investment arm of the Kidd Family Office and is engaged in sponsoring private equity transactions in the lower middle market. The firm was founded in 1976 and is headquartered in Old Greenwich, CT (www.kiddcompany.com).

“This investment fits perfectly with Kidd & Company’s investment strategy of partnering with management teams to transform businesses in industries undergoing change in order to build fundamental value.  We are very excited about the opportunities within the aerospace sector and are thrilled to be partnering with Scott and the expanded management team to take the company to the next level,” said Tony Castor, a Kidd & Company Partner and Board member of Imaginetics.

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-24-13

Bregal Sagemount Invests in Recondo Technology

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Bregal Sagemount has made a $20 million investment in Recondo Technology, a services provider to providers, payers, and patients in the healthcare industry.

Recondo is a provider of revenue cycle services and payment solutions for the healthcare industry. In fiscal 2012 the company increased revenue by 94% and added 266 new hospital customers. Additionally, Deloitte Touche placed Recondo at #9 in its annual list of the Deloitte Technology Fast 500 and Inc. Magazine ranked Recondo at #222 in its annual Inc. 500 list.  The company is based in Greenwood Village, CO (www.recondotech.com).

The investment will be used by Recondo to accelerate its organic growth rate, enhance its customer support teams, and complete strategic acquisitions. Phil Yates, a founding Partner of Bregal Sagemount, and Pavan Tripathi, Senior Associate, will join the company’s board of directors.

“Recondo brings innovative, best-in-class technology to the problem of proper payments for hospitals, Integrated Delivery Networks, and Accountable Care Organizations,” said Mr. Yates. “The US healthcare system spends 15 plus percent of revenue to process and collect payments compared to one to two percent in other efficient markets.  We are excited to invest in Recondo, the market leader changing this paradigm.”

Bregal Sagemount makes control and non-control investments of $15 million to $150 million in companies active in the following sectors: business services, software and technology, information and media, financial services, and healthcare. The firm makes both equity and/or junior debt investments and has $500 million in committed capital. Bregal Sagemount is based in New York (www.bregalsagemount.com).

“We are very pleased that the seasoned partners of Bregal Sagemount have placed their confidence in Recondo Technology,” said Rick Adam, Recondo Founder and CEO. “This investment will be used to significantly expand our sales and marketing efforts, take client service to a new level, and broaden our product offerings through internal development and strategic merger and acquisition opportunities.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 1-24-13