Archives for October 2014

Larsen MacColl Exits A&S, Hits 24x Return

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Larsen MacColl Partners has sold its portfolio company A&S Services Group to Celadon Group for $55 million and realized a 24x multiple of its invested capital from the sale. The transaction closed on October 24, 2014.

A&S Services Group is a provider of transportation, warehousing, distribution and logistics services in the Northeast and Mid-Atlantic region, with an additional presence in the Southeast and Midwest. The company is led by its President & CEO, Ken Buck, and is headquartered in New Freedom, PA (www.aandstrucking.com) (www.kinardtrucking.com).

A&S Services Group was acquired by Larsen MacColl in April 2009. During its term of ownership the company grew both organically and through add-acquisitions including the Diamond Group (January 2010), Den-El Transfer (June 2011), Kinard Trucking (June 2012) and B&B Trucking (January 2013).

“Thanks to Ken Buck and his team, A&S grew tenfold during our partnership. We wish everyone at the combined company continued success,” said Larsen MacColl Managing Partner, Jeff Larsen.  “We’d also like to thank both BB&T, as our exclusive financial advisor, and Miller and Martin who acted as legal counsel to the sellers.”

Larsen MacColl invests in companies with $5 million to $40 million in revenue and $1 million to $5 million of EBITDA.  Sectors of interest include transportation and logistics, specialty manufacturing and distribution, consumer products and business services. Larsen MacColl is investing out of its third committed fund. The firm was founded in 2007 and is headquartered in Radnor, PA (www.larsenmaccoll.com).

“We achieved growth and profitability far beyond our expectations due to the financial and strategic support we received from the Larsen MacColl team,” said Mr. Buck.  “Our alliance with them was paramount to the visibility we achieved in the marketplace with strong industry players like Celadon.”

The buyer of A&S Services, Celadon Group, provides long-haul, regional, local, dedicated, intermodal, temperature-controlled, flatbed and expedited freight service across the United States, Canada and Mexico. The company is headquartered in Indianapolis (www.celadongroup.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-31-14

Levine Leichtman Acquires Justin Craig Education

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Mander Portman Woodward, a portfolio company of Levine Leichtman Capital Partners (LLCP), has acquired Justin Craig Education, one of the United Kingdom’s leading exam preparation and tutoring businesses.

Mander Portman Woodward (MPW) is a provider of private education for students in their transition from secondary school into UK universities.  MPW offers courses to over 1,000 students each year at its London, Cambridge and Birmingham campuses. MPW was founded in 1973 and is based in London (www.mpw.co.uk).

The addition of Justin Craig (www.justincraig.ac.uk) to MPW’s educational offerings and revision courses will allow Justin Craig to leverage MPW’s resources and expertise to accelerate growth and bring the Justin Craig brand into new schools and markets throughout the UK.

“The Justin Craig acquisition is an important strategic addition to the MPW platform, which will broaden the company’s educational offerings and provide yet another growth avenue for MPW,” said Lauren Leichtman, Co-Founder and CEO of LLCP.  “The transaction will be highly accretive and will provide value to all of MPW’s stakeholders.”

Levine Leichtman manages approximately $7 billion of capital through private equity partnerships, distressed debt and leveraged loan funds. The firm is currently making new investments through Levine Leichtman Capital Partners V, LP; Levine Leichtman Capital Partners SBIC Fund, LP; and Levine Leichtman Capital Partners Private Capital Solutions II, LP. Prior investments by LLCP include Santa Cruz Nutritionals, CiCi’s Pizza, Hackney Ladish, Jon Douglas Real Estate Group, and Luminator Technology Group.  The firm is based in Los Angeles with offices in Chicago, Dallas, New York and London (www.llcp.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-31-14

Bregal Sagemount Moves into Senior Debt

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Bregal Sagemount has added senior debt as a new investment option for its debut fund, Bregal Sagemount I, LP (Fund I), a $500 million fund that closed in June 2012.  To provide funding for the new effort, Bregal Investments has increased its commitment to Fund I by $150 million bringing total capital commitments to $650 million.

To lead the new credit effort, Bregal Sagemount has hired Clayton Main who has spent the last ten years at Goldman Sachs as one of the founding team members of its Specialty Lending Group. Mr. Main has worked closely with several members of the Bregal Sagemount team in the past, and he shares the same experience in the industries targeted by Bregal Sagemount.

Bregal Sagemount, based in New York (www.bregalsagemount.com), was founded by Gene Yoon in partnership with Bregal Investments in March 2012. Prior to launching Bregal Sagemount, Mr. Yoon was the Head of Private Equity for Goldman Sachs’ Special Situations Group.

“Since launching two years ago, our flexible capital approach has resonated strongly with market leaders in growth sectors. In our direct conversations with those businesses, we have found significant demand for debt capital, and credit is a natural addition to our existing capabilities in buyouts, growth equity, and structured equity,” said Mr. Yoon. “Our long history with Clayton made him the logical choice to head the strategy for us.”

Fund 1’s original mandate was to make equity and/or junior debt investments of $15 million to $75 million in control or non-control situations. By co-investing with Bregal Investments, Bregal Sagemount can invest up to $150 million per transaction. With the new credit mandate, Fund I will now make senior debt investments as well. Sectors of interest continue to be business services, software and technology, information and media, financial services, and healthcare.

Bregal Investments is the corporate investment business of Cofra Holding AG, a sixth-generation family holding company based in Switzerland. Cofra Holding’s other businesses include C&A, a clothing retail organization, and Redevco, a large real estate enterprise. Bregal invests directly in equity capital in public and private situations and in private equity funds and has invested over $9 billion since its inception in 2002.   Bregal maintains offices in New York and London (www.bregal.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-31-14

American Capital Super Busy in Third Quarter

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In the third quarter of 2014 the Sponsor Finance Group of American Capital invested approximately $220 million to back new platform and add-on acquisitions made by private equity firms.

“During the third quarter, our Sponsor Finance team not only made six investments in new platform companies, but also provided several incremental investments to support existing portfolio companies,” said Ryan Brauns, American Capital Managing Director and Head of Sponsor Finance.

American Capital is a publicly traded (NASDAQ: ACAS) private equity firm and asset manager that originates, underwrites and manages investments of $10 million to $750 million in lower and middle market private equity, leveraged finance, real estate, energy & infrastructure and structured products.  From its eight offices in the US and Europe, American Capital and its affiliate, European Capital, will consider investment opportunities from $10 million to $750 million.  The firm is headquartered in Bethesda, MD (www.AmericanCapital.com).

Below is a summary of some of the transactions completed by American Capital in the third quarter.

DataPipe: In September, American Capital invested an additional $17 million in a second lien facility in DataPipe to support an add-on acquisition led by ABRY Partners.  DataPipe is a provider of outsourced IT services to medium and large size enterprise customers. The company is headquartered in Jersey City, NJ, with additional locations in Europe and Asia (www.datapipe.com)

iParadigms:  In August, American Capital invested $27 million in a second lien facility to support the acquisition of iParadigms by Insight Ventures.  iParadigms is a provider of cloud-based educational technologies to prevent plagiarism, verify content and evaluate student learning.  The company is headquartered in Oakland, CA (www.iparadigms.com).

Cole-Parmer Instrument Company: In August, American Capital invested $25 million in a second lien facility to support the acquisition of Cole-Parmer Instrument Company by GTCR.  Cole-Parmer is a manufacturer and distributor of specialty laboratory equipment, instruments and supplies to a range of customers in pharmaceutical, biotech, healthcare, chemicals, food and other research-based or regulated markets.  The company is based in the Chicago suburb of Vernon Hills, IL (www.coleparmer.com).

Tectum Holdings:  In August, American Capital invested in a second lien facility and equity to support the acquisition of Tectum Holdings by TA Associates.  Tectum is a manufacturer of branded light duty truck tonneau covers, bedliners and accessories.  The company is headquartered near Detroit in Ann Arbor, MI (www.thicorp.com).

Sparta Systems:  In July, American Capital invested $26 million in a unitranche facility and equity to support the acquisition of Sparta Systems by Thoma Bravo. Sparta Systems is a provider of enterprise quality management software solutions, which enable businesses to safely and efficiently deliver their products to market.  Sparta Systems is headquartered in Hamilton, NJ and has locations across Europe and Asia (www.spartasystems.com).

Risk & Co.:  In July, European Capital invested €35 million in unitranche bonds in Risk & Co., a portfolio company of Latour Capital.  The financing enabled Risk & Co. to finance an add-on acquisition as well as future acquisitions.  Risk & Co. is a consulting firm providing corporations with security and strategic intelligence, particularly related to foreign operations. The company is headquartered in Paris (www.riskeco.com).

Sausalitos:  In July, European Capital invested €10 million in unitranche bonds to support the acquisition of Sausalitos by Ergon Capital Partners.  Sausalitos is one of the top five German leisure restaurant chains. The company is headquartered in Munich (www.sausalitos.de).

“As we review investment opportunities in the pipeline for the remainder of 2014 and look ahead to 2015, our experienced professionals in both our US and European offices are prepared to invest capital to support new platform investments and dividend recapitalizations, as well as support the growth of our existing portfolio companies,” said Mr. Brauns.

2014 PEPD • Private Equity’s Leading News Magazine • 10-31-14

Welsh, Carson, Anderson & Stowe Exits Matrix Medical

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Welsh, Carson, Anderson & Stowe has completed the sale of its portfolio company, Matrix Medical Network, to the Providence Service Corporation (Nasdaq: PRSC) for a purchase price of $400 million, including $360 million in cash and shares of Providence common stock with a value at closing of $40 million.

The Welsh, Carson, Anderson & Stowe (WCAS) equity investment in Matrix Medical generated a total gain $213 million, representing a 3.1 times investment multiple and a 46% internal rate of return.

Matrix Medical provides risk-adjustment medical assessment services to Medicare Advantage health plans.  The company utilizes a captive provider network of over 600 nurse practitioners to provide onsite medical evaluations and document member diagnoses in 33 states. Matrix Medical is based in Scottsdale, AZ (www.matrixforme.com).

WCAS acquired Matrix Medical in September 2011. During the course of WCAS’ ownership, the company focused on several operating initiatives: (i) increasing production capacity to meet growing customer demand, (ii) implementing management team metrics and a dashboard to drive visibility, process improvements and accountability, (iii) continuing to drive operational improvements and (iv) developing a long-term strategic plan to diversify the company’s service offering. As a result of these efforts, Matrix Medical has generated three-year revenue and Adjusted EBITDA compound annual growth rates of over 45% and 75%, respectively.

Under WCAS’s ownership, Matrix was led by CEO, Randy Dobbs, a repeat WCAS CEO and former WCAS Senior Industry Executive. WCAS and Mr. Dobbs hired over 20 senior managers, who previously worked at a WCAS portfolio company. In addition, several key members of the management team were recruited from large healthcare companies.

“I have enjoyed working with WCAS to build Matrix Medical over the last several years,” said Mr. Dobbs.  “We are proud of the operational growth that Matrix Medical achieved and believe that the company is well positioned as a market leader.”

WCAS is focused exclusively on investments in information/business services, and healthcare.  Since its founding in 1979, WCAS has organized 15 limited partnerships with total capital of over $20 billion.  WCAS has been capitalizing on the attractive exit environment this year, completing four portfolio company sales (GlobalCollect, Solstas Lab Partners, Peak 10 and Matrix Medical) and two initial public offerings of Paycom Software (NYSE: PAYC) and K2M Group Holdings (Nasdaq: KTWO). Including pending transactions, WCAS has generated distributions to investors of $5.5 billion since the beginning of 2013. This has resulted in WCAS’s investors receiving $5.42 of distributions for every $1 of capital called.  The firm is currently investing through its latest fund, Welsh, Carson, Anderson & Stowe XI, LP, and is based in New York (www.welshcarson.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-30-14

Francisco Partners Acquires Vendavo

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Francisco Partners has completed the acquisition of Vendavo, a provider of business-to-business pricing optimization strategies.

Vendavo provides price optimization and management services that are used by its customers to make better data-driven decisions for pricing and sales effectiveness. The company serves B2B mid-market and enterprise companies in the chemicals and process industries, consumer packaged goods, wholesale distribution, energy and utilities, technology, industrial manufacturing, and medical devices and consumables. The company is based in Mountain View, CA (www.vendavo.com).

David Mitchell, an operating partner of Francisco Partners, will join Vendavo as CEO and lead the company’s worldwide business strategy and operations.  Incumbent CEO Neil Lustig will transition into an advisory role with Vendavo.

Mr. Mitchell has more than 25 years of experience as a software executive.  Previously, he was the president and CEO of Global 360, an enterprise business process management solutions provider, and CEO of webMethods, an enterprise software company focused on application, business process and B2B partner integration.  “It is truly a privilege to join Vendavo,” said Mr. Mitchell. “The company has an impressive list of customers and a strong portfolio of innovative products. I look forward to working with the leadership team to fully capitalize on Vendavo’s tremendous growth opportunities and take the company to new heights.”

“Vendavo has built a terrific foundation and we look forward to working with David and the team,” said Petri Oksanen, a partner at Francisco Partners. “Combining the management talent of Vendavo and Francisco Partners puts the company in an excellent position to usher Vendavo into its next stage of growth.”

Francisco Partners makes investments in technology companies with transaction values ranging from $50 million to $2 billion. Transaction structures include buyouts, divisional divestitures, recapitalizations, restructurings and growth equity financings. Francisco Partners is headquartered in San Francisco (www.franciscopartners.com).

Golub Capital was the lead arranger, sole bookrunner, and administrative agent on a senior credit facility to support the acquisition of Vendavo.  This is the ninth transaction that Golub has closed with Francisco Partners.  “We chose Golub Capital to lead the transaction because they understood our strategy to grow the business and provided us a customized and flexible solution that will help us execute it,” said Mr. Oksanen.

Golub Capital’s Late Stage Lending group, a unit of Golub Capital’s Middle Market Lending business, provides financing to technology companies backed by venture capital, growth equity, private equity or other private companies. The group will holds entire credit facilities from $15 million to $75 million in technology companies undergoing growth due to new services, increased adoption and/or entry into new markets.

“We are very excited to become a partner to Vendavo and support the company’s continued growth,” said Spyro Alexopoulos, Managing Director at Golub Capital.  “We are also thrilled to be completing another transaction with a world class sponsor and long-time partner in Francisco Partners.”

Francisco Partners was advised by JMP Securities, and Vendavo was advised by William Blair.

2014 PEPD • Private Equity’s Leading News Magazine • 10-30-14

Versa Closes Dividend Recap of Avenue Stores

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Avenue Stores, a portfolio company of Versa Capital Management, has completed a recapitalization that provides capital to fund additional growth and to provide for a payment of a significant dividend to its shareholders.  Following the recapitalization, Versa, along with management, continues to own 100% of the company’s equity interests. Versa and management acquired Avenue Stores through a bankruptcy transaction with United Retail Group in April 2012.

The financing was provided by JP Morgan Chase and Goldman Sachs and includes a $90 million term loan and revolving credit facility.  The new financing leaves the previously debt-free company with only a modest amount of leverage and ample liquidity to support Avenue’s continued growth and expansion.

“In light of Avenue’s strong financial profile and the fact it had no prior borrowings, the company’s board determined that it would be prudent to capitalize on today’s historically low interest rates and deliver an attractive return to our investors, while ensuring that Avenue remained well-equipped to fund its ongoing expansion,” said Gregory Segall, CEO of Versa Capital and Chairman of Avenue Stores.

Avenue Stores is a specialty retailer targeting women between 25 and 55 years of age, wearing apparel sized 14 or larger. The company operates more than 280 stores across 35 US states and also sells online. Avenue Stores is based in Rochelle Park, NJ (www.avenue.com).

“We are pleased to have finalized this transaction, as it underscores the significant progress Avenue has made since its acquisition just over two years ago,” said Mr. Segall.  “Working in close partnership with Avenue’s management team led by CEO Liz Williams, the company has been transformed into a vibrant enterprise achieving substantial growth in revenues, earnings and free cash flow, while accelerating its new store opening program.”

Versa Capital Management invests in special situations involving middle market companies with revenues in the $50 million to $1 billion range or assets of $25 million to $500 million.  In addition to Avenue Stores, Versa’s portfolio includes retailers Bob’s Stores, Eastern Mountain Sports and Sport Chalet; restaurant chain Black Angus Steakhouse; community newspapers under Civitas Media; and manufacturers that service a variety of industries.  The firm has $1.4 billion of capital under management and is based in Philadelphia (www.versa.com).

Avenue Stores was represented in the transaction by Sullivan & Cromwell and Stifel, Nicolaus & Company.  The lenders were represented by Milbank, Tweed, Hadley & McCloy.

2014 PEPD • Private Equity’s Leading News Magazine • 10-30-14

Palladium Exits Teasdale Foods

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Palladium Equity Partners has completed the sale of Teasdale Foods, a producer and marketer of bean and hominy products, to Snow Phipps Group.

Teasdale represents the third sale of a portfolio company by Palladium this year.  Earlier this year, Palladium sold its portfolio companies ABRA Auto Body & Glass – a national provider of vehicle damage repair services – to Hellman & Friedman, and Sahale Snacks – a manufacturer and marketer of premium, branded nut and fruit snacks – to The J. M. Smucker Company.

Teasdale Quality Foods is the largest producer and marketer of canned hominy and beans in the Western United States, primarily serving the Hispanic market under its Teasdale brand and other branded products such as Aunt Penny’s and Emilio’s. The company sells its products through the retail, foodservice, government and industrial channels, including grocery chains, distributors, club stores, dollar stores, restaurant chains, commissaries, Hispanic food manufacturers and the U.S government. Teasdale owns and operates manufacturing facilities in Atwater, CA (headquarters), Hoopeston, IL and Greeley, CO.  The company was founded in 1930 (www.teasdale.net).

Palladium acquired Teasdale in September 2011.  During the course of ownership, the company completed three add-on acquisitions (Zateca Foods, Greeley Trading Company and Hoopeston Foods), deepened relationships with existing customers, and began to service new customers in a variety of channels, including retail, foodservice, government, and industrial.

“We are very pleased with the outcome we have achieved for Teasdale,” said Luis Zaldivar, a Managing Director of Palladium. “Backed by an excellent management team, Teasdale over the course of our investment integrated three regional businesses, focused on the attractive store brand and organic categories, and became a national Hispanic food platform with significant growth momentum.”

Alberto Bandera, CEO of Teasdale, added, “We are extremely thankful for the support we received from our partners at Palladium over the last three years. They helped us execute on an ambitious growth plan by providing sound advice and access to the human and capital resources we needed.”

Palladium Equity Partners targets investments in business services companies as well as in financial services, consumer/retail, food/restaurants, healthcare, industrial, and media businesses. Palladium has a focus on companies that operate in the US Hispanic market. In April 2014, Palladium announced the final closing of Palladium Equity Partners IV, LP with $1.1 billion of capital, significantly above the firm’s target.  Since its founding in 1997, Palladium has invested over $1 billion of capital in more than 20 platform investments and over 50 add-on acquisitions. The firm is based in New York (www.palladiumequity.com).

Snow Phipps, the buyer of Teasdale Foods, makes control investments in companies primarily located in North America with enterprise values ranging from $100 million to $500 million that require equity investments ranging between $40 million and $100 million. The firm has $1.5 billion of assets under management and was co-founded by Ian Snow and Ogden Phipps in April 2005. Snow Phipps is headquartered in New York (www.snowphipps.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-29-14

Tonka Bay Exits AeroSystems Engineering

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Tonka Bay Equity Partners has completed the sale of AeroSystems Engineering, a provider of testing and engineering services, to Gen Cap America.

AeroSystems Engineering is a global provider of testing and engineering services to the aerospace, energy, and military markets.  The company is based in St. Paul (www.aseholdings.com).

Tonka Bay acquired AeroSystems Engineering in 2006 and during the course of its ownership the firm worked with the senior management team of the company to develop a key account strategy to increase the company’s customer base and opened new markets in the energy and military sectors.

“Given AeroSystems’ reputation and technical expertise, we saw a very attractive opportunity to take advantage of the growth and changes in the aerospace industry,” said Peter Kooman, a Managing Principal at Tonka Bay and AeroSystems’ Chairman of the Board.  “It has been a pleasure working with the AeroSystems team.  I have no doubt that the foundation they have built is equipped to handle the anticipated growth for years to come.”

Tonka Bay Equity Partners invests in highly-engineered manufacturing, value-added distribution and business services companies with EBITDA greater than $2 million. The firm is based in the Minneapolis suburb of Minnetonka (www.tonkabayequity.com).

AeroSystems Engineering is led by Tom Moll, the company’s CEO.  “I’ve enjoyed our partnership with Tonka Bay, said Mr. Moll.  “Not only have they proven to be a patient and supportive capital partner but also a great sounding board which allowed me to more effectively lead the business.  Through the partnership with Tonka Bay and the dedication of my team, we are well positioned to capitalize on the global market opportunity within our aerospace and energy end markets.  ”

Gen Cap America, the buyer of AeroSystems Engineering, invests in companies with revenue between $5 million and $100 million that are active in the manufacturing, distribution or service sectors.  The firm is actively investing Southwest Fund VI, a $165 million fund which began making investments in May 2010. Gen Cap was founded in 1985 and is based in Nashville (www.gencapamerica.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-29-14

Comvest Acquires Old Time Pottery

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Comvest Partners has completed the acquisition of Old Time Pottery, a discount retailer of home décor products.  The investment in Old Time Pottery was made through Comvest Investment Partners Fund IV.

Old Time Pottery is a discount retailer of home décor products including home accents, house & kitchenware, seasonal products, linens, and crafts. The company operates 33 store locations in 11 states throughout the Southeast and Midwest.  Old Time Pottery was founded in 1986 by the Peterson family and is headquartered in Murfreesboro, TN (www.OldTimePottery.com).

“Old Time Pottery is a brand that resonates with the value-focused home décor customer.  Management has built a unique concept, which offers an expansive array of home décor products at an attractive price point. We look forward to working with management to continue the company’s success,” said Tom Clark, Managing Director at Comvest Partners.

Comvest Partners provides debt and equity to middle-market companies. For debt investments the firm will invest from $2 million to $20 million per transaction in companies with $10 million to $200 million of revenue that have positive or negative EBITDA. For equity investments the firm will invest from $10 million to $50 million per transaction in companies with $15 million to $500 million of revenue that have positive or negative EBITDA. Since 2000, Comvest has invested more than $1.9 billion of capital in over 130 public and private companies. The firm is based in West Palm Beach (www.comvest.com).

“I am excited to partner with Comvest. The firm brings a depth of retail expertise and a growth-oriented perspective to assist Old Time Pottery in pursuing its full potential,” said Robert Sharp, President and CFO of Old Time Pottery.

Debt financing was provided by PNC Bank.  Old Time Pottery was advised on the transaction by Harris Williams & Co. and Comvest was advised by Lazard Middle Market.

2014 PEPD • Private Equity’s Leading News Magazine • 10-29-14

Gauge Closes Debut Fund Above Target and at Max Cap

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Gauge Capital has held a final closing of the firm’s debut fund, Gauge Fund LP, at $250 million.  Gauge began fundraising in April 2014 with a target of $175 million, and in September held an oversubscribedfinal closing at its self-imposed limit of $250 million in commitments.

Gauge Capital invests from $10 million to $50 million in North American based companies that have $5 million to $50 million of EBITDA. Sectors of interest include business and consumer services, healthcare services and food services. The firm will consider both majority and minority investments.

Gauge Capital was co-founded in 2013 by Managing Partners Drew Johnson and Tom McKelvey, who each have over 20 years of experience as investors, operators, board members, and advisors, primarily in the middle market.  Gauge Capital is based near Dallas in Southlake, TX (www.gaugecapital.com).

The new fund will make equity investments in eight to ten companies over the next several years.  Gauge has already closed on its first portfolio company with a $43 million investment in Origami Owl, a custom jewelry company that uses a direct sales business model (www.origamiowl.com).

Mr. Johnson and his partners at Gauge, through the fund’s general partner, are collectively the largest investor in the new fund.  Limited partners include many institutional investors including endowments, foundations, family offices, and asset managers.  “We are pleased with the reception we received from the institutional investment community,” said Partner Whitney Bowman “and are especially thankful for the numerous operating executives in our targeted sectors who have chosen to invest with us.”

Gauge Capital used Harken Capital Securities as its exclusive placement agent and Ropes & Gray provided the firm with legal counsel.

2014 PEPD • Private Equity’s Leading News Magazine • 10-29-14

MVC Recruits Fifth Third Mezzanine Team

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MVC Capital has added four new debt professionals to its team with the hiring’s of David Williams, Harrison Mullin, David Gardner and Scott Foote. All four were previously employed by Fifth Third Bancorp’s Mezzanine Finance Group which Mr. Williams co-founded in 1999.  The new team members will join Tokarz Group Advisers, the external manager of MVC Capital, and will be based in Cincinnati.

“We are delighted to welcome David and his team of talented investment professionals,” said Michael Tokarz, Chairman & Portfolio Manager of MVC Capital.  “As seasoned debt investors through decades of investment cycles, the team brings to MVC sourcing and lending expertise to supplement our already strong investment group. Their expertise will enhance MVC’s efforts to grow our mezzanine lending business and provide creative capital solutions for the middle market.”

All four team members, while at Fifth Third, completed 176 transactions, representing over $800 million of invested mezzanine capital.  As part of the Tokarz Group, the team will continue to focus on middle market lending opportunities sourced from senior lenders, corporate executives and private equity sponsors.

As mentioned earlier, David Williams co-founded Fifth Third’s Mezzanine Finance Group in 1999.  As a senior investment professional with over 30 years of investment experience, he has led or co-led transactions, representing over $2 billion of invested capital.  Prior to his time at Fifth Third, Mr. Williams worked at First Interstate Bank, The Bank of California, Union Bank of California and PNC. He has a BBA degree from Wittenberg University.

Mr. Williams expects that the new team will have an immediate impact on the results of MVC.  “We are excited about joining MVC and look forward to immediately impacting MVC’s yield strategy. We look forward to building upon MVC’s successful investment platform and driving strong returns for MVC’s shareholders.

As part of Fifth Third, Mr. Williams and his team were based in Cincinnati and they will continue to base their operations from the Queen City.  “We are thrilled to remain in Cincinnati, an important strategic location that allows us continued access to investment opportunities from our long-term relationships in the financial community,” said Mr. Williams.

MVC Capital invests from $3 million to $25 million in middle market companies that have revenues of $10 million to $150 million and EBITDAs of $3 million to $25 million. Sectors of interest include consumer products; industrial manufacturing and services; food and food services; financial services; value-added distribution; and specialty chemicals. The firm is traded on the NYSE under the symbol MVC and is headquartered near White Plains in Purchase, NY (www.mvccapital.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-29-14

Main Street Inks 31% IRR on Sale of NCP

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Main Street Capital has fully exited its investment in NCP Investment Holdings (National Cardiovascular Partners), a healthcare services company, with the closing of the sale of the company to Fresenius Medical Care.

National Cardiovascular Partners (NCP) is an operator of free-standing outpatient cardiac and vascular procedure labs. The centers are joint venture partnerships between NCP and a group of physicians and hospitals that perform diagnostic and therapeutic procedures at the site. The company is based in Houston (www.ncplp.com).

Main Street made its initial investment in NCP in 2004 to support growth initiatives, with Main Street’s investment consisting of a first lien, secured debt investment with an equity warrant participation. Main Street’s debt investment in NCP was fully repaid during the second quarter of 2012, and a majority of its equity interest in NCP was purchased by Bain Venture Partners in the fourth quarter of 2012.

With the close of the sale of NCP to Fresenius Medical Care (www.fmcna.com), Main Street realized a gain of approximately $8.6 million.  On a cumulative basis since Main Street made its initial investment in NCP in 2004, Main Street realized an internal rate of return of 30.9% and received 4.7 times its money invested.

Main Street Capital provides long-term debt and equity capital to middle market and lower middle market companies in diverse industry sectors that generally have annual revenues ranging from $10 million to $150 million. Main Street provides “one stop” financing alternatives within its lower middle market portfolio. The firm is based in Houston, TX (www.mainstcapital.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-28-14

GTCR Exits Devicor Medical Products

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GTCR has signed an agreement to sell its portfolio company, Devicor Medical Products, to Leica Biosystems, a subsidiary of Danaher Corporation.

Devicor began as a management partnership between GTCR and Thomas Daulton – formed as part of GTCR’s Leaders Strategy – to build a medical device company focused on interventional procedures.  In 2010, Devicor completed its initial platform acquisition with the corporate carve-out of the Mammotome breast care business from Johnson & Johnson.  During the course of GTCR’s ownership, Devicor built dedicated manufacturing facilities for Mammotome, secured new regulatory permits, and invested in new product research & development.  According to GTCR this was a complex two-year carve-out of Mammotome, but once completed the business became a standalone, fully-integrated, global medical device business that was able to leverage its commercial platform to complete several complementary tuck-in acquisitions.

“Our partnership with Devicor CEO Tom Daulton and the carve-out of the Mammotome business from Johnson & Johnson is another example of how GTCR executes on its Leaders Strategy,” said GTCR Managing Director Dean Mihas. “We created Devicor with the goal of acquiring and building a leading medical device company with an attractive market position and physician preferred products focused on interventional procedures. Since the initial carve-out acquisition, Tom Daulton and the team have successfully built a leading global platform in the breast biopsy market.”

Today, Devicor’s product portfolio includes the Mammotome Breast Biopsy System, neo2000 Gamma Detection System and tissue markers MammoMARK, MicroMARKII, and CorMARK that are used in breast disease diagnostic sampling and management. These products are sold in more than 50 countries around the world. Devicor has more than 400 employees and is headquartered in Cincinnati (www.devicormedical.com) (www.mammotome.com).

The buyer of Devicor, Danaher’s Leica Biosystems, is a provider of anatomical pathology services and automation used in advance cancer diagnostics. The company is headquartered in Nussloch, Germany (www.LeicaBiosystems.com).

“Tom Daulton, Jon Salkin and the entire Devicor team have done an extraordinary job building a highly strategic and impressive medical device business focused on diagnostics and women’s health. We believe Danaher is an excellent home for Devicor, where the business can continue to grow and improve patient care,” said Sean Cunningham, Managing Director at GTCR.

“We’d like to thank GTCR for their commitment and support in helping build Devicor over the last four years,” said Mr. Daulton. “We have had a great partnership with GTCR and we look forward to working with Danaher to continue our efforts to develop products that advance the accurate diagnosis and treatment of breast cancer.”

GTCR pioneered the investment strategy of identifying and partnering with executives to acquire and build companies through a combination of acquisitions and internal growth. The firm currently has nearly $11 billion in assets under management. Since its inception in 1980, GTCR has invested more than $10 billion in over 200 companies. The firm is based in Chicago (www.gtcr.com).

J.P. Morgan Securities and Jefferies served as Devicor’s financial advisors and Kirkland & Ellis provided legal counsel.

2014 PEPD • Private Equity’s Leading News Magazine • 10-28-14

Pamlico and Primus Exit Three Eagles

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Digity Media has acquired Three Eagles Communications, a radio broadcasting company and a portfolio company of Pamlico Capital and Primus Capital, for $66.5 million. Pamlico Capital first invested in Three Eagles in 2002.

Three Eagles Communications is an operator of 48 small and medium sized radio stations across Nebraska, Iowa, Minnesota and South Dakota. The company’s radio properties are strategically clustered to take advantage of regional and national advertising opportunities. Three Eagles Communications is headquartered in Lincoln, NE (www.threeeagles.com).

Digity is a diversified local media, digital, entertainment and event marketing company.  In February 2014, Digity purchased 33 radio stations from NextMedia and operates those stations in San Jose, Chicago, suburban Dallas, Saginaw, Canton, Greenville and Myrtle Beach. Collectively, Digity owns and operates (or has under contract) 115 live and local radio stations around the country, making the company a top five radio group.  Digity was founded by Dean Goodman, its CEO, and Garrison Investment Group, through the merger of Palm Beach Broadcasting and Good Radio Networks.  The company is headquartered in West Palm Beach (www.digity.me).

“Digity is on-air, online, on-demand, on-location, and on-the-go. It connects today’s busy consumers with content they want, people they trust, products they enjoy and things that matter,” said Mr. Goodman.  “We are very pleased to have completed the Three Eagles purchase and Digity intends to continue to grow in all areas of its operations.”

CEA Capital Advisors advised Three Eagles on the sale process and placed $181 million of debt capital to assist Digity Media in financing the acquisitions of both Three Eagles and NextMedia.

CEA Capital Advisors is an investment bank that specializes in the technology, media and telecommunications sectors. The firm has completed M&A and financing transactions for corporations, middle-market and emerging companies, entrepreneurs and private equity firms. The firm has offices in New York, Los Angeles, and Tampa (www.ceacapitaladvisors.com) (www.ceaworldwide.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-28-14

TSG Consumer Partners Names Paula Sutter as CEO of TSG Fashion

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TSG Consumer Partners, an equity investor in high-growth consumer brands, has appointed Paula Sutter as CEO of TSG Fashion.

In this newly created position, Ms. Sutter will work with the CEOs and management teams of REVOLVE, Paige, Alexis Bittar and others in the TSG Fashion portfolio. She will also identify and develop new investments in the apparel, footwear and accessories space.

“Paula’s passion for brand building and expertise in the fashion arena will be tremendously valuable for TSG’s partner companies. We see Paula harnessing her proven track record, strategic leadership strengths and hands-on tactical approach to fuel the growth of our fashion portfolio,” said Jennifer Baxter Moser, managing director at TSG Consumer Partners.

Ms. Sutter’s experience spans more than 25 years in the fashion industry. As president of Diane von Furstenberg (DVF) for 14 years, she transformed the nameplate label into a global brand in the contemporary and accessible luxury space. Prior to DVF, Ms. Sutter was US vice president of the women’s division at Donna Karan/DKNY.

“I am thrilled to be joining this dynamic leadership team and gaining a greater understanding of the private equity model,” said Ms. Sutter. “I look forward to collaborating with their existing partner companies to drive momentum and maximize each brand’s potential. Equally compelling to me is the opportunity to expand TSG Fashion through further acquisitions and new business creation.”

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 improving operations. Since its founding in 1987, TSG has been an active investor in the food, beverage, restaurant, beauty, personal care, household and apparel & accessories sectors. The firm has $2.9 billion in equity capital under management and is headquartered in San Francisco (www.tsgconsumer.com).

Tim Burke Joins Castanea Partners

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Castanea Partners – an investor in branded consumer products and services – has hired Tim Burke as its newest Partner. He will be based in the firm’s Boston office.

Prior to joining Castanea, Mr. Burke was Co-Founder and Partner of Glenbrook Consumer Partners, a San Francisco based consumer fund where he was responsible for all elements of the investment process.  Prior to Glenbrook, he was a Partner at Rosewood Capital, a middle market consumer fund where he was active in consumer products and services, retail, and restaurants. As a senior investor at Rosewood, he led multiple investments and worked closely with portfolio companies.  Mr. Burke has a BA in Sociology from Harvard University and an MBA from Stanford Graduate School of Business.

“Tim is an experienced private equity professional and consumer investor and we’re very excited to have him on our team. As a senior investor, Tim has extensive experience in all aspects of middle market investment sourcing, execution, and post acquisition management. He brings with him an extensive network of industry relationships including entrepreneurs, business owners, and investment bankers. Tim’s extensive knowledge and network in the consumer sector will help us identify new opportunities for investment,” said Rob Smith, a Managing Partner of Castanea.

Castanea Partners invests from $15 million to $75 million in companies that operate in the consumer brands, marketing services, and information services sectors. Castanea participates in leveraged buyouts, growth and acquisition equity investments, and operationally challenging situations. The firm is currently investing from its fourth fund, a $600 million fund that targets companies with enterprise values up to $250 million. Castanea is headquartered near Boston in Newton, MA (www.castaneapartners.com).

“I am very pleased to be joining the Castanea team,” said Mr. Burke, “They have established themselves as a leading middle market private equity firm with deep operating experience in the branded consumer sector. I look forward to helping them identify new investment opportunities and partner with founders and management teams of exceptional small and mid-size companies.”

2014 PEPD • Private Equity’s Leading News Magazine • 10-28-14

Deloitte Corporate Finance Advises El Dorado Paper Bag

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Deloitte Corporate Finance (DCF) was the exclusive financial advisor to El Dorado Paper Bag Manufacturing Co. on its sale last month to Industrial Opportunity Partners.

“DCF’s deep transaction and industry experience added value throughout the entire sale process,” said Louie Hall, III, president and CEO of El Dorado Paper Bag Manufacturing.  “DCF’s sector knowledge was vital to us finding the right partner for El Dorado.  Their commitment helped us to achieve our overall goals and shareholder objectives.”

El Dorado Paper Bag Manufacturing is a producer of small format multiwall paper bags primarily for consumer use in the flour, sugar and pet food markets.  The company provides one, two, and three ply pasted bottom paper bags, ranging from 1½ pounds to 30 pounds, with the printing capacity for up to ten colors.  Founded in 1963, El Dorado operates from a single facility in El Dorado, AR (www.eldoradopaperbag.com).

“We are pleased to have used our significant experience in the packaging sector to play a part in this transaction,” said Will Frame, managing director, Deloitte Corporate Finance, and head of DCF’s Industrials Group.

Deloitte Corporate Finance provides deal execution and financial advisory services to large corporate, middle market, and private equity firms.   Deloitte Corporate Finance has access to the resources of the Corporate Finance Advisory practices of the member firms within the Deloitte Touche Tohmatsu Limited network of member firms. Together with Deloitte Corporate Finance, these practices include in excess of 1,900 professionals, working collaboratively in 150 international locations (www.investmentbanking.deloitte.com).

2014 PEPD • Private Equity’s Leading News Magazine • 10-28-14