Archives for 2013

Vista Equity Partners Acquires Websense

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Websense has entered into an agreement to be acquired by Vista Equity Partners in a transaction valued at approximately $1 billion. J.P. Morgan Securities, RBC Capital Markets and Guggenheim Partners have agreed to provide debt financing in connection with the transaction.

Websense (NASDAQ: WBSN) specializes in computer security software which is used by customers including businesses, schools, and libraries, to protect their networks from malware, stop data theft, prevent students from viewing sexual or other inappropriate content, and discourage employees from spending time browsing non business-related websites. The company was founded in 1994 and is based in San Diego (www.websense.com).

“Vista shares a similar vision for the company, including a dedication to developing and delivering best-in-class cyber security to our customers,” said John McCormack, Websense CEO. “Vista brings an operational discipline that will enable us to continue to invest in the business and technology innovation.”

Vista Equity Partners has more than $7 billion in committed capital and makes equity investments in enterprise software businesses and technology-enabled services companies. The firm was founded in 2000 and has over 50 investment professionals operating out of Austin, Chicago, and San Francisco (www.vistaequitypartners.com).

“We are long-term investors in enterprise software and data companies that are committed to being leaders in their markets,” said Robert Smith, CEO and founder of Vista Equity Partners. “We are impressed with the Websense product suite and the compelling value proposition it offers to its customers. We look forward to working with the company to enable it to reach its full potential.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-20-13

BDCA Launches into the Lower Middle Market

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Business Development Corporation of America (BDCA), part of American Realty Capital, has hired a team of three professionals to launch a new lower middle market investing effort. Lloyd Sams and Scott Chappell join BDCA as managing directors and Damien Dovi joins as a director.

BDCA will invest in both sponsored and non-sponsored middle market investment opportunities in a variety of industries. Investment types will include both senior and junior capital for acquisitions, refinancings, or organic growth.

“Lloyd, Scott and Damien bring tremendous experience to BDCA’s platform as we continue to increase our participation in direct-to-company, lower middle market financings,” said Bob Grunewald, Chief Investment Officer at BDCA Adviser. “In addition to attractive senior secured financing opportunities in the lower middle market, they also will expand our product offering into higher-yielding, junior capital products.”

Messrs. Sams, Chappell and Dovi have worked together for the past 11 years at BIA Digital Partners, a set of private mezzanine funds focused on the business services, media and telecom sectors.

Prior to BIA Digital Partners, Messrs. Sams and Chappell, worked at First Union National Bank (now Wells Fargo). Mr. Sams managed the Communications and Media Finance Group for seven years. Previously he was a team leader and banker at The First National Bank of Chicago (now JP Morgan). He was the co-founder of BIA Digital Partners in 1999.

Mr. Chappell was a banker in the Private Placements and High Yield Groups at First Union for six years. He later joined Thomas Weisel Partners (now Stifel Nicholas) as an investment banker before joining BIA Digital Partners in 2001.

Mr. Dovi was hired by BIA Digital Partners in 2002 after three years in the Sports and Entertainment Group at Bank of America. He moved from an underwriting role into an origination role at BIA Digital Partners in 2010.

“When combined with our recently-hired middle market team of Joe Taylor, Jim Fisher and Doug Lyons, this lower middle market team gives BDCA full coverage of U.S. businesses that have been starved for growth capital since the financial crisis of 2008 and 2009. We believe BDCA can deliver flexible, cost-effective capital to the entire middle market through this expanded team,” said Pete Budko, Chief Executive Officer of BDCA.

BDCA (www.bdcofamerica.com) is owned by American Realty Capital (www.americanrealtycap.com), an investment advisory firm sponsoring a series of investment programs with an emphasis on publicly registered non-traded real estate offerings. American Realty and BDCA are based in New York.

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-20-13

GE Antares Backs Greenbriar Buy of EDAC

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GE Antares served as administrative agent for an $89.5 million senior credit facility to support Greenbriar Equity Group’s acquisition of EDAC Technologies Corporation, a designer, manufacturer and servicer of precision components for aerospace and industrial applications. GE Capital Markets acted as joint lead arranger and sole bookrunner.

“We view GE Antares as an excellent choice to lead our debt financing for EDAC Technologies,” said Rob Wolf, director at Greenbriar Equity. “GE Antares has a great understanding of the debt financing markets, ensuring superior execution, and through their Access GE program they can help us tap into GE’s deep knowledge and experience in the aerospace market.”

EDAC Technologies Corporation 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 Cheshire, CT (www.edactechnologies.com).

“We’re excited to be leading another financing for Greenbriar Equity and starting a relationship with EDAC Technologies,” said Douglas Cannaliato, managing director at GE Antares. “Greenbriar Equity has extensive aviation industry expertise resulting from their exclusive focus on the global transportation industry which we are confident will provide real value to EDAC Technologies’ already strong and experienced management team.”

GE Antares is a unit of GE Capital with offices in Atlanta, Chicago, Los Angeles, New York, and San Francisco. Specializing in the middle market, GE Antares is a “one-stop” source for GE’s lending and other services to middle market private equity sponsors (www.geantares.com).

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

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-20-13

The Beekman Group Acquires NorthStar Alarm Services

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The Beekman Group has acquired NorthStar Alarm Services, a residential security alarm provider. Beekman partnered with NorthStar’s founder, Jason Christensen, and the current management team, who will continue to lead the company and maintain a significant ownership interest.

“I am extremely excited to partner with The Beekman Group to pursue the next phase of growth for NorthStar. Beekman has a strong track record of partnering with management teams to support the growth initiatives of middle market companies and its industry partner relationships have significant expertise in the residential alarm monitoring industry, having supported the growth of numerous successful platforms,” said Mr. Christensen.

Beekman’s investment in Northstar was made through the firm’s second fund, Beekman Investment Partners II, which closed in January 2013 with $100 million in commitments.

NorthStar Alarm Services is a residential security alarm provider and authorized dealer of Honeywell Security Products. Service offerings include intrusion alarms, fire alarms, video surveillance, life-safety devices and home automation products. NorthStar generates alarm contracts through an internal sales force, which is complemented by a 24-7 support staff, and a team of technicians and consultants. The company was founded in 2000 and is headquartered in Orem, UT (www.northstaralarm.com).

“The Beekman team has been interested in the security alarm industry for several years and we found an extremely attractive platform in NorthStar. We are excited to partner with NorthStar’s management team and value not only the successful growth already achieved, but the culture of integrity, accountability and service that Jason has built from top to bottom in the organization,” said John Troiano, Beekman’s Managing Partner and CEO.

The Beekman Group makes control investments from $5 million to $25 million in privately held companies, family businesses in transition, operating divisions of large companies or small public entities interested in privatization. Typical acquisitions have revenues from $10 million to $200 million. The firm’s investment team is led by Mr. Troiano, formerly with Onex Corporation, and by Managing Directors Andrew Marolda and Andrew Brown. The Beekman Group is based in New York (www.thebeekmangroup.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-17-13

Glencoe Capital Acquires South Shore Venture Enterprises

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Budco, a marketing services provider and a portfolio company of Glencoe Capital, has acquired South Shore Venture Enterprises, a Medicare direct marketing company.

South Shore specializes in direct marketing to senior citizens and represents 38 Medicare Advantage and Medicare Supplement plans. South Shore provides direct mail, customer care, data analysis and modeling and incentives. The company is based in Treasure Island, FL (www.southshoreventure.com).

Budco is a provider of marketing services to Fortune 100 companies operating in the automotive, pharmaceutical, healthcare, financial services, travel and leisure and consumer packaged goods sectors. The company was founded in 1982 and is headquartered in Highland Park, MI (www.budco.com).

“The addition of South Shore expands our footprint in the healthcare and insurance vertical markets while adding additional thought leadership to our company,” said Budco Chief Operating Officer Rob Hyman. “South Shore’s President, Bob Ditwiler, who will continue in his role as President of South Shore, has been involved in Medicare marketing for many years and is a sought after speaker for national conferences on the best ways to connect and build lasting relations with the senior market. This acquisition will integrate well with future Budco healthcare offerings we currently have in development.”

Glencoe Capital makes acquisitions and growth equity investments in lower-middle market companies that have EBITDAs between $3 million and $15 million. The firm manages more than $650 million of committed capital and has completed over 35 acquisitions representing more than $1 billion in transaction value across its family of four private equity funds. Founded in 1993, Glencoe Capital has offices in Chicago and in Birmingham (a suburb of Detroit) (www.glencap.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-17-13

Luxury Goods Continues Annual Growth

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According to Bain & Company revenues for the worldwide luxury goods market will grow as much as 50 percent faster than global GDP, with an expectation of four to five percent growth in 2013 and five to six percent annual average growth through 2015, on track to break the €250 billion sales threshold by mid-decade. Bain has published its latest luxury forecast at a conference hosted by Fondazione Altagamma (the Italian luxury goods industry trade association) and is an update to the firm’s “Luxury Goods Worldwide Market Study” published in 2012.

Last year, luxury revenues grew by 10 percent and were driven by the strong growth tailwinds present in the first half of last year. According to Bain’s latest report the key drivers – the who, what and where – of the luxury goods market are:

Who

  • Tourists are changing their consumption habits, seeking out new destinations (e.g., Dubai, South East Asia, Australia) and showing more savvy in the items they purchase
  • Each year, more “HENRYs” (High Earnings, Not Rich Yet) become potential customers, with ten times as many HENRYs as ultra-affluent individuals
  • The rise of the middle class in emerging countries is polarizing the competitive arena, becoming a “new baby boom sized generation” for luxury brands to target

What

  • Absolute luxury items (consisting of high-end products with no logo, highest quality materials, and exquisite craftsmanship) lead the way
  • Despite some recovery of spending on apparel, leather goods and other accessories will continue growing faster than other categories
  • Watch consumption has sharply decelerated as retailers de-stock and as Chinese luxury consumers slow their purchasing
  • Cosmetics are slowing down in mature markets, while still delivering growth in emerging markets

Where

  • High consumer confidence among the affluent, increased store openings in American cities, and intensive investment in linking physical and digital shopping are all fueling United States sales growth
  • The impact of 12 percent sales growth across Central and South America (notably Brazil and Mexico) will result in overall growth of five to seven percent in the Americas
  • In Asia, growth in China is stabilizing to an expected seven percent, while South East Asia will experience 20 percent growth driven by a wave of new store openings, and increasing strength and relevance of second-tier markets
  • Japan returns to a strong growth story of five percent as the country’s monetary policy depreciates the yen and pushes local consumption
  • Europe remains a challenge for the industry; as tourism slows, as tourists spend less per visit, and as Europeans, especially in southern Europe, curtail spending—Bain expects flat-to-two percent growth
  • Middle East is growing at a steady pace, with Dubai continuing as the center of gravity and the only city attracting foreign luxury consumers (e.g. Russians, Indians, Africans)

“We are seeing a more even distribution of global growth,” said Claudia D’Arpizio, a Bain partner in Milan and lead author of the study. “In turn, brands are refocusing from short-term, reactive hot spot thinking to long-term sustained growth strategies.”

Over the long term, Bain estimates that the global luxury goods market in 2025 will likely be more than five times larger than it stood in 1995. The key for winning in the luxury market over the next 10 to 15 years, says Bain, is “to get ready for Luxury 2.0,” where success will be defined by a relentless focus on three luxury goods management principles:

Superior customer experience

  • Luxury will depend more than ever on word-of- mouth promoters who share their delight with products and experiences
  • Consumers expect every interaction in stores, online, and on mobile devices to be premium, differentiated, and targeted to their tastes and preferences
  • Marketing must maintain a persistent drumbeat of innovation in media and messaging to keep consumers connected to what’s new

Flawless retail management

  • Physical and digital storefronts are accelerating their arms race for offering more compelling engagement to wow the luxury shopper
  • The era of the disengaged, formal shopping experience is ending. Shoppers now expect inviting and personalized service to welcome them into the store
  • As store networks grow into new markets and tap new segments, the bar is raised for ensuring the right products are in the right stores in the right quantities

People excellence

  • Brands are investing more in top management talent from strategy to finance to supply chain to back office operations
  • The store employee serves as brands’ direct face to shoppers, with brands expending significant resources on training and development of people on the front lines
  • Luxury players are more and more putting the customer first in their strategies

“We are entering a new phase in the evolution of the luxury market,” concluded Ms. D’Arpizio. “More markets, more segments, and more diversity of tastes all combine to create more variables to solve for when pursuing the right strategy for growth.”

A copy of the “2012 Luxury Goods Worldwide Market Study” report is available by clicking HERE.

For a copy of Bain’s “Luxury Goods Worldwide Market Study, Spring 2013 Update” please contact Cheryl Krauss at [email protected] or Frank Pinto at [email protected].

© 2013 PEPD • Private Equity’s Leading News Magazine • 5-17-13