Archives for September 2015

Halifax Sells Caring Brands to Levine Leichtman

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The Halifax Group has sold its portfolio company Caring Brands International, a franchisor of home healthcare services, to Levine Leichtman Capital Partners.

Caring Brands operates under three brands: Interim HealthCare (US); Bluebird Care (UK and Ireland); and Just Better Care (Australia).  In November 2012, Halifax invested in Interim HealthCare, a home health care franchise company.  In partnership with Halifax, the management team executed a plan to grow the business organically, adding 42 new US franchise locations, and through acquisitions, adding 210 new locations in six countries through the buys of UK based Bluebird Care in September 2013 and Australia-based Just Better Care in October 2014.

No financial information on the sale was provided but Halifax has characterized the sale as a successful investment for the firm.  “Our successful investment in Caring Brands is the continuation of Halifax’s long history of investing in both healthcare and franchising and is the result of our partnership with the highly dedicated Caring Brands team,” said Ken Doyle, managing director, Halifax.

Halifax formed Caring Brands International (CBI) in September 2013 to serve as the holding company for its brands and operations. Together, the CBI brands represent 530 locations operated by more than 250 independent franchise owners that produce over $1 billion of system wide sales.   CBI is led by CEO Kathleen Gilmartin and COO Mike Slupecki and is headquartered west of Ft. Lauderdale in Sunrise, FL (www.caringbrandsintl.com).

“Halifax’s experience and understanding of the complex nature of healthcare services and franchising allowed them to provide invaluable strategic guidance,” said Ms. Gilmartin.  “We have been able to execute against a very aggressive growth strategy, re-energize our domestic growth effort and extend our footprint across four countries. Halifax brought a unique approach and skill set that our team greatly appreciated.”

The Halifax Group invests in lower middle-market businesses across a variety of industries including health and wellness, infrastructure, business and government services and franchising. The firm has offices in Washington, DC; Dallas, TX; and Raleigh, NC (www.thehalifaxgroup.com).

“Under Kathleen Gilmartin and Mike Slupecki’s leadership, Caring Brands’ management team and employees executed a masterful growth plan during our partnership,” said Scott Plumridge, principal at Halifax. “From energizing new franchise development to expanding onto two new continents, together we have truly transformed the business into a global brand in home health franchising.”

Piper Jaffray (www.piperjaffray.com) and North Point Advisors (www.nptadvisors.com) were the financial advisers to Halifax and Caring Brands on this transaction.

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-30-15

Thoma Bravo Acquires MedeAnalytics

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Thoma Bravo has completed its buy of MedeAnalytics, a provider of cloud-based financial performance analytics for the healthcare industry. Current investors Bain Capital Ventures and Emergence Capital Partners remain as minority shareholders.

MedeAnalytics is used by healthcare companies to analyze patient data to improve financial performance by strengthening core operations and improving the quality of patient care. MedeAnalytics’ cloud-based tools have been used by over 1,500 hospitals, health systems, health plans, and state Medicaid programs.  The company is led by its CEO Andy Hurd and is headquartered north of Oakland in Emeryville, CA (www.medeanalytics.com).

“Now more than ever, healthcare providers and hospital systems alike are under pressure to rein in costs and demonstrate value to their customers and patients,” said Scott Crabill, managing partner at Thoma Bravo. “MedeAnalytics has the products and expertise to help healthcare institutions sift through vast amounts of data and deliver cost-effective care.”

Thoma Bravo provides equity and strategic support to management teams building growing companies. The firm originated the concept of industry consolidation investing, which seeks to create value through the strategic use of acquisitions to accelerate business growth.  Thoma Bravo currently manages approximately $8.5 billion of equity capital.

“We’ve been working with MedeAnalytics’ management team to set a plan for growth and enhanced market leadership moving forward,” said Arvindh Kumar, principal at Thoma Bravo. “With the transaction closed, we look forward to working with the team to realize MedeAnalytics’ strategic growth objectives.”

Thoma Bravo was founded in 1981 and has offices in Chicago and San Francisco (www.thomabravo.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-30-15

DADCO Adds New Banker in Denver

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Investment bank D.A. Davidson & Co. has added Chris Rockers to its investment banking team as a managing director in the firm’s energy practice. He will be based in the firm’s Denver office.

“The advisory track record and strong relationships Chris has make him a stellar addition to our team,” said Monte Giese, co-head of investment banking at D.A. Davidson. “He adds specialized expertise in the energy space having worked in the industry for over a decade.”

Mr. Rockers joins D.A. Davidson with over 15 years of experience in investment banking and private equity, principally in the oil and gas and energy sectors.  He was the co-founder of ESC Solutions where he directed mergers and acquisitions for oilfield services companies. Mr. Rockers began his career in energy at Cornerstone Holdings, where he led a multi-company consolidation acquisition strategy to create Magna Energy Services.  Before Cornerstone he did financing and M&A advisory with Alpina Capital, FTI Consulting and Falkenberg Capital. Mr. Rockers has a BA degree from Colorado State and an MBA from the University of Denver.

D.A. Davidson’s investment banking team underwrites public offerings, serves as a placement agent for private financings and advises companies on mergers and acquisitions. The firm has offices in Great Falls, MT (headquarters); Portland; Baltimore; Boston; Chicago; Denver; Minneapolis; New York; Costa Mesa; Salt Lake City; and Seattle (www.dadco.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-30-15

Christopher Hebble Rejoins Houlihan Lokey

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Houlihan Lokey has hired Christopher Hebble as a new Managing Director in the firm’s Capital Markets Group. He is based in the firm’s Los Angeles office. This is the second time around for Mr. Hebble as he was at Houlihan Lokey from 2000 to 2004 as a Vice President.

Mr. Hebble joins Houlihan Lokey from Cerberus Capital Management where he was a Managing Director responsible for origination, underwriting, portfolio management, and investment exits for a range of private finance transactions. Before Cerberus he was a Principal at Caltius Mezzanine Partners. Mr. Hebble holds a BS from the University of Pennsylvania and an MBA in Finance from the University of Southern California.

“As alternative sources of financing continue to grow, both in demand and availability, our clients more than ever require deep expertise in a range of capital markets solutions,” said Scott Adelson, Co-President and Co-Head of Corporate Finance. “Having worked on nearly every type of private financing transaction, Chris is well-positioned to deliver this depth of expertise to our clients, and we’re delighted that he has returned to Houlihan Lokey.”

Houlihan Lokey’s Capital Markets Group serves both corporate and private equity clients across all industry verticals.  With the hiring of Mr. Hebble, the group now has 30 professionals across New York, London, and Los Angeles.  “Over the past several years, Houlihan Lokey has built a substantial capital markets group that delivers unique, bespoke financing solutions to its clients.  I’m thrilled to return to the firm at such an exciting stage of its growth and I look forward to continuing the success it has achieved to date,” said Mr. Hebble.

Houlihan Lokey is an international investment bank with expertise in mergers and acquisitions, capital markets, financial restructuring, and valuation. The firm serves corporations, institutions, and governments worldwide with offices in the United States, Europe, and Asia (www.hl.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-30-15

Heritage Closes Second Ambulance Add-on

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ProTransport-1, a portfolio company of New Heritage Capital, has acquired Century Ambulance Service. This is ProTransport-1’s second acquisition in 2015, having closed the acquisition of Los Angeles-based PRN Ambulance in July.  New Heritage Capital acquired ProTransport-1 in August 2012.

Century Ambulance Service is an inter-facility medical transport provider serving the Jacksonville, FL metropolitan area.  Century was founded in 1981 with just two ambulances and today operates a fleet of over 50 ambulances and has a staff of more than 290 employees. The company is based in Jacksonville (www.casjax.com).

“Century represents another important step towards our goal of building the preeminent patient logistics business in the United States.  We are excited about the opportunities that Century will provide to ProTransport-1, and enthusiastic to continue supporting the team as they further their growth in new and existing markets,” said Melissa Barry, a Principal of Heritage.

ProTransport-1 is a provider of inter-facility medical transportation to hospitals, nursing facilities, specialty clinics and event venues in Northern California.  The company operates a fleet of 170 ambulances and has 950 employees.  ProTransport-1 was founded in 2000 by Mike Sechrist (CEO) and Elena Whorton (President) and is headquartered north of San Francisco in Cotati, CA (www.protransport-1.com).

“We are excited to partner with the Century team in the North Florida market, another move in our deliberate expansion into additional geographies,” said Mr. Sechrist. “Century serves a blue chip base of healthcare providers and we are eager to introduce many of our technologies and services to help serve those customers.”

Heritage invests minority or majority equity in companies with minimum revenues of $30 million and at least $5 million of EBITDA. Sectors of interest include aerospace, business services, consumer products, distribution, education and training, food and beverage, healthcare and healthcare services, industrial and infrastructure, manufacturing, pet products and services, specialty chemical, and test and measurement. Heritage was founded in 2006 and is headquartered in Boston (www.newheritagecapital.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-29-15

MTS Health Invests in Trust Healthcare Consulting

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MTS Health Investors has made an equity investment in Trust Healthcare Consulting Services, a provider of outsourced coding and health information management consulting services to US hospitals, physician groups, and healthcare systems.

TrustHCS’s primary services include remote medical coding, coder education, clinical documentation improvement, and coding audit and compliance services for hospitals and physician practices. The company is headquartered in Springfield, MO (www.trusthcs.com).

“The TrustHCS management team has built an exceptional business,” said MTS Managing Director, Alex Buzik.  “The company is widely regarded as an industry leader in the outsourced coding space, and consistently recognized by their customers for their quality and service.  We look forward to providing additional resources to assist in their continued growth.”

MTS Health Investors specializes, as their name would imply, in investing in companies within the healthcare industry.  Sectors of specific interest include providers of direct medical services to patients in an institutional, ambulatory, or home setting; providers of managed care and other healthcare insurance services; distributors of medical products; and manufacturers of low-technology medical devices and supplies. MTS Health is based in New York (www.mtshealthinvestors.com).

“This partnership with MTS will enable our growth strategy and enhance the value we deliver to our clients.  MTS has a deep understanding of our industry and its strong network of relationships will augment our capabilities and support us in expanding our market share,” said TrustHCS President, Torrey Barnhouse.

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-29-15

Genstar and Aquiline Buy Ascensus from Flowers

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Genstar Capital and Aquiline Capital Partners have entered into an agreement to acquire Ascensus from J.C. Flowers & Co.  No financial details on this transaction were announced but according to industry sources the enterprise value of Ascensus is estimated to be approximately $965 million with annual an EBITDA of $70 million.  The transaction is expected to close in the fourth quarter.

Ascensus, acquired by J.C. Flowers in 2007, is a service provider to retirement and college savings plans including defined contribution and defined benefit retirement plans, 529 college savings plans, and IRA and health savings accounts.  Ascensus supports more than 1.7 million retirement plan participants and administers more than 3.3 million 529 college savings accounts, along with more than 1.5 million IRAs and HSAs. The company is headquartered north of Philadelphia in Dresher, PA (www.ascensus.com).

This is the second acquisition that Genstar and Aquiline have cooperated on.  In 2013 the two firms partnered up on the acquisition of Genworth Wealth Management for $412 million.

Genstar, which had a final close in August 2015 of its seventh fund with $2 billion in commitments, invests from $50 million to $400 million in middle-market companies that have enterprise values from $50 million to $1 billion and EBITDAs greater than $15 million.  Genstar targets investments in financial services, software, industrial technology, and healthcare industries.  The firm was founded in 1988 and is based in San Francisco (www.gencap.com).

Aquiline Capital Partners invests in middle-market businesses across the financial services sector in banking and credit, insurance, investment management and markets, and financial technology.  The firm is based in New York (www.aquiline-llc.com).

J.C. Flowers & Co. invests in the financial services industry. Founded in 1998, the firm has invested over $14 billion of capital in 15 countries across a range of industry subsectors, including banking, insurance and reinsurance, investment banking and brokerage, and specialty finance.  J.C. Flowers has offices in New York and London (www.jcfco.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-29-15

Trive Closes Fund II Above Target

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Trive Capital Management has held a final closing of Trive Capital Fund II LP and Trive Capital Fund II (Offshore) LP with $500 million of capital commitments.  The funds (collectively called Fund II) reached its hard-cap in three months and beat its initial target of $400 million.  Trive Capital was founded in 2012 by Conner Searcy, Managing Partner and Chris Zugaro, Partner.

“We have a very supportive group of institutional investors that enabled us to have a quick and efficient fund closing,” said Mr. Searcy.  “Chris and I believe the significantly over-subscribed fund drew interest from investors attracted to our deep value investing approach, the quality of the Trive team, and our success in executing our operationally-focused investment strategy.

The close of Fund II caps a busy year for Trive. In  the past twelve months the firm has completed three platform investments, four dividend recapitalizations, expanded its team, and successfully sold Huron – a maker of tubular assemblies and components used in automotive engines and transmissions – to Seven Mile Capital Partners. The sale closed earlier this month and was a 2.5 year hold for Trive.

As with Fund I, Fund II’s investment focus will be in lower middle market companies which Trive believes possess transformational upside and would benefit from an operationally-focused partner.  “Trive’s collaborative, hands-on operational model brings a skill set we believe is absent in many lower middle market businesses, increasing the velocity of shareholder value creation,” said Mr. Zugaro.

Trive invests from $10 million to $60 million in North America headquartered companies with revenues of $30 million to $500 million. Sectors of interest include automotive and transportation; aerospace and defense; building products; construction and infrastructure; consumer goods; energy services; healthcare; manufacturing and industrials; chemicals; distribution; business and professional services; and communications.  Trive Capital is based in Dallas (www.trivecapital.com).

Preston Hollow Continues Staff Build

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Preston Hollow Capital, an alternatives investor launched in January 2014 by Jim Thompson, the long-time President and CEO of ORIX USA, has added additional staff with the hirings of Stuart Fink as Senior Credit Underwriter and Max Pickle as Director of Human Resources.

“These important hires reflect the continued rapid growth of our business,” said Jim Thompson, the Chairman and CEO of Preston Hollow Capital. “Stuart and Max are seasoned professionals and we’re very pleased to add them to the team.”

Mr. Fink’s corporate responsibilities include evaluation, analysis and underwriting of the real property components of the firm’s investments. Mr. Pickle manages all of the firm’s human resources operations and advises the firm on employment-related matters including recruiting, compensation, benefits, training and development.  Before joining Preston Hollow, Mr. Fink worked with GE Capital for 11 years. He served as a manager in the securitization of commercial mortgages with pool contributions totaling $750 million. Mr. Fink’s prior experience includes serving as Valuations Manager and Dispositions Manager for Invesco Real Estate.  He has a BBA from Baylor University and an MBA from Amberton University.

Mr. Pickle served ten years with ORIX USA as Recruiting Manager before joining Preston Hollow Capital. At ORIX, he was responsible for leading talent acquisition in the private equity, municipal finance, asset management, commercial real estate, and leveraged finance business units.  Mr. Pickle’s previous experience includes retained and contingency recruiting roles in finance, engineering and physician search. He has a BA from Texas Tech University.

Preston Hollow Capital invests in fixed income, private equity, venture capital and alternative opportunities. The firm is based in Dallas (www.phcllc.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-29-15

G.C. Andersen Raises Capital for Flight Fit N Fun

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Investment bank G.C. Andersen Partners was the financial adviser to Flight Fit N Fun on its recent acquisition of Flight Entertainment, an operator of indoor trampoline parks in the Eastern US. Financing for the transaction was provided by Gladstone Capital through a combination of first lien debt and equity.

According to the International Association of Trampoline Parks there were about 35 to 40 indoor trampoline parks in operation in 2011 and today there are approximately 280 parks.

“Trampoline parks are the newest and fastest growing segment of the leisure market,” said John Duran, Flight’s CEO.  “The fun and fitness-centered nature of the venues are gaining tremendous popularity and quickly replacing the traditional arcade and bowling birthday party and events venues.  Flight was an attractive acquisition that represents the platform from which we plan to build a large family entertainment and attractions business.”

“G.C. Andersen was very effective at understanding our business and communicating the value of this opportunity to potential financial partners,” said Mr. Duran.  “We look forward to our new partnership with Gladstone Capital as we grow Flight through a combination of opening new locations and acquiring additional businesses.”

G.C. Andersen advises clients on mergers and acquisitions, capital raises and restructuring assignments. The firm provides advice to both publicly and privately held middle market companies with revenues between $20 million and $2 billion.  G.C. Andersen has been very active in the past year and has raised almost $400 million in debt and equity financing for its clients.  The firm was founded in 1996 and has offices in New York and Los Angeles (www.andersenllc.com).

“As a result of our strong relationships throughout the financial community, we were able to facilitate the acquisition of Flight by this seasoned team of successful entrepreneurs.  This is our second completed transaction with Gladstone Capital, and we are confident that the partnership with Gladstone will position the company for substantial organic and acquisition growth,” said Scott Hadfield, a Managing Director at G.C. Andersen.

Gladstone is a publicly-traded business development company that makes debt and equity investments in US-based small to middle-market businesses. Target investments generally range from $5 million to $30 million in companies with over $3 million in EBITDA. Sectors of interest include light and specialty manufacturing, industrial products, business and government services, media and communications, consumer products and services, healthcare services, transportation, specialty chemicals and energy services. Gladstone is based in McLean, VA with additional offices in New York, Chicago, and Los Angeles (www.Gladstone.com).

Flight Fit N Fun operates trampoline parks and family entertainment centers that include facilities free jumping, dodgeball, and basketball as well as private event space. The company was founded in 2015 (www.flighttrampolinepark.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-29-15

Ares and Harvest Acquire Valet Waste

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Ares Management and Harvest Partners will acquire Valet Waste, a portfolio company of New Mountain Capital.  Valet Waste is a national provider of doorstep waste and recycling collection to the multi-family housing industry.

New Mountain acquired its ownership position in Valet Waste in August 2007 through the acquisition of its parent company Oakleaf Global.  In July 2011, New Mountain sold Oakleaf Global to Waste Management however it retained Valet Waste as a portfolio investment.

Today, Valet Waste is a national provider of doorstep trash and recycling collection to the multifamily housing industry.  The company contracts with the management companies and owner groups of multifamily housing projects to collect trash on a daily basis from company issued trash receptacles placed by residents outside their doors.  The company services over 400 management companies that represent over 3.4 million units in over 25 major markets. The company also offers maintenance services including nightly maintenance, apartment cleaning, apartment turns and porter services through its Maintenance Plus product which was launched in 2014.  The company is led by CEO Shawn Handrahan.  Valet Waste was founded in 1995 and is based in Tampa (www.valetwaste.com).

“New Mountain Capital has played a vital role in growing Valet Waste during its ownership period – and we thank them for a very successful partnership,” said Mr. Handrahan.  “With the growth opportunities in front of us, this is an opportunity to take the next step and further our position as a market leader in amenity and maintenance services to the multifamily housing industry.”

New Mountain’s investment in Valet Waste was led by Bert Notini, Managing Director.   “It was a pleasure to work with the Valet Waste management team as they defined the market, built their business and achieved significant sustainable growth,” said Mr. Notini. “We wish Valet Waste continued success in its next stage of expansion with Ares and Harvest.”

Ares Management – with $88 billion in assets under management – invests in private equity, leveraged loans, high-yield bonds, distressed debt and private debt.  Within Ares, its private equity group manages $10 billion of assets and is currently investing its fourth private equity fund with $4.7 billion of committed capital.  Ares Management is headquartered in Los Angeles with offices in New York, London, Chicago, and Atlanta (www.aresmgmt.com).

“Valet Waste is a leader in its industry, with a longstanding track record of delivering high-quality service to its customers and providing a top-rated amenity to residents,” said Matt Cwiertnia, Partner in the private equity group of Ares Management.  “We are excited to partner with the Valet Waste management team and look forward to supporting the company in its next phase of growth.”

Harvest Partners – which is partnering on this transaction with Ares – currently manages approximately $2 billion of equity and structured capital and is investing its sixth private equity fund.  Harvest targets investments in companies with $20 million to $75 million of EBITDA and total enterprise values of $100 million to $750 million.  Sectors of interest include industrial & energy services; manufacturing & distribution; consumer & business services; and healthcare services.  The firm was founded in 1981 and is based in New York with an additional office in Palo Alto (www.harvestpartners.com).

“We are delighted to join Ares and the senior management team as long-term investors in the company,” said Michael DeFlorio, Senior Managing Director of Harvest Partners. “CEO Shawn Handrahan and his team have built a unique business that provides exceptional value to customers and residents. We are excited to invest alongside this first class team to build upon Valet Waste’s leadership position in the market and expand services more broadly across the multifamily housing industry.”

Robert W. Baird & Co. acted as a financial advisor to Valet Waste and New Mountain.  Proskauer Rose was the legal advisor to Ares Management and Harvest Partners. White & Case was the legal counsel to Harvest Partners. Fried, Frank, Harris, Shriver & Jacobson were the legal advisor to Valet Waste.

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-28-15

Dubin Clark Sells Driven Performance Brands

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After more than ten years of ownership, Dubin Clark has sold its portfolio company Driven Performance Brands to Sentinel Capital Partners.

Driven Performance Brands (DPB), acquired by Dubin Clark in July 2005, is a designer, manufacturer, marketer and distributor of specialty automotive aftermarket performance products. Brand names include B&M Racing and Performance Products, Hurst, Hurst Driveline Conversions, Flowmaster, and Dinan Engineering.  The company was founded in 1953 and is headquartered north of San Francisco in Santa Rosa (www.dpbrands.com) (www.bmracing.com).

“We were delighted to enter into a partnership with Brian Appelgate, CEO of DPB, and his team in 2005,” said Tom Caracciolo, Managing Partner of Dubin Clark.  “Together with management, we were successful in completing five strategic add-on acquisitions and building a world-class operation.  Having exceeded our growth objectives, we felt the time had come to find another partner for DPB, one that would continue to finance the significant future growth of the business.”

Dubin Clark invests in companies that have from $10 million to $100 million in sales and at least $2 million of EBITDA. Sectors of interest include manufacturing, value-added distribution, and services. The firm was founded in 1984 and is based in Greenwich, CT (www.dubinclark.com).

“When we partnered with Dubin Clark we were convinced that we made the right choice for the best private equity partner,” said Brian Appelgate, President and CEO of DPB.  “We were right.  The team at Dubin Clark delivered everything that they said they would in every respect.  They supported all of our growth initiatives as well as add-on acquisition executions.  We found the Dubin Clark team to be professional but very caring and engaged.  They proved to be a wonderful partner for us.”

Jefferies (www.jefferies.com) was the financial advisor to Driven Performance Brands and Dubin Clark.

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-28-15

Lariat Partners Invests in LaMi

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Lariat Partners has invested in LaMi Holdings, a distributor and merchandiser of non-edible, general merchandise impulse items sold through grocery stores and other retail channels.

LaMi’s impulse items typically retail for less than $9.99 and are cross merchandised throughout a grocery or retail store using clip-strips, power panels, towers, and aisle end caps.  For example, the company’s ice cream scoops are racked next to freezers, and pet toys are racked adjacent to pet food.  LaMi serves over 7000 grocery stores and sells through more than 20,000 retail outlets.    The company operates a 250,000 square foot warehouse with over 3500 SKU’s and over 700 employees. LaMi was founded in 1978 by Larry and Michael Dion (Co-Chief Executive Officers) and is based north of Philadelphia in Huntingdon Valley, PA (www.lamiretail.com).

Lariat’s investment will provide growth capital to help LaMi complete its new state-of-the-art automated warehouse, improve sourcing, fund expansion-related expenditures, and pursue other growth opportunities.

“Our new state-of-the-art warehouse and robotic pick-n-pack system will enable us to continue our growth while providing just-in-time inventory to customers,” said Larry Dion. “The partnership with Lariat and the recapitalization effort will play a key role in helping us replicate this automated warehouse operation on the west coast in the near future.”

“LaMi provides a strong value proposition to its customers that we believe is only going to improve as the grocery industry seeks new sources of revenue.  Larry, Michael and the LaMi team have proven their ability to execute throughout their long entrepreneurial history, and we are excited to help them continue achieving their vision,” said Jay Coughlon, Managing Partner for Lariat Partners.

Lariat invests in lower middle market companies that have EBITDA of $2 million to $20 million. The firm targets companies across a number of industries, including specialty agriculture, energy & environmental services, consumer products and maritime services. Lariat raised its first investment fund in July 2014 with $118 million of capital commitments. Lariat was founded in January 2013 by Jay Coughlon and Kevin Mitchell and is based in Denver (www.lariatpartners.net).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-28-15

KSL Closes Fund IV Above Target

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Travel and leisure investor KSL Capital Partners has held a final close of KSL Capital Partners IV, LP with total commitments of $2.7 billion.  The new fund took less than a year to raise and demand from both existing and new investors exceeded the $2.25 billion target.

Investors in KSL IV include the usual collection of institutional investors such as state pension funds, corporate pension funds, sovereign wealth funds, endowments, foundations, insurance companies and family offices.

“Similar to our prior private equity and credit funds, KSL IV will target investments exclusively in the global travel and leisure sector,” said Eric Resnick, CEO of KSL Capital Partners. “This new fund garnered significant interest from our existing investor base and accepted commitments from a select group of new investors. We are grateful for the support shown by our limited partners.”

KSL invests equity capital and mezzanine debt in travel and leisure companies that operate in five primary sectors: hospitality, recreation, clubs, real estate and travel services. The firm was founded by Eric Resnick and Mike Shannon in 2005 and has offices in Denver, London, and Stamford (www.kslcapital.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-28-15

Accel-KKR Closes Fifth Buyout Fund

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Accel-KKR has closed its fifth buyout fund with $1.3 billion in committed capital.  Fundraising began during the Spring of 2015 and the fund closed at its hard cap earlier this month.  Fund V, like earlier funds, will invest in lower-middle market and middle-market software and IT-enabled services companies.

According to Accel-KKR, the fund received strong support from its investors in prior funds, as well as from a number of new investors.  More than one-third of the committed capital is from international investors.

“We are heartened by the support we received from our existing investors, and are quite pleased to welcome a number of new investors to the fund,” said Tom Barnds, Managing Director of Accel-KKR.  “The missions of our investors, who include academic institutions, medical research foundations, health care institutions, and corporate and government pensions, resonate deeply with the Accel-KKR team.”

Accel-KKR invests in both majority ownership situations via its buyout funds, and minority equity positions through its structured capital funds.  With the closing of Fund V, Accel-KKR’s total committed capital now totals $4 billion.  Fund V follows the firm’s fourth buyout fund, which it began investing in 2013 with $800 million of commitments.  Accel-KKR was founded in 2000 and is headquartered in Menlo Park with additional offices in Atlanta and London (www.accel-kkr.com).

The new fund also includes a $100 million commitment from the firm’s general partners.  “We believe in strong alignment of interest with our limited partners,” said Rob Palumbo, Managing Director of Accel-KKR. “One of the many ways we seek to achieve this alignment is by making very significant financial commitments to invest alongside of our limited partners.”  The $100 million commitment represents the largest general partner commitment in Accel-KKR’s history and also makes the general partner the largest investor in Fund V.

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-28-15

Rippowam Adds Strumwasser to Team

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Rippowam Partners has hired that Stu Strumwasser as Managing Director – Business Development. Mr. Strumwasser will lead Rippowam’s efforts to source new investment and acquisition opportunities and he is also tasked with building the firm’s base of high net worth and family office investors.

Rippowam Partners was launched earlier this year by Peter Weinbach and Graham Anderson to pursue investments in the healthy living and wellness sectors. “We hired Stu to conduct a buy-side exploration for us and were instantly taken by his work ethic, energy, insights, and understanding of the market both as an investor and as a former operator,” said Mr. Weinbach.

“Stu has an impressive track record of networking and building relationships with both companies and investors, and he has also founded and operated businesses of his own. He is an interesting guy, a published novelist, and he’s extremely passionate about investing in sectors which provide an opportunity to do good in the world in addition to creating financial value for shareholders,” said Mr. Anderson.

Before joining Rippowam, Mr. Strumwasser was the founder and Principal of Green Circle Capital Partners, a boutique investment bank focused on the healthy living and wellness space. He was also the founder and CEO of Snow Beverages, a natural soda manufacturer, and a co-founder of Tengrade, an internet-based products and services rating web site. Earlier in his career he spent fifteen years in wealth management at Paine Webber and Oppenheimer & Co. He is a graduate of Cornell University.

“Working alongside Peter and Graham will provide me with a unique opportunity for professional growth that I couldn’t refuse,” said Mr. Strumwasser. “These are extremely experienced private equity professionals with track records of excellence in creating returns for investors. It’s an opportunity for me to apply my skills to larger transactions, and have greater impact and influence on companies we will seek to acquire and grow. There is a shared view among the three of us regarding our vision for the firm we desire to build, and I am looking forward to playing a role in growing the firm’s reach, as well as creating significant value in our portfolio companies for investors.”

Rippowam targets companies that have annual revenues between $10 million and $100 million and EBITDAs from $2 million to $10 million. Specific areas of interest include consumer products and services (especially healthy living and wellness), software and outsourcing, or light manufacturing. Rippowam makes control and non-control investments, and through the partner’s personal capital and the firm’s network of family offices, will invest from $5 million to $30 million in equity per transaction.

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-28-15

Harvest Partners SCF Invests in LAZ Parking

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Harvest Partners SCF – the non-control private equity strategy of Harvest Partners – has made an investment in LAZ Karp Partners, a provider of parking management services.

LAZ Karp Partners (DBA LAZ Parking) has operations in over 2,100 locations across 29 states and 265 cities and is considered to be the third largest parking operator in the United States with 815,000 parking spaces.  LAZ provides an array of parking services including facility management, billing, collections, maintenance, valet parking and shuttles.  Customers of the company include commercial and residential property owners and managers, government and municipal entities, hotels, universities, hospitals, stadiums and arenas, airports and transit authorities, and retailers and restaurants.  LAZ Parking was founded in 1981 and is headquartered in Hartford, CT (www.lazparking.com).

LAZ Parking is led by founders Alan Lazowski and Jeff Karp and Senior Executives Michael Harth and Mike Kuziak.  “Harvest Partners SCF offers a unique value proposition to founder-owners who are looking for private equity capital but do not wish to sell control of their business,” said Mr. Lazowski. “We are enthusiastic about our new partnership with Harvest, and look forward to continuing our plans for growth together.”

Harvest Partners SCF (HP SCF) targets private equity-like returns while assuming risks more characteristic of debt investments.  The group targets investments of $20 million to $75 million in companies where the business owners need equity capital but do not wish to dilute or sell their ownership. Target companies will have revenues of $100 million to $750 million and be active in the following sectors: business and consumer services; healthcare services; industrial and energy services; manufacturing; and distribution.  HP SCF, founded in 2014, is led by senior managing director Joseph (Jay) Hegenbart and is headquartered in New York (www.hp-scf.com)

“We are pleased to be partnering with Alan, Jeff and the rest of the LAZ team,” said Mr. Hegenbart.  “LAZ has demonstrated an ability to consistently grow organically and through acquisitions across a variety of market cycles, and we are very fortunate to be teaming up with LAZ through this proprietary investment.”  There were no investment bankers involved in the transaction.

Steve Duke, Principal, and Caldwell Zimmerman, Associate, also worked on this transaction for Harvest Partners SCF.

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-25-15

Calling the Crest

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By Andrew Greenberg, CEO GF Data –

A question framed by GF Data’s second quarter report, accentuated by the recent tumult in the international and domestic equity markets, and on the minds of deal professionals:

Have the ideal market conditions – meaning “ideal” from the perspective of would-be business sellers – finally begun to crest?

Earlier this month, we were at the first stop on the Association for Corporate Growth fall circuit, the excellent Great Lakes event in Cincinnati. Conversation there fortified the impression that the private M&A market still has plenty of giddy-up in it, notwithstanding the drop in public stock prices.

Here is GF Data’s suspicion of the most likely trajectory in market conditions, followed by some thoughts on what to look for in the transaction data in coming months.

Business buyers, capital providers and intermediaries widely agree that in terms of valuations and debt support, conditions in this “seller’s market” can only move in one direction.

We believe that what we will see is some continued run on the current elevated plateau, then an unmistakable but moderate dip to another plateau. That level – still very good for sellers in historical terms but not at the current idyllic peak – will persist for some time. (This prognosis, of course, assumes the absence of any cataclysmic macro events.)

Is the moderate drop three months away or twelve? Too early to say, but here is what to watch for in our data.

In the GF Data universe – transactions reported by financial sponsors on deals they complete in the $10-$250 million range – valuations have remained stable at an elevated level reached through a steady upward push in the first few years of this decade. Within our sample – currently comprising 200 active contributors — the average valuation was 6.3x Trailing Twelve Months (TTM) Adjusted EBITDA in 2012 and 6.5x in 2013. The average mark reached 6.8x in 2014 and has remained there in the first half of this year.

While aggregate pricing has not changed much, the composition of the underlying financing has. The average equity contribution required of acquirers to get deals done (as noted in our August Leverage Report) has declined steadily over the past two years:

[Click chart to enlarge]

Equity contribution has declined the least in the two larger brackets, notwithstanding the fact that debt support on these transactions is greater than on the smaller deals. This is evidence of the more intense competition for quality businesses with $7 to $8 million of EBITDA and up. Buyers of smaller businesses have been able to maintain greater restraint in pricing.

The chart shows the relative movement in pricing since 2013:

[Click chart to enlarge]

In other words, deal values are being sustained at the current frothy levels by debt availability and the larger the beer, the more froth in the mug.

It seems clear that a tightening in available leverage will have an immediate effect on deal pricing, particularly on the $50 million plus transactions where debt support has played an outsized part in the run up in value.

Has this retrenchment started to occur? It isn’t in our data. Debt levels in 2015 2Q were at an all-time high in a sample that goes back to 2003. Our subscribers and other market participants tell us they’re seeing no sign of it either, that even in processes where they think a new line is being drawn, a willing lender always emerges.

The last downturn is of limited utility in trying to gauge the timing and the shape of the next one. By the time of the collapse of the mortgage finance market in mid-2007, average equity contribution had been declining about four percentage points from a high of 46% in 2005. However, as the global economic meltdown hit private M&A equity with full force in 2008, there was a massive flight to quality – deal volume fell off the table, but average multiples fell only slightly, from 6.3x in 2007 to 6.1x in 2008.

The chart below (click on the chart to enlarge it) indicates an even more salient point. Average equity share did not crack 50 percent in the years heading into the financial downturn. It got there in the still-frigid days of 2009, as the deals that were getting done tended to be conservatively capitalized, and stayed in the 50 percent range for the next few years as the market heated up.

[Click chart to enlarge]

This lends support to our thinking that once debt markets cool off a bit, sponsors are more likely to exert some discipline on valuation than return to a historically aberrant percentage of equity share.

We note as well that the larger middle-market businesses whose size enables them to attract leverage are for the same reason more likely to energize strategic as well as financial buyers. Here the recent market tumult does come in to play. At some point, public companies looking to their own stock valuation as a benchmark become less formidable bidders.

Given the continuing intensity of competition for attractive businesses approaching or above $10 million of EBITDA, our guess is that the immediate effect is a pendulum swing in favor of financial buyers rather than an across-the-board decline in valuations.

In sum, we aren’t prepared to say the market has crested, but are prepared to say that dynamics driving the crest are there now for us to see.

About the Author:
Andy Greenberg is CEO of GF Data and Managing Director of Fairmount Partners, an M&A firm. Both are based in West Conshohocken, PA. He received the 2014 Alliance of M&A Advisors (AM&AA) Middle Market Thought Leader of the Year Award.

For information on subscribing or on contributing data as a GF Data private equity participant, please contact Bob Wegbreit at [email protected] or 610-260-6263.  GF Data is based in the Philadelphia suburb of West Conshohocken, PA (www.gfdataresources.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-25-15