February 19, 2015
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Archives for February 19, 2015

Frontenac Gets Spicy

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Frontenac Company has completed a new platform investment with the recapitalization of Van de Vries Spice Corporation and the simultaneous add-on acquisition of SpiceCo.  Frontenac is partnering with food industry veteran Pat Mulhern to lead the combined company. This investment represents the fifth platform investment made by Frontenac X Private Capital which closed in 2014 with $250 million of committed capital.

Van de Vries Spice is an importer and processor of spices and seasonings primarily for food manufacturers, foodservice and the nutritional supplement industries.  The company is based in East Brunswick, NJ (www.vdvspice.com).

SpiceCo is a processor and packager of spices primarily focused on the private label retail and foodservices markets.  The company was founded in 1966 by Andrew Barna and is based in Avenal, NJ (www.spice-co.com).

Mr. Mulhern, who will be the CEO of the combined companies, is the former President of US Foods’ Monarch Food Group (a $6 billion private brands business) and he was also a Director at US Foods, President of US Foods’ North Star Food Service, Executive Vice President at Vistar Corporation and held various positions at Alliant Foodservice and Kraft Foodservice.

“Van de Vries and SpiceCo are spice and seasoning companies with fantastic history, a nice range of capabilities and a strong and diverse customer base,” said Mr. Mulhern.  “Combined with additional acquisitions and through a partnership with Frontenac, they have the ability to leverage these attributes to deliver above-market growth, and a commitment to quality and innovation.”

Mr. Mulhern and Frontenac have been working together for about 2 years searching for a platform company in the food business.  “We are excited to partner with Pat Mulhern to lead Van de Vries and SpiceCo as a combined entity going forward,” said Elizabeth Williamson, a Vice President at Frontenac.  “We believe that the growing demand for healthy, ready-to-eat and ethnic foods will continue to drive demand for Van de Vries’ and SpiceCo’s products.”

“This transaction highlights our continued commitment to our CEO1ST® investing strategy and program.   We work in partnership with proven operating leaders to help family or founder-owners as they address complex transition issues of liquidity, management development, and growth planning,” said Walter Florence, a Managing Partner at Frontenac.  “Combining financial and human capital, we help business owners achieve their goals and build market leading companies through a commitment to operational excellence and transformational acquisitions.  We are looking to build upon this platform through additional acquisitions that will support Pat’s strategy.”

As part of the recapitalization of Van de Vries Spice, Al Swanson, the former Chief Financial Officer of US Foods, has joined Mr. Mulhern and Frontenac as an investor and member of the Board of Directors.

Frontenac Company invests in lower middle businesses that operate primarily in the business services, industrial, food, and healthcare industries.  The acquisition of Van de Vries is Frontenac’s fourth food investment in five years.  Frontenac’s food sector experience includes investments in Alfalfa’s Market, Chipotle, Health Valley Foods, Levy Restaurants, Mercer Foods, Wenner Bread Products and Whitebridge Pet Brands.  Frontenac was founded in 1971 and is headquartered in Chicago (www.frontenac.com).

USBank provided financing for the transaction and Winston & Strawn served as legal counsel to Frontenac.

© 2015 PEPD • Private Equity’s Leading News Magazine • 2-19-15

KRG Sells Diversified Foodservice to New Mountain

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KRG Capital Partners has completed the sale of Diversified Foodservice Supply to New Mountain Capital.  The transaction closed on February 17th and represents the fourth exit for KRG’s $1.96 billion Fund IV.

KRG Capital Partners acquired Diversified Foodservice Supply (DFS) in December 2010. “The DFS management team has done an excellent job executing our combined vision and achieving a successful outcome,” said Ted Nark, a Managing Director at KRG.  “Since our involvement began in late 2010, we have enjoyed a productive and collaborative relationship building a truly unique market-leading distributor.”

Diversified Foodservice Supply is a distributor of maintenance, repair and operations parts, supplies, and equipment to the foodservice industry. The company operates through multiple brands including AllPoints Foodservice Parts & Supplies, Tundra Restaurant Supply, Franklin Machine Products, Mill Hardware, and Restaurant Parts & More.  DFS serves over 250,000 foodservice customer locations across multiple end-markets, including restaurants, service agencies, equipment and supplies dealers, and institutions.  The company is headquartered in the Chicago suburb of Mt. Prospect and manages more than 100,000 SKUs through seven distribution facilities located across the United States (www.allpointsfps.com).

“Partnering with KRG enhanced our team’s ability to build the leading distributor in the foodservice parts and supplies sector,” said Mike Cate, CEO of DFS. “KRG’s support allowed us to invest in organic and acquisitive growth, which further developed our product and service offering for the end customers and significantly accelerated growth.”

KRG Capital specializes in acquiring and recapitalizing unique and profitable middle-market companies. Since inception, KRG has invested in 46 platform companies and has completed 165 add-on acquisitions for those platforms. Founded in 1996, KRG has $4.3 billion of capital under management and is based in Denver (www.krgcapital.com).

“The DFS management team has built a proven growth platform that delivers significant value for its customers. We wish them continued success with their new partners at New Mountain Capital,” said Bennett Thompson, a Principal at KRG.

“The DFS team has developed a proven growth strategy and we are excited to put additional resources behind this strategy to grow and expand the business,” said Mat Lori, Managing Director at New Mountain Capital. “We look forward to working closely with management over the coming years to support the realization of the Company’s full growth potential by investing behind both organic initiatives and acquisitions.”

New Mountain Capital currently manages private and public equity funds with over $15 billion in aggregate capital commitments.  The firm was founded in 1999 and is headquartered in New York (www.newmountaincapital.com).

Robert W. Baird & Co. acted as financial advisor to DFS in connection with the transaction and Hogan Lovells served as legal counsel for DFS.

© 2015 PEPD • Private Equity’s Leading News Magazine • 2-19-15

Webster Adds to Epic Platform with Buy of Loving

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Epic Health Services, a portfolio company of Webster Capital, has acquired the parent company and pediatric division of Loving Care Agency (LCA), a provider of pediatric and adult home health care services. Simultaneous with the close of this transaction, the adult division of Loving Care Agency was spun off into a new operating entity separate from Epic Health Services.

LCA is a provider of pediatric homecare and home health aide services throughout New Jersey. The pediatric division provides nursing services to medically fragile and complex children in their homes and schools and serves more than 1,500 patients in seven states.  The home health aide division assists patients, most of whom are either elderly or disabled, with activities of daily living, such as bathing, dressing, walking and meal preparation. LCA is headquartered north of New York City in Hasbrouck Heights, NJ (www.lovingcareagency.com).

Epic Health Services is a provider of pediatric home health and therapy services as well as adult home health services.  Epic provides care to more than 6,000 patients throughout its service area.  Services provided include skilled nursing, therapy, personal care and behavioral health nursing.   With the purchase of LCA, Epic now serves its patients in 10 states, including Texas, Pennsylvania, Massachusetts, New Jersey, Missouri, Indiana, Delaware, Arizona, Illinois and Colorado.  Epic was founded in 2001 and is based in Dallas (www.epichealthservices.com).

Webster Capital invests in branded consumer, business- to-business, and healthcare services companies with EBITDAs from $2 million to $15 million and transaction values from $20 million to $100 million. The firm was founded in 2003 and is based in Waltham, MA (www.webstercapital.com). 

© 2015 PEPD • Private Equity’s Leading News Magazine • 2-19-15

Excellere Continues Strong Run, Sells U.S. Water Services

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Excellere Partners has completed the sale of its portfolio company U.S. Water Services to Allete (NYSE: ALE) for $194 million.  U.S. Water, which was acquired by Excellere in January 2011, had revenue of approximately $120 million in 2014.

Allete initially purchased 87 percent of U.S. Water for $168 million, based on an enterprise value of $194 million. Current employees and management of U.S. Water will continue to own the remaining 13 percent will be purchase by Allete in the future for a contingent amount based on U.S. Water’s future earnings.

When Excellere acquired U.S. Water the firm believed that the increasing cost of water due to scarcity, quality challenges and environmental policies had, and would continue to drive, small and mid-sized companies and other water users to out-source the treatment of their water supply for industrial processes and/or discharge.

Following Excellere’s four year investment period, U.S. Water grew from an upper-Midwest regionally-focused provider of industrial water treatment services to an industry leader with production facilities and representation nationwide.  Today, the company serves over 3,600 customers, including a significant number of Fortune 500 companies.  The company’s chemicals division offers a line of approximately 350 chemical products and support services, and the equipment division offers a line of equipment, parts, and consumable supplies. U.S. Water is headquartered northwest of Minneapolis in St. Michael, MN (www.uswaterservices.com).

The sale of U.S. Water is a continuation of momentum Excellere is experiencing in the marketplace.  According to Managing Partner David Kessenich, “The momentum started in July with an investment in DentMall, a Miami-based dental practice management company, and continued with three highly-successful exits, two additional platform investments, and one strategic add-on. The pace of activity continues into 2015 with a strong pipeline of new investment opportunities.”

In the midst of what many private equity insiders consider to be a challenging market, driven by strong competition for quality companies and valuations at historical highs, Excellere has been able to achieve its most active period in the firm’s history.  “It may seem like an over-simplification, but it’s a combination of a lot of hard work, a sound long-term investment strategy, a proprietary value creation model that is highly attractive to entrepreneurs and some good fortune,” said Mr. Kessenich.  “In looking back over the last half of 2014, it really is a culmination of all the efforts we’ve put into our industry-focused investment thesis and the value creation programs that we implement with our management teams.”

In addition to the DentMall investment in July that started this run for Excellere, in December the firm made investments in TrialCard (Raleigh, NC), a provider of patient access and medication adherence support services to the pharmaceutical industry, and completed the acquisition of a geospatial information software and services provider for Systems Integrity Management Solutions (Houston, TX), a provider of asset integrity services to midstream and downstream energy companies.  Excellere’s most recent investment occurred last month with the recapitalization of a neuro-rehabilitation company that provides post-acute rehabilitation to persons who have sustained a brain injury.

Exits have equally been active for Excellere. In August, the firm sold Personable Insurance (San Diego, CA), a provider of specialty auto insurance programs; and in November, PhyMed Healthcare Group (Nashville, TN), an anesthesia and pain management provider, was sold to Ontario Teachers’ Pension Plan.

Excellere Partners invests in middle-market companies with revenues ranging from $20 million to $150 million. Sectors of interest include energy products and services; healthcare; industrial technology and services; business services; and agri-business.  The firm has $737 million of capital under management and is based in Denver (www.excellerepartners.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 2-19-15

Sterling Uses Lincoln International on Latest Sale

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Lincoln International was the lead financial advisor to Lazer Spot, a portfolio company of Sterling Investment Partners, on its recent sale to Greenbriar Equity Group.

Lazer Spot’s services include trailer spotting (rapid and precise movement of empty and full trailers at its customers’ distribution centers and manufacturing facilities) and shuttling (on-demand movement of empty or full trailers between customers’ sites, distribution facilities, third party rail yards and shipping ports).  Lazer Spot is the only national provider of spotting services with 260 sites that are used by more than 80 customers that operate in the consumer packaged goods, food & beverage, pulp & paper, retail, and industrial sectors.  The company was founded in 1996 and is headquartered in Atlanta (www.lazerspot.com).

“Trucking companies bringing trailers into big distribution centers or manufacturing facilities want to drop and go,” said Adam Newsome, President and CEO of Lazer Spot. “They don’t want to sit and wait. We found a need in the market that wasn’t being met, and we provide that service on a national scale.”

During the sales transaction, Lincoln advised the management team and shareholders and managed the marketing, negotiation and due diligence phases of the transaction.

“Lincoln was the absolute right choice to advise us. Their unique insights and in-depth understanding of our business model allowed them to tell our story and value proposition in a highly compelling manner,” said Mr. Newsome.

Lincoln specializes in merger and acquisition advisory services, debt advisory services, private capital raising and restructuring advice on mid-market transactions. The firm also provides fairness opinions, valuations and pension advisory services on a range of transaction sizes. Lincoln has sixteen offices in the Americas, Asia and Europe and is headquartered in Chicago (www.lincolninternational.com).

William Macey, Managing Partner and Co-Founder of Sterling, said “Lincoln’s focus and commitment was crucial to consummating the transaction with Greenbriar, who we believe will be an outstanding partner to continue Lazer Spot’s success.”

Greenbriar Equity Group invests from $50 million to $150 million per transaction in the global transportation industry, including companies in logistics and distribution, aerospace and air transport, automotive, industrial equipment and components, MRO, surface transport and other related sectors.  The firm manages $2.5 billion of committed capital and is based in Rye, NY (www.greenbriarequity.com).

Sterling Partners, which acquired Laser Spot in September 2010, focuses on investing growth capital in small and mid-market companies in industries with positive, long-term trends, including education, healthcare, and business services. Sterling manages over $5 billion in institutional capital. The firm was founded in 1983 and has offices in Chicago, Baltimore, and Miami (www.sterlingpartners.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 2-19-15

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