Archives for May 8, 2013

Vance Street Acquires Smart Electronics & Assembly

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Secure Communication Systems, a portfolio company of Vance Street Capital, has acquired Smart Electronics & Assembly. This is the first add-on acquisition for Secure Communication Systems since Vance Street acquired the company in October 2009.

Smart Electronics is a provider of electronic products including electronic circuit boards, sub-assemblies, cable & harnesses, and modules & boxes to the defense, commercial aerospace, industrial and homeland security markets. Smart Electronics was founded in 1994 and is based in Anaheim, CA (www.smartelec.com).

Secure Communication Systems designs and manufactures tactical mission computing systems, encryption equipment, communications products and related equipment for defense and industrial applications. The company’s products include handhelds, rugged tablet PCs, workstations and servers, routers, accessories, translators, tactical displays, and ultra-mobile PCs for various branches of the military as well as for civilian applications. The company was founded in 1986 and is based in Santa Ana, CA (www.securecomm.com).

“The purchase of Smart Electronics provides both firms with a number of strategic advantages, including new cross-selling opportunities across a broader range of industries,” said Brian Martin, a principal at Vance Street Capital.

Vance Street Capital makes control investments in companies with enterprise values up to $200 million. Sectors of interest include precision industrial manufacturing, aerospace & defense, medical components & devices, and business services. The firm is based in Los Angeles (www.vancestreetcapital.com).

Fifth Third Bank provided debt financing for the transaction. O’Melveny & Myers acted as legal advisor to Vance Street Capital and Secure Communication Systems in the transaction. Smart Electronics was represented by Arent Fox.

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-8-13

Brynwood Partners Exits TrueNorth

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DeMet’s Candy Company, a portfolio company of Brynwood Partners, has sold the TrueNorth brand and selected assets to B&G Foods.

“The divestiture of the TrueNorth brand allows DeMet’s to focus on its core confectionary products including Turtles chocolate-caramel nut clusters, Flipz chocolate covered pretzels and Treasures filled chocolates,” said Peter Wilson, Vice Chairman of DeMet’s.

TrueNorth is a nationally distributed premium snack nut brand that DeMet’s acquired from Frito-Lay North America, a division of PepsiCo, in 2010 (www.truenorthsnacks.com).

“We are pleased to announce the divestiture of TrueNorth,” said Hendrik Hartong III, Chairman, DeMet’s and Senior Managing Partner, Brynwood Partners. “We wish B&G Foods much success with this terrific brand. It has been a pleasure working with the B&G Foods team and we are excited to have completed our first transaction with them.”

DeMet’s Candy Company is a manufacturer and marketer of chocolate confectionary products including Turtles, Flipz and Treasures. Brynwood Partners formed DeMet’s Candy Company in June 2007 to acquire the Turtles® confectionery brand from Nestlé USA. The company owns manufacturing facilities in Big Flats, NY and Mohnton, PA and is headquartered in Stamford, CT (www.demetscandy.com).

B&G Foods (NYSE: BGS) manufactures, sells and distributes a portfolio of branded shelf-stable foods across the United States, Canada and Puerto Rico. Brands include, among others, Ac’cent, Baker’s Joy, Brer Rabbit, Cream of Rice, Cream of Wheat, Mrs. Dash, Ortega, Red Devil, and Sugar Twin. B&G Foods also sells and distributes two branded household products, Static Guard and Kleen Guard. The company is based in Parsippany, NJ (www.bgfoods.com).

Brynwood Partners is an operationally-focused private equity firm that makes control investments in lower middle market companies. Sectors of interest include consumer products, light manufacturing with low capital intensity, and business services. Brynwood Partners has $500 million of capital under management. The firm was founded in 1984 and is based in Greenwich, CT (www.brynwoodpartners.com).

Houlihan Lokey Capital served as the investment banking advisor to DeMet’s Candy Company.

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-8-13

The Edgewater Funds Acquires FlexPoint Technology

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Haystax Technology, a portfolio company of the Edgewater Funds, has acquired FlexPoint Technology. This acquisition extends Haystax products and services in defense and intelligence markets and marks the second add-on acquisition for the company.

Haystax provides information integration, data analytics and visualization services used to process data in the intelligence, defense and security sectors. The company is based in San Jose, CA (www.haystaxtechnology.com).

FlexPoint Technology is an IT professional services company that provides cloud computing and enterprise content management services to government customers with demanding security requirements. Services provided include identity management, secure collaboration services, infrastructure management and application development. Following the acquisition, FlexPoint will continue to be led by its president, David Conrad. The company is based in Reston, VA (www.flexpointtech.com).

“The addition of FlexPoint Technology’s cloud computing and security services perfectly complements our existing capabilities in big data analytics and mobile solutions. This combination results in a full spectrum of products and services with expertise in each of the four technology forces that are revolutionizing government and private industry,” said Haystax Technology CEO, William Van Vleet.

The Edgewater Funds invests in companies with revenues from $20 million to $500 million and EBITDAs from $5 million to $30 million. Sectors of interest include business services, financial and government services, consumer products and services, health care services, IT services and software and basic industries. The firm has $1.4 billion in committed capital and is based in Chicago (www.edgewaterfunds.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-8-13

The Edgewater Funds Acquires Digital Sandbox

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Haystax Technology, a portfolio company of the Edgewater Funds, has acquired Digital Sandbox. This acquisition extends Haystax capabilities and products in public safety, law enforcement and corporate security markets.

Digital Sandbox provides threat and risk analysis and monitoring software to the national security and homeland security sectors. The company’s products are used by federal, state, and local agencies to quantify and monitor risks from natural and man-made threats, and to direct resources based on threat and risk priorities. Following the acquisition, Digital Sandbox will continue to be led by its president, Anthony Beverina. The company was founded in 1998 and is based in McLean, VA (www.dsbox.com).

Haystax provides information integration, data analytics and visualization services used to process data in the intelligence, defense and security sectors. The company is based in San Jose, CA (www.haystaxtechnology.com).

“The accelerating variety, volume and velocity of available data can overwhelm organizations and leaders responsible for ensuring the safety of major companies and events. We are excited to add Digital Sandbox’s technologies to provide our customers with scalable analytics to monitor hundreds of real-time news and social media feeds with mobile solutions to enable entirely new capabilities for prioritized, intelligent decision-making,” said William Van Vleet, Chief Executive Officer of Haystax.

The Edgewater Funds invests in companies with revenues from $20 million to $500 million and EBITDAs from $5 million to $30 million. Sectors of interest include business services, financial and government services, consumer products and services, health care services, IT services and software and basic industries. The firm has $1.4 billion in committed capital and is based in Chicago (www.edgewaterfunds.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-8-13

Greenbriar Equity Acquires EDAC Technologies

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Greenbriar Equity has completed its previously announced acquisition of EDAC Technologies Corporation, a designer, manufacturer and servicer of precision components for aerospace and industrial applications, for approximately $104 million.

EDAC Technologies Corporation (NASDAQ: EDAC) is a diversified manufacturing company serving the aerospace and industrial markets. In the aerospace sector, EDAC offers design and manufacturing services for commercial and military aircraft, in such areas as jet engine parts, special tooling, equipment, gauges and components used in the manufacture, assembly and inspection of jet engines. Industrial applications include high-precision fixtures, gauges, dies and molds, as well as the design, manufacture and repair of precision grinders and precision spindles. The company is based in Farmington, CT (www.edactechnologies.com).

Greenbriar Equity Group invests from $50 million to $150 million per transaction in the global transportation industry, including companies in aerospace and defense, automotive, freight and passenger transport, logistics and distribution, and related sectors. The firm manages $1.5 billion of committed capital and is based in Rye, NY (www.greenbriarequity.com).

Stifel, Nicolaus & Company served as the exclusive financial advisor to EDAC Technologies.

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-8-13

Silver Oak Closes Fund 2 Above Target

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Silver Oak Services Partners has held a final closing above target for its newest fund, Silver Oak Services Partners II, L.P., with total commitments of $206 million.  The new fund saw strong support from both existing and new investors. Limited partners include corporate pension plans, family offices, funds of funds, insurance companies and a sovereign entity.

Silver Oak makes control investments of $10 million to $30 million in companies with revenues from $15 million to $150 million and EBITDAs from $4 million to $20 million. Sectors of interest include business services, healthcare services, and consumer services.

Silver Oak, based in Evanston, IL (www.silversoaksp.com), has already completed two platform investments for its new fund. In September 2011 the firm acquired Directravel Holdings, a provider of outsourced corporate travel management services, and in April 2012 acquired Physical Rehabilitation Network, a physical therapy clinic platform in the Western United States.

Forum Capital Partners served as placement agent and fundraising advisor to Silver Oak. “We are pleased by the market’s reception of Silver Oak’s second fund, which exceeded its target despite a challenging fundraising environment,” said Robert Schwabe, Managing Partner of Forum Capital. “The successful fundraising campaign is directly attributable to the strength and experience of Silver Oak’s team and differentiated investment approach.”

Forum Capital Partners advises and raises institutional capital for buyout, growth equity, real estate, infrastructure, secondary and other private investment funds worldwide. The firm was founded in 2001 by Jeffrey Stern and Robert Schwabe and is based in New York (www.forumcp.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-8-13

Individuals are Buyers of Most Businesses Under $5 Million in Valuation

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According to a new report, for the first time ever, individuals were the largest buyer group for businesses that were valued under $5 million. The new report is titled 2013 Market Pulse Quarterly Survey Report and was published by Pepperdine University’s Graziadio School of Business and Management, the International Business Brokers Association, and M&A Source.

For transactions valued at more than $5 million the most common buyers were existing companies looking to grow through acquisition (40 percent), followed by private equity platforms (30 percent), and private equity add-ons (20 percent).

“As our economy picks up steam, more high-net worth individuals are transitioning from employees to business owners,” said George Lanza, president of Plethora Businesses. “Many of these individuals are buying businesses for job security or because they anticipate a better ROI than with other investments.”

According to the report, the majority of business brokers that sell businesses valued up to $2 million think it is a buyer’s market right now. For transactions valued at less than $500,000, 78 percent say supply and demand is in the buyer’s favor.

“The transition from a seller’s market in the third quarter of 2012 to the current buyers market reflects more confidence in our economic recovery,” said report co-author Dr. John Paglia, director of the Pepperdine Private Capital Markets Project and associate professor of finance at Pepperdine University’s Graziadio School of Business and Management. “For deals under $500,000, the majority of buyers (73 percent) are coming to the table with cash – this is an important sign that our economy may be turning around.”

International buyers made a strong appearance in this quarter’s survey, representing 20 percent to 30 percent of buyers for businesses valued at $1 million and above. Previous reports (since Q2 2012) haven’t seen international buyers exceed 8 percent in any sector.

For the second quarter in a row, retirement ranked as the number one reason driving business sales in the lower middle market sectors, followed by owner “burn-out”. Business brokers and M&A advisors around the country reported that client loads increased at a faster rate compared to any other quarter since the survey started in June 2012.

“Trends show a growing number of businesses on the market and we can expect listings and engagements will continue to increase as baby boomers look to retire and sell their businesses,” said Jim Afinowich, president of Fox & Fin Financial Group.

How are lower middle market transactions being structured? The new report shows that buyer equity led every sector followed by relatively equal amounts of seller financing and senior debt. For businesses valued up to $5 million sellers are holding around 20 percent to 25 percent in financing. “These national trends confirm that seller financing continues to be a key component in completing a transaction,” said Scott Bushkie, principal of Cornerstone Business Services. “Business owners who aren’t prepared for that will have a much lower chance of successfully completing a sale.”

For a FREE copy of the first quarter 2013 Market Pulse Quarterly Survey Report click HERE.

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-8-13

Adams Street Closes Secondaries Fund at Hard Cap

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Adams Street Partners has held a final close of Adams Street Global Secondary Fund 5. The new fund was oversubscribed, surpassing the $750 million target and hitting the firm’s hard cap of $1 billion.

Limited partners in the new fund include sovereign wealth funds, public and private pension funds, insurance companies, endowments, foundations and high net-worth individuals. In combination with other managed accounts, Adams Street’s secondary program now has approximately $2 billion in new capital to invest.

Adams Street Partners provides primary and secondary partnership and direct investment management services to institutional clients. The firm has been investing in private equity partnerships since 1979 and managing direct investments in private equity since 1972. Adams Street has offices in Chicago, London, Menlo Park, and Singapore (www.adamsstreetpartners.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-8-13