Archives for July 16, 2015

Arlington Acquires Avalign from RoundTable

by

Arlington Capital has acquired Avalign Technologies, a manufacturer of orthopedic implants and instruments, from RoundTable Healthcare Partners. This transaction is the sixth exit from RoundTable’s first fund which closed in March 2002 with $400 million in capital commitments.

The history of Avalign Technologies began in October 2005 when RoundTable acquired Instrumed International, a manufacturer of surgical instruments, and then in January 2007 acquired Advantis Medical, a designer and manufacturer of case and tray organizing systems for surgical instruments, implants and medical devices. RoundTable combined the operations of Instrumed and Advantis under a newly formed company called Avalign Technologies.  In August 2007, Avalign completed the add-on acquisition of Nemcomed, a designer and manufacturer of medical implants and instrumentation for orthopedic specialties.  In May 2009, Avalign completed the add-on acquisition of NGInstruments, a family-owned manufacturer of surgical cutting tools for the medical industry.  Today, Avalign Technologies operates under four divisions: Advantis Medical, Nemcomed, NG Instruments and Instrumed International. The company is headquartered north of Chicago in Lake Forest, IL (www.avaligntech.com).

“RoundTable has been an exceptional partner for Avalign since the initial acquisition in 2005. They have supported investments across all aspects of our operations and provided capital and transaction assistance for add-on acquisitions,” said Forrest Whittaker, CEO of Avalign. “Arlington Capital, which has expertise and an impressive track record in healthcare and precision manufacturing, is the ideal partner to help us achieve our future goals.”

“Avalign’s management team has built a best-in-class manufacturing platform, providing a consultative go-to-market approach and project management capabilities for its OEM customers,” said Joseph Damico, Founding Partner and Co-Chairman of RoundTable and Chairman of Avalign. “We believe that Arlington Capital Partners will be an excellent partner to help the company achieve its next phase of growth.”

RoundTable Healthcare Partners is an operating-oriented private equity firm focused exclusively on the healthcare industry. RoundTable manages $1.9 billion in capital, including three equity funds totaling $1.5 billion and two subordinated debt funds totaling of $400 million. The firm is headquartered north of Chicago in Lake Forest, IL (www.roundtablehp.com).

“Avalign is a leader in the large and growing orthopedic precision manufacturing market and the company provides value to its OEM partners through design improvement, speed to market acceleration and cost reductions,” said Matt Altman, a Partner at Arlington Capital.  “We look forward to partnering with the Avalign management team to support the company through its next phase of growth.”

Arlington Capital Partners has $1.5 billion of committed capital and invests in buyouts and recapitalizations of companies valued from $50 million to $500 million. Sectors of interest include government services and technology, aerospace & defense, healthcare, and business services & software.  The firm is based in Washington, DC (www.arlingtoncap.com).

William Blair & Company was the financial advisor to Avalign and Sidley Austin was the legal advisor to RoundTable.

© 2015 PEPD • Private Equity’s Leading News Magazine • 7-16-15

High Road Acquires Cali Bamboo

by

High Road Capital Partners has acquired Cali Bamboo, a direct-to-consumer retailer of bamboo flooring. This is High Road’s fifth platform acquisition for its $320 million second fund which closed in December 2013.

Cali Bamboo co-founders Jeff Goldberg, CEO, and Tanner Haigwood, Vice President of Business Development, invested in the transaction alongside High Road and will continue to lead the company post-closing.

Cali Bamboo’s products include bamboo flooring, composite decking, bamboo plywood, eucalyptus flooring, bamboo fencing, and cork tiles.  In addition to its direct-to-consumer sales, the company also sells to contractors and architects, flooring dealers, and retailers.  Cali Bamboo was founded in 2004 and is headquartered in San Diego (www.calibamboo.com).

Bamboo is among the fasting-growing plants on Earth, making it an environmentally sustainable alternative to conventional hardwoods.  “Green building products are a rapidly growing segment of the new construction and remodeling markets. Consumers and businesses are seeing the aesthetic, economic and environmental benefits of bamboo and other renewable materials over traditional hardwoods,” said Ben Schnakenberg, a High Road Partner.

High Road invests in manufacturing, service, or value-added distribution businesses with revenues of $10 million to $100 million and EBITDAs of $3 million to $10 million.  High Road has now completed 37 transactions – 14 platform investments, 19 add-on acquisitions and four exits – since its founding in 2007.  High Road is based in New York (www.highroadcap.com).

To grow Cali Bamboo, High Road intends to develop new products and expand distribution channels. “We look forward to working with Cali Bamboo’s entrepreneurial team to leverage the company’s brand across new product categories and to more fully develop multiple distribution channels,” said Mr. Schnakenberg.

“Since founding the company in 2004 as a direct-to-consumer, online retailer of bamboo building products, we have served more than 250,000 customers,” said Mr. Goldberg.  “We are building a presence in other distribution channels, including a rollout with a premier home improvement retailer. As our new partner, High Road will provide guidance and resources to support the rapid growth of our business.”

Mr. Schnakenberg led the transaction for High Road and was assisted by Jerry Anderson, Operating Partner; Scott Rubino, Vice President; and James Karle, Associate.

Monroe Capital (www.monroecap.com) was the sole lead arranger and administrative agent on a unitranche credit facility to support this acquisition.

Cali Bamboo was represented in the transaction by San Diego-based investment bank Shoreline Partners (www.shoreline.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 7-16-15

Argosy Adds-On to Fairway Building Products

by

Fairway Building Products, a portfolio company of Argosy Investment Partners, has acquired Carfaro, a manufacturer of aluminum railings used in residential and commercial buildings.

The buy of Carfaro is the first add-on acquisition for Fairway – a manufacturer of railing systems for residential and commercial decks – since being acquired by Argosy in September 2014.  Argosy’s objective is to build the Fairway platform into a provider of a complete line of railing products to multiple end markets.

In addition to manufacturing aluminum railings, Carfaro also provides drafting, estimating, engineering, and installation services.  Customers of Carfaro include 8 of the 10 largest homebuilders in the country including Toll Brothers, Pulte Homes, and Lennar Homes as well as home improvement contractors, international general contractors, and architects.  The company was founded in 1994 by Joseph Carfaro, President, and operates out of a single manufacturing facility in Trenton, NJ (www.carfaro.com).

According to Argosy, Mr. Carfaro has created in-house automated manufacturing and production capabilities which differentiate Carfaro from its competition. These capabilities have allowed Carfaro to build relationships with local and regional contractors for quality, on-time deliveries which have made it an entrenched supplier.

To complete the Carfaro acquisition, Argosy made a follow-on investment in Fairway through its fourth fund, Argosy Investment Partners IV, LP, a $180 million fund which closed in June 2010.  In April 2015, Argosy held a final closing of Argosy Investment Partners V, LP with $300 million of capital commitments.

Argosy invests from $5 million to $15 million in lower middle market companies that have revenues of $10 million to $100 million and EBITDA margins of 10% or greater.  Sectors of interest include manufacturing, business services, and value-added distribution.  The firm was founded in 1990 and is headquartered in the Philadelphia suburb of Wayne, PA (www.argosycapital.com).

Citizens Bank (www.citizensbank.com) and Graycliff Partners (www.graycliffpartners.com) – the incumbent lenders that provided the debt financing for the buy of Fairway Building Products – provided senior and subordinated financing, respectively, to finance the Carfaro acquisition.

© 2015 PEPD • Private Equity’s Leading News Magazine • 7-16-15

VMG Closes Fund III at $500 Million

by

VMG Partners – an investor in branded consumer products companies in the lower middle market – has closed VMG Partners III, LP with $500 million of committed capital. VMG’s investors include college endowments, charitable foundations, international investors and corporate pension plans.  VMG closed its prior fund, VMG Partners II, LP, in 2011 with $382 million of committed capital.

VMG Partners targets companies that are active in the food, beverage, wellness, pet products, personal care and household products sectors. The firm has offices in San Francisco and Los Angeles (www.vmgpartners.com).

“VMG Partners has built its track record partnering with entrepreneurs to build leading consumer products companies.  With the completion of our third fund we are now very well positioned to continue working with these creative and visionary entrepreneurs,” said Michael Mauzé, Managing Director of VMG.

In addition to closing its third fund, VMG has been active in 2015 with the recently announced sale of Vega, a maker of plant-based nutrition products (primarily powdered shakes and snack bars) to White Wave (NYSE:WWAV) for approximately $550 million in cash, and the completion of three investments in the better for you food and wellness sectors.  VMG recently made investments in Health Warrior, a maker of plant-based superfood snacks; Perfect Bar, a maker of nut butter based nutrition bars, and; Vermont Smoke and Cure, a manufacturer and marketer of antibiotic and nitrate free, humanely raised beef, pork and turkey meat sticks, bacon, summer sausages, smoked pepperoni and ham.

“VMG is well situated to support brands as small as $5 million and as large as $500 million in sales.  We provide access to a unique tool box of value-add resources and strategic capital to organizations and brands in our core consumer segments regardless of size or stage,” said Kara Cissell-Roell, Managing Director of VMG.  “Our team has a proven track record of helping entrepreneurs and management teams in critical areas of sales, marketing, field activation, operations, finance and legal strategy utilizing our VMG Toolbox on a customized basis.    We will continue to work collaboratively with management teams to accelerate growth, drive brand awareness and create exceptional strategic value for all stakeholders.”

“Our latest investments exemplify the core areas of our expertise,” said Dave Baram, Managing Director of VMG.  “Our efforts are focused on helping the entrepreneurs who built these companies expand their consumer base and reach their full potential by employing sound and consistent investment strategies that have delivered above average returns for our investors and partner brand stakeholders over the past 10 years.”

Park Hill Group (www.parkhillgroup.com) served as the placement agent for VMG Partners and legal advice was provided by Latham & Watkins (www.lw.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 7-16-15

Water Street Expands Resources Group with New IT Hire

by

Water Street Healthcare Partners has named Paul Cottey as the firm’s chief information officer.  Mr. Cottey will be part of Water Street’s Corporate Resources Group, which is comprised of specialists who work with the firm’s portfolio companies to execute strategies that support their growth objectives.

Mr. Cottey has nearly 30 years of information technology experience.  Most recently he was the Executive Vice President and Chief Information Officer for PatientMatters, a revenue cycle management company based in Orlando.  Prior to PatientMatters he was with Los Angeles-based private equity firm The Gores Group from November 2011 to May 2013 as Vice President of IT and Systems.  Perfecting and extending his match with Water Street, Mr. Cottey also served as the chief information officer of Accretive Health, a revenue cycle management and physician advisory company, from October 2006 to November 2011.  Prior to Accretive Health he had an 18-year career with Accenture where he provided IT consulting services to numerous corporations.

Mr. Cottey’s responsibilities will include working directly with the firm’s portfolio companies to maximize their IT strategies and infrastructure.  “We are excited to expand our team of health care executives and investment professionals with another leader of Paul’s caliber,” said Kevin Swan, partner, Water Street.  “His expertise in information technology strategy and operations brings another important component of support to growing and creating long-term value in our family of health care companies.”  The Corporate Resources Group also offers expertise in corporate communications, corporate development, information technology and talent management.

Water Street invests from $50 million to $500 million in companies that are active in four health care sectors: medical and diagnostic products and devices, specialty distribution, outsourced health care services, and specialty pharmaceutical products and services.  The firm has particular expertise in corporate divestitures from healthcare companies. Water Street, founded in 2005, has more than $1 billion of capital under management and is based in Chicago (www.waterstreet.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 7-16-15