August 15, 2013
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Archives for August 15, 2013

Crofton and Gladstone Acquire Schylling Toys

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schyllingSchylling Associates, an independent toy and gift designer, manufacturer and distributor, has been acquired by Crofton Capital and Gladstone Investment Corporation.

Schylling is a designer, manufacturer and distributor of branded toys, gifts and collectible products to independent stores and large retailers. Products include contemporary versions of classic toys and collectables inspired by iconic playthings including jack-in-the-boxes, sock monkeys, tin robots and tin vehicles. The company’s products are sold under the Schylling brand and under licenses from Thomas & Friends, Uglydoll, Curious George, Babar and Warner Brothers’ The Wizard of Oz. Schylling also distributes products for LEGO, BRIO, Lava Lamps, Moshi Monsters, Angry Birds, Sea Monkeys and Erector. The company is headquartered in Rowley, MA (www.schylling.com).

As part of this transaction, Paul Weingard has become President of Schylling. He most recently led product development at Schylling for five years, and brings 30 years of toy industry experience to his new role. Founder Jack Schylling is assuming an advisory role focused on providing creative support. David Schylling will continue in a business development leadership role.

“We’re extraordinarily excited about Schylling’s future. We see tremendous opportunities for product innovation, brand development and expanded distribution that will fuel continued growth,” said Mr. Weingard. “Our new partners bring the capital and complementary resources that will enable us to continue to build on our leadership position of classic fun in the independent toy arena.”

Crofton Capital invests in and provides strategic resources to small and midsize businesses that have annual revenues of up to $50 million and operating cash flow of $1 million to $5 million and are based primarily in the northeast. Sectors of interest include consumer products and services, niche manufacturing, value-added distribution, business services, and software and technology-enabled services. Crofton Capital is based in Wellesley, MA (www.croftoncap.com).

Gladstone Investment Corporation (NASDAQ: GAIN) is a publicly-traded business development company that makes debt and equity investments in US-based small to middle-market businesses. Target investments generally range from $5 million to $30 million in companies with over $3 million in EBITDA. Sectors of interest include light and specialty manufacturing, industrial products, business and government services, media and communications, consumer products and services, healthcare services, transportation, specialty chemicals and energy services. Gladstone is based in McLean, VA with additional offices in New York, Chicago, and Los Angeles (www.GladstoneInvestment.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 8-15-13

Wynnchurch Acquires Imperial Group, Forms New Platform

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imperial group nfWynnchurch Capital has acquired Imperial Group, a metal fabricator, from Accuride Corporation. Wynnchurch partnered on this transaction with BMO Mezzanine Fund and the management team of Imperial led by Chief Executive Officer Terry Wogan.

Imperial is a metal fabricator supplying light and medium gauge fabricated metal components, metal stampings, and assemblies to heavy truck, bus, and industrial OEMs. Imperial has operations in Denton, TX (headquarters); Decatur, TX; Portland, TN; Dublin, VA; and Chehalis, WA (www.imperialgroup.com).

“Imperial has built an impressive franchise in the metal fabrication industry and is well positioned to take advantage of the anticipated recovery in its end markets. Our goal is to help transform the company into a world-class supplier and a value-added partner to our customers,” said Ian Kirson, Managing Director at Wynnchurch.

The Imperial investment follows Wynnchurch’s acquisition of Detroit Tool Metal Products which was completed in June 2013 (Wynnchurch Buys Detroit Tool, Launches Metal Roll-Up).

Imperial and Detroit Tool Metal Products will operate as subsidiaries of Ironform Holdings Co., a new platform company formed by Wynnchurch. The combination of Imperial and Detroit Tool Metal Products forms one of the largest metal fabricators serving the heavy truck, bus, and off-highway markets in North America. Wynnchurch intends to continue to pursue strategic acquisitions under the Ironform Holdings umbrella and build a metal fabrication platform with industry leading capabilities and a presence in the Midwest, South, Southeast, and West Coast.

“Imperial represents the tenth corporate carve-out transaction in Wynnchurch’s history. We are excited to continue to build the Ironform platform with the highly complementary acquisition of Imperial,” said John Hatherly, Managing Partner of Wynnchurch stated. “Wynnchurch is proud to partner with Terry Wogan and his team to build a metal fabrication business with best-in-class quality, delivery, and customer service.”

Wynnchurch Capital makes investments of $10 million to $90 million in middle-market companies that have revenues of $5 million to $500 million. Sectors of interest include niche manufacturing, transportation & logistics, business services, value-added distribution, energy and power services, general industrials, and metals & mining. Wynnchurch Capital was founded in 1999 and is located in the Chicago suburb of Rosemont with additional offices in Detroit and Toronto (www.wynnchurch.com).

Senior debt financing for the transaction was provided by Regions Business Capital.

© 2013 PEPD • Private Equity’s Leading News Magazine • 8-15-13

Evolve and Praesidian Acquire Meheen Manufacturing

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meheen nfEvolve Capital and Praesidian Capital have acquired Meheen Manufacturing, a manufacturer of carbonated beverage bottling machines. Praesidian Capital provided $11.25 million in first lien debt and made a $500,000 equity co-investment alongside Evolve.

Meheen manufactures branded carbonated beverage bottling machines for microbreweries, brewpubs, water, tea, cider and other bottlers. Distributing internationally, Meheen’s primary product is the Merlin which utilizes computer controls to manage product pressure, filling and foaming. The company was founded in 1992 by Dave Meheen, an engineer and former brewery owner, and is based in Pasco, WA (www.meheen-mfg.com).

“We see great value in this business,” said Glenn Harrison, Partner of Praesidian Capital. “Meheen holds a strong position in the growing craft brewing industry and has partners in place to continue its growth.”

Evolve Capital specializes in leveraged recapitalizations of entrepreneurial businesses with EBITDAs between $2.5 million and $4.0 million. The firm’s investment focus is primarily on service or asset-light businesses. Evolve Capital was founded in 2005 and is based in Dallas (www.evolvecapital.com).

Praesidian Capital provides mezzanine capital to small and mid-sized businesses. The firm typically invests in connection with a management/leveraged buyout, recapitalization or refinancing. Praesidian manages over $700 million in committed capital and is based in New York (www.praesidian.com).

The investment in Meheen is the second Evolve portfolio company in which Praesidian has invested within the last year. In March 2013, Praesidian made a $22.8 million senior debt investment in Mission Critical Electronics, a manufacturer of specialized electronic products for the emergency/specialty vehicle, marine and telecommunications industries.

“Meheen Manufacturing has tremendous upside. We are glad to partner again with Praesidian on another unique transaction,” said Ryan Shultz, Partner of Evolve Capital.

© 2013 PEPD • Private Equity’s Leading News Magazine • 8-15-13

Halyard Capital Exits Engauge Marketing

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engauge nf2Halyard Capital has sold its portfolio company, Engauge Marketing, to Publicis Groupe, one of the world’s leading communications companies.

Engauge is a full-service marketing agency for the digital and social age. The agency’s client roster includes Nationwide Insurance, Coca-Cola, Chick-fil-A, UPS and CiscoSystems. Engauge was founded by Halyard Capital in 2007 in partnership with marketing executive Stan Rapp. Since founding, Engauge has acquired Ten United, a Columbus, OH-based advertising agency with offices in Pittsburgh and Orlando; Spunlogic, a digital marketing services company in Atlanta; and Direct Impact, a database analytics and CRM company in Austin, TX. Today, the company provides full-service advertising and digital marketing services, including social media marketing, to more than 30 clients. The company has approximately 250 employees with offices in Atlanta (headquarters), Orlando, Columbus and Pittsburgh (www.engauge.com).

“We are deeply appreciative of the strategic guidance and support that Halyard Capital has provided Engauge over the last six years. They have been outstanding partners for our management team, as we have navigated the increasingly complex world of digital marketing,” said Nick Bandy, CEO of Engauge. “The acquisition by Publicis Groupe validates our strategy and will benefit both our clients and our employees, as we tap into the resources and expertise of one of the world’s leading communication groups.”

Halyard specializes in middle-market leveraged buyouts and growth equity investments in technology-enabled information, data analytics, communications and business services companies that cater to industries including healthcare, education, marketing services, human capital management and media. The firm has over $600 million of capital under management and is based in New York (www.halyard.com).

“The team at Halyard expresses its sincere thanks to the entire Engauge management team for its commitment, creativity and hard work over the last six years. Engauge’s outstanding capabilities have been recognized by many of the top brand marketers in the US and we are proud to have been the company’s founding owner. This sale to Publicis is an exciting next step in the growth of Engauge,” said Jonathan Barnes, Partner of Halyard Capital.

Engauge Marketing and Halyard Capital were represented by investment bank Petsky Prunier (www.petskyprunier.com), which served as the exclusive financial advisor on the transaction.

Publicis Groupe is a multinational advertising and public relations company and is one of the world’s leading communications companies. Publicis Groupe is headquartered in Paris and operates in 108 countries with a total employment of 60,000 professionals (www.publicisgroupe.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 8-15-13

Incline Equity Partners Surpasses $300 Million Fundraising Target

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incline nfIncline Equity Partners has held a final closing of Incline Equity Partners III, LP and affiliated funds (collectively, “Fund 3”) with over $301 million of capital commitments.

glover nf“We could not have asked for a more successful fundraising outcome. We sincerely thank our new and existing investors for their support. We believe that this outcome reflects the confidence our investors have in our team and our investment strategy,” said Jack Glover, Partner of Incline.

Investors in Fund 3 include pension funds, fund-of-funds, insurance companies, family offices, and foundations as well as many executives from Incline’s current and prior portfolio companies. Incline received strong support from existing investors while also welcoming a group of new limited partners.

wali nf“We are extremely pleased that we were able to close above our stated target and hard cap in a competitive fundraising environment. We intend to remain committed to making investments and creating value in companies operating in the lower end of the middle market,” said Wali Bacdayan, Partner of Incline.Add New

Incline seeks to partner with management teams to make private equity investments of $10 million to $25 million, with the ability to syndicate up to $50 million, in support of leveraged buyouts, recapitalizations, and large minority financings in lower middle market growth companies with enterprise values between $25 million and $100 million across a variety of sectors including light manufacturing, value-added distribution, and business and industrial services. The firm was formed in 2011 and is based in Pittsburgh (www.inclineequity.com).

Incline has already made three platform investments out of Fund 3: Double E Company (April 2012) a manufacturer and distributor of web process solutions and parts based in West Bridgewater, MA (www.doubleeusa.com); Dorner Manufacturing Corporation (June 2012) a manufacturer and supplier of unit handling conveyors and components based in Hartland, WI (www.dornerconveyors.com); and AmSpec (April 2013) a provider of testing, inspection, and certification services to oil, gas, and petrochemical industries based in Linden, NJ (www.amspecllc.com).

Fund 3 represents Incline’s first fund raised as an independent firm. Incline was formed in 2011 by three managing principals of PNC Equity Partners: Jack Glover, Wali Bacdayan, and Justin Bertram. Incline also manages the portfolio assets of two predecessor private equity funds – PNC Equity Fund I and PNC Equity Fund II – which were raised in 2001 and 2007, respectively as part of PNC Equity Partners.

bertram nf“We believe that our firm has a strong foundation,” said Justin Bertram, Partner of Incline. “The legacy and best practices from our prior experiences, combined with the enthusiasm and opportunity that comes with being an independent firm.”

Sixpoint Partners (www.sixpointpartners.com) with offices in New York and San Francisco served as placement agent for Fund 3 and Covington & Burling (www.cov.com) served as legal counsel.

© 2013 PEPD • Private Equity’s Leading News Magazine • 8-15-13

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