Archives for June 4, 2015

AIP Closes Buy of Fasteners Division of Anixter

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American Industrial Partners has closed its acquisition of the OEM Supply Fasteners division of Anixter International. This transaction was originally announced in February 2015. With the close of the transaction, the business has been named Optimas OE Solutions.

Optimas is a global distributor and manufacturer of highly-engineered fasteners and C-Class (high volume, low cost parts and materials) components used in the commercial vehicle, luxury automotive, agricultural equipment, power generation equipment, construction, and general industrial markets.  The company’s products – Optimas has more than 100,000 SKUs – are designed for a specific application and are often engineered to withstand harsh operating environments that include extreme temperatures, high torque and exposure to the elements.

Last year, Optimas reported 2014 revenues of $939 million and operating profit of $39 million. Optimas has more than 4,000 customers in 15 countries and maintains a network of 74 distribution and service centers located across North America, Europe, and Asia. The company has approximately 1,950 employees and is headquartered in the Chicago suburb of Glenview (www.optimas.com).

“We are extremely excited to partner with AIP, who brings deep operating and industry expertise,” said Ian Clarke, CEO of Optimas.  “As a standalone company, we look forward to implementing a strategic growth plan focused on serving our blue-chip customer base and enhancing our leadership position.”

AIP has a history of successfully buying industrial businesses, such as Optimas, and partnering with management to drive growth.  “With a global market leadership position driven by deep, long-standing relationships, combined with a highly-customized product portfolio, Optimas is well positioned for growth worldwide,” said Eric Baroyan of AIP. “We look forward to supporting management to execute identified growth initiatives and to drive operational efficiencies at the company.”

American Industrial Partners invests in North American headquartered industrial companies with sales ranging from $100 million to $500 million and EBITDA up to $70 million. Transaction values are typically less than $500 million.  The firm was founded in 1989 and is currently managing more than $1.1 billion in equity capital. American Industrial Partners is based in New York (www.americanindustrial.com).

The acquisition was funded by American Industrial Partners Capital Fund V, LP a $717 million fund that closed in December 2011.

2015 PEPD • Private Equity’s Leading News Magazine • 6-4-15

Advent Acquires Insulation Fabricators

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Distribution International, a portfolio company of Advent International, has acquired Insulation Fabricators, a fabricator and distributor of thermal and acoustical insulation products.

This is the 12th acquisition completed by Distribution International (DI) over the past four years and is a continuation of a strategy launched by prior owners to consolidate the mechanical insulation distribution industry.  Advent acquired DI in December 2014 from Audax Private Equity and The CapStreet Group, which had acquired the company in August 2010 from Grey Mountain Partners.

Distribution International is a distributor of thermal and acoustical insulation and related supplies.  The company has 70 branch locations and serves customers in the commercial building, chemicals, energy, power, railcar and marine end markets. Most of DI’s sales are derived from ongoing maintenance and repair spending in industrial installations and commercial buildings.  DI was founded in 1986 and is headquartered in Houston (www.distributionintl.com).

The buy of Insulation Fabricators expands DI’s service range with additional locations in Ohio and West Virginia. Insulation Fabricators was founded in 1979 by Larry McNabb and is headquartered near Chicago in Hammond, IN (www.insulationfabricators.com).

Advent International focuses on buyouts and strategic restructuring opportunities in five sectors: business and financial services; healthcare; industrial; retail, consumer and leisure; and technology, media and telecom.  Advent has offices in 16 countries and employs 170 investment professionals across Western and Central Europe, North America, Latin America and Asia. Founded in 1984 and headquartered in Boston, Advent has $33 billion in assets under management and has completed more than 300 buyout and private equity transactions (www.adventinternational.com).

2015 PEPD • Private Equity’s Leading News Magazine • 6-4-15

Sheridan Legacy Acquires Lone Star

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Sheridan Legacy Group, a lower middle-market firm, has acquired Lone Star Distribution, a specialty distributor of sports nutrition fitness products.

Lone Star distributes protein powders, creatine, bars, muscle enhancers, workout supplements, sleep aids and immune boosters, vitamins, weight loss supplements, and energy boosters. The company operates six distribution centers located in Dallas; Atlanta; Indianapolis; Shelton, CT; Pompano Beach, FL; and Las Vegas. Lone Star is headquartered in Dallas (www.lonestardistribution.com).

“We are excited to partner with CEO Gary Giles, Lone Star founder John Hoffmann, and the entire management team to support the company’s ongoing success and accelerate its expansion initiatives across the US,” said Jonathan Lewis, Partner of Sheridan Legacy Group.  The acquisition of Lone Star was led by Mr. Lewis, Principal Sean Dempsey, and Associate Chase Culbertson.

Before joining Lone Star as its new Chief Executive Officer in May 2015, Mr. Giles spent 9-years at The Juice Plus Company most recently as Global Vice President of Product and Research.  “Sheridan Legacy Group represents a great strategic partner for Lone Star,” said Mr. Giles.  “Their understanding of the distribution and consumer markets, operational focus, and strategic guidance will help us leverage and expand existing operations while maintaining the Lone Star’s focus on customer and vendor relationships.”

Sheridan Legacy Group makes investments of $10 million to $30 million in leveraged buyouts, recapitalizations and large minority financings of lower middle-market companies with enterprise values between $20 million and $150 million. Sectors of interest include healthcare and consumer.  The firm was founded in 2012 and is headquartered in Chicago (www.sheridanlegacy.com).

2015 PEPD • Private Equity’s Leading News Magazine • 6-4-15

Lightyear Sells Paradigm to Summit Partners

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Lightyear Capital has sold Paradigm, a provider of outsourced catastrophic workers’ compensation case management services, to Summit Partners.

Paradigm provides its workers’ compensation case management services to insurance companies and self-insured employers.  The company was founded in 1991 and is headquartered near San Francisco in Walnut Creek, CA (www.paradigmcorp.com).

Paradigm has been a portfolio company of Lightyear since February 2012.  “We are very pleased with the outcome of this investment in Paradigm,” said Donald Marron, Chairman and Founder of Lightyear. “Under Lightyear’s ownership, Paradigm’s management successfully positioned the firm for the future with strong revenue and EBITDA growth in the three years we have owned the business.”

Lightyear makes control investments in North America-based, middle-market financial services companies. Subsectors of specific interest include asset management, banking, brokerage, financial technology, insurance, and specialty finance.  The firm is headquartered in New York (www.lycap.com).

“Our investment in Paradigm is a great case study of how Lightyear works with companies to develop and grow them,” said Mark Vassallo, Managing Partner of Lightyear.  “Paradigm is well positioned to continue its growth and market leadership under new ownership.”

Summit Partners, the buyer of Paradigm, provides private equity and venture capital for growth companies.  Founded in 1984, Summit has raised more than $16 billion in capital and has provided equity, recapitalization, and management buyout financing to more than 395 companies across a range of industries. The firm has offices in Boston, Palo Alto, London, and Mumbai (www.summitpartners.com).

2015 PEPD • Private Equity’s Leading News Magazine • 6-4-15

Gryphon Launches New Dental Platform

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Gryphon Investors has formed OneSmile, a new platform company to acquire dental practices and groups in the western United States. Partnering with Gryphon – for the second time – are dental care executives Steven Bilt and Bradley Schmidt. Gryphon has a track record of backing professional executive partners and teams with resources to build businesses through both acquisition and organic growth.

“We have known and worked with Steve and Brad for many years and we are excited to support these talented executives in building a dental platform once again,” said Nick Orum, Gryphon’s president.

Mr. Bilt, a seventeen-year veteran of the dental industry, becomes OneSmile’s CEO. He previously served as the president and CEO of Smile Brands, a providers of support services to general and multi-specialty dental groups. Mr. Schmidt will be OneSmile’s CFO, a position he previously held at Smile Brands.  Together with Gryphon’s financial backing, the two executives built Smile Brands from inception to over 250 locations with revenues of more than $350 million before Gryphon sold a majority of its shares to Freeman Spogli in 2005 which in turn sold the company to Welsh Carson in 2010.

“There is a compelling opportunity to build a dental support organization in the Western US, and I look forward to working with Gryphon again in this exciting new venture,” said Mr. Bilt.  “Gryphon’s experience helping to build Smile Brands’ predecessor starting in 1998, along with their financial and operational support, will benefit us as we establish a unique model bringing comprehensive general, pediatric and specialty dental care and healthy, happy smiles to millions of people.

“Gryphon has invested successfully in the dental sector in the past and we believe the opportunity in the space continues to be highly attractive,” said Luke Schroeder, a principal in Gryphon’s Healthcare Group. “There are a number of compelling acquisition opportunities in this fragmented space, and with our investment in OneSmile, we are well-positioned to prioritize and pursue these investments.”

Gryphon Investors makes leveraged acquisitions and growth investments in middle-market companies. The firm invests from $35 million to $100 million of capital in companies with sales ranging from $50 million to $400 million. Sectors of interest include business services, consumer and retail, automotive, chemical, general manufacturing, health care and hotels. Gryphon Investors is based in San Francisco (www.gryphoninvestors.com).

2015 PEPD • Private Equity’s Leading News Magazine • 6-4-15

American Capital Backs ABRY’s Buy of Compusearch

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American Capital was the sole lender and second lien agent on a $51 million second lien financing to support the acquisition of Compusearch Software Systems by ABRY Partners.  Compusearch is a provider of acquisition and program management software to Federal agencies, the Department of Defense program offices, and government contractors.  Compusearch had been a portfolio company of Arlington Capital Partners and JMI Equity since June 2010.

“American Capital has partnered with ABRY on previous investments and we are delighted they turned to us to work together on this investment in a leading federal government software provider,” said Ryan Brauns, American Capital Managing Director and Head of Sponsor Finance.  “Having invested in Compusearch under previous ownership, this is an excellent opportunity for us to leverage our understanding of the company, its business, clients and industry and support its continued growth plans under ABRY.”

Compusearch’ software provides federal, defense and intelligence agencies with visibility, control, and transparency that is needed to manage productivity and performance and to meet government reporting requirements.  The company’s software products were developed specifically for agencies of the US federal government and are the most widely adopted acquisition and grants management systems with more than 50,000 authorized users representing 80 organizations around the globe.  Compusearch was founded in 1983 and is headquartered just west of Washington DC in Sterling, VA (www.compusearch.com).

American Capital’s Sponsor Finance Group works with private equity firms to provide unitranche, second lien, subordinated debt and minority equity investments, to support buyouts, recapitalizations, and add-on acquisitions. The group will underwrite up to $300 million and hold up to $150 million in companies with at least $10 million of EBITDA.

“Compusearch marks the third investment from American Capital in an ABRY portfolio company in the last 12 months,” said Brian St. Jean, a Partner at ABRY.  “American Capital provided a second lien financing that was flexible and seamlessly sat behind a bank executed first lien facility.”  Senior financing for this acquisition was provided by SunTrust.

American Capital (NASDAQ: ACAS) is a publicly traded 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 and structured products.  Founded in 1986, American Capital has $80 billion in total assets under management and has eight offices in the US, Europe and Asia.  The firm is headquartered in Bethesda (www.AmericanCapital.com).

2015 PEPD • Private Equity’s Leading News Magazine • 6-4-15