Archives for June 2015

Praesidian Exits Mezzanine Investment in Metanexgen

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Praesidian Capital has exited its $11.5 million subordinated debt investment in Metanexgen, a marketing services company serving the life sciences industry, as a result of the sale of the company by DFW Capital Partners to Insignia Capital Group.

DFW acquired Meta Pharmaceutical Services, a provider of data-driven email and direct mail marketing services, from its founders in August 2010.  At that time, Praesidian provided $6 million in subordinated debt to support the acquisition.  In June 2013 the company acquired NexGen RxMarketing, a provider of online video and virtual meeting marketing services.  Praesidian made an additional investment to support this add-on acquisition.  The combined company was then renamed Metanexgen.

Today, Metanexgen is a provider of data-driven multi-channel marketing services that are used by pharmaceutical, biotechnology and medical device brands to market their products to healthcare practitioners.  Metanexgen is headquartered near Philadelphia in Bensalem, PA (www.metanexgen.com).

“This has been a highly successful relationship at all levels. We wish Metanexgen only the best as they continue on their growth path,” said Glenn Harrison, a Praesidian Partner.

Praesidian provides senior and mezzanine capital to small and mid-sized businesses that have revenues of $15 million to $200 million and EBITDA of $5 million to $20 million.  The firm typically invests in connection with a management/leveraged buyout, recapitalization or refinancing.  Praesidian is based in New York with an additional office in London and manages nearly $1 billion in committed capital (www.praesidian.com).

“The support we have had from Praesidian in the past five years has allowed our company to expand and evolve,” said Brian Tilley, Partner of DFW Capital Partners.  “Praesidian provided the kind of partnership that any fast-growing organization most desires and rarely finds.  We are grateful to the entire Praesidian team.”

DFW Capital Partners invests in lower middle-market service companies, with an emphasis on healthcare and outsourced business and industrial support services.  The firm is headquartered in Teaneck, NJ, and maintains an office in Chevy Chase, MD (www.dfwcapital.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 6-25-15

McKinsey: Value of IoT Exceeds Hype

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The Internet of Things – all those objects that are embedded with sensors and software and that have connectivity capability – will create changes in the very near future that will dramatically affect both consumer and businesses.  The term “Internet of Things” (IoT) was coined by British entrepreneur Kevin Ashton in 1999 and referred to the connectivity of devices, systems, and services beyond just machine-to-machine communications.  Mr. Ashton felt that the creation of “smart” objects would launch a rapid movement in automation in nearly all fields and would create smart homes, smart businesses, smart grids and smart cities.

The IoT is not new to private equity investors.  For instance, in March 2015 Topcon Positioning Group acquired Digi-Star, a company that Baird Capital Partners acquired in November 2011.  Digi-Star is a maker of agricultural weight sensors and control systems for feeding, planting, fertilizer, and harvest equipment manufacturers.  According to Ray O’Connor, president and CEO of Topcon, the buy of Digi-Star was part of the company’s IoT strategy, “At a time when many companies are decreasing their investment in agricultural markets, we are increasingly optimistic about their growth based upon our strong commitment to developing management systems and solutions that bring the power of the Internet of Things to every farm.”

The opportunity provided by the IoT is the subject of a new report by the McKinsey Global Institute titled “The Internet of Things: Mapping the value beyond the hype.” The central finding of the report is that the hype may understate the potential of the IoT and that capturing the value of the IoT by businesses will require an effort to address a set of systems issues, including interoperability.

The McKinsey report reviews more than 150 IoT use cases, ranging from consumer health and wellness monitors to sensors that optimize the maintenance of equipment. The result is that the IoT may achieve an annual economic impact of $3.9 trillion to $11.1 trillion a year by 2025. Putting this in perspective, McKinsey notes that at the top end that level of value would be equivalent to about 11 percent of the world economy.

Quoting from the McKinsey report:
“Business-to-business (B2B) applications can create more value than pure consumer applications. While consumer applications such as fitness monitors and self-driving cars attract the most attention and can create significant value, we estimate that B2B uses can generate nearly 70 percent of potential value enabled by IoT.”

“A dynamic industry is evolving around IoT technology. Like other technology waves, there are opportunities for both incumbents and new players. Digitization blurs the lines between technology companies and other types of companies; makers of industrial machinery, for example, are creating new business models, by using IoT links and data to offer their products as a service. To realize the full potential from IoT applications, technology will need to continue to evolve, providing lower costs and more robust data analytics. In almost all settings, IoT systems raise questions about data security and privacy. And in most organizations, taking advantage of the IoT opportunity will require leaders to truly embrace data-driven decision making.”

This report on the IoT is an important one and should be read by all private equity investors.  A PDF copy of “The Internet of Things: Mapping the value beyond the hype” can be downloaded free of charge by clicking HERE.

© 2015 PEPD • Private Equity’s Leading News Magazine • 6-25-15

Golub Continues Support of Aurora Portfolio Company

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Golub Capital has provided a $355 million facility to support the refinancing of National Technical Systems, a portfolio company of Aurora Capital Group.  Aurora took publicly-traded National Technical Systems private in November 2013.

National Technical Systems (NTS) is a provider of environmental simulation testing, inspection, and certification services to the civil aviation, space, defense, nuclear, and telecommunications end markets.  NTS is led by Bill McGinnis, President and CEO.  The company was founded in 1961 and is based in Calabasas, CA (www.nts.com).

Golub Capital provided $193 million of debt to support Aurora’s acquisition of NTS in 2013. This facility grew to $243 million as Golub provided additional financing to support the company’s acquisition program.  The new $355 million facility replaces the company’s existing financing and will provide NTS with additional debt capacity to pursue add-on acquisitions.  Golub Capital acted as the Administrative Agent, Sole Lead Arranger, and Sole Bookrunner on this refinancing.

“Our capital commitment to NTS has increased significantly since we first became involved in 2013,” said Troy Oder, Managing Director of Golub Capital. “This commitment reflects our views on the strength of the company’s management team, NTS’ growth prospects, and Aurora’s support of the platform.”

“Golub has been a consistent and reliable growth partner throughout our investment in NTS,” said Michael Marino, Partner at Aurora.  “We have been impressed with Golub’s flexible and scalable solutions in support of the NTS’ acquisition strategy, and we look forward to further expanding our relationship in the future.”

Golub offers buy-and-hold products ranging from $10 million to $75 million and includes one-loan financings, senior, 2nd lien and subordinated debt, preferred stock and co-investment equity.  The firm underwrites and syndicates loans up to $500 million and will hold up to $300 million per transaction. Industries of interest include consumer products, business and consumer services, defense, manufacturing, value-added distribution, media, healthcare services and restaurants. Golub has offices in New York, Chicago, and San Francisco (www.golubcapital.com).

Aurora Capital makes control investments in middle-market industrial, manufacturing and service oriented businesses. The firm was founded in 1991 and has $2 billion of capital under management.  Aurora Capital is headquartered in Los Angeles (www.auroracap.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 6-25-15

GI Partners Acquires MRI Software

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GI Partners has completed its acquisition of MRI Software, a provider of real estate property and investment management software products, from Vista Equity Partners.

MRI’s software products are used for property-level management and accounting to complex, long-range financial modeling and analytics in both the commercial and multifamily real estate markets.  MRI’s software has been installed over 4,500 times in five continents and in 41 countries.  The company was founded in 1971 and was acquired by Intuit in 2002 and renamed Intuit Real Estate Solutions (IRES).  In 2009 Vista Equity Partners acquired IRES and renamed the company MRI Software.   The company is headquartered south of Cleveland in Solon, OH and has international offices in Toronto, London, Sydney, Singapore, and Hong Kong (www.mrisoftware.com).

GI Partners invests from $50 million to $250 million in companies with enterprise values of $100 million to $750 million.  Sectors of interest include technology, media & telecommunications, healthcare, retail & leisure, and financial & real estate services.  The firm was founded in 2001 and is based in San Francisco (www.gipartners.com).

Shea & Company (www.shea-co.com), a technology-focused investment bank with offices in Boston and San Francisco, acted as financial advisor for MRI.

© 2015 PEPD • Private Equity’s Leading News Magazine • 6-24-15

Spell Capital Acquires Vestal Manufacturing

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MVC Capital has sold Vestal Manufacturing Enterprises to Spell Capital Private Equity. MVC first invested in Vestal in April 2004.

Vestal is a manufacturer of fabricated steel and cast iron products primarily used in residential housing construction. Vestal also casts water meter covers used in municipal infrastructure construction and repair.  The company ‘s facilities consist of a 103,000 square-foot foundry pouring Class 30-35 gray iron and a 105,000 square-foot steel-fabrication plant.  Vestal was founded in 1946 and is headquartered south of Knoxville in Sweetwater, TN (www.vestalmfg.com).

Spell Capital Partners makes control investments of $3 million to $15 million in industrial manufacturing companies with revenues of at least $5 million and EBITDAs of at least $1.5 million.  The firm is based in Minneapolis (www.spellcapital.com).

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).

The Chicago Corporation (www.thechicagocorp.com) was the exclusive financial advisor to Vestal Manufacturing.

© 2015 PEPD • Private Equity’s Leading News Magazine • 6-24-15

Baird Capital Keeps Adding on at Myelin

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Myelin Communications, a portfolio company of Baird Capital, has acquired HY Connect, an advertising agency in Chicago, and Dodge Communications, a public relations and communications firm in Atlanta.

HY Connect provides digital, creative, brand strategy, social media and research services to an array of customers across many industries. The company – according to Baird – has been described as one of the fastest growing advertising agencies in America.  HY Connect has offices in Chicago and Milwaukee (www.hyc.com).

“Myelin’s network will bring new resources and expertise to HY Connect,” said Dave Sheehan, president of HY Connect. “This is an important growth opportunity for us and we’re pleased to join this collaborative partnership.”

Dodge Communications provides public relations, social media, content development, and creative and digital services to the healthcare industry. The company was founded in 2001 and has 50 employees in its Atlanta headquarters (www.dodgecommunications.com).

“Being part of Myelin Communications provides an exciting opportunity for our clients and employees,” said Brad Dodge, president and founder of Dodge Communications. “We look forward to exchanging best practices and expertise with such a strong network of firms that share our passion for healthcare.”

Myelin Communications, created by Baird Capital in November 2012, provides public relations, social media, content development, and creative and digital services to companies operating in the health and financial services sectors.  Myelin Communications is headquartered in Boston (www.myelincommunications.com).

With the closing of the acquisitions of HY Connect and Dodge Communications, Myelin is now  comprised of five companies: PARTNERS+simons, a Boston-based brand communications and integrated marketing services firm specializing in healthcare and financial services; Duet Health, a Columbus-based mobile communication platform serving hospitals, health systems and general health providers; AVID Design, an Atlanta-based online marketing communication business with a healthcare website design and content management system presence; HY Connect; and Dodge Communications.

“While most companies in our industry are focused on growth in terms of size, Myelin’s growth is fueled by teaming with companies that will enable us to provide deeper, richer and more comprehensive service offerings for clients,” said Rich Levy, CEO of Myelin.  “HY Connect and Dodge Communications are both directly aligned with the Myelin vision, and we look forward to working together to support our clients’ success.”

Baird Capital, the direct private investment arm of Robert W. Baird & Co., invests in lower middle-market companies in the manufactured products, healthcare and business services sectors. The firm invests from $15 million to $35 million in companies with enterprise values of $25 million to $125 million and EBITDAs greater than $5 million. Baird Capital was founded in 1989 and is based in Chicago (www.bairdcapital.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 6-24-15