Archives for September 10, 2015

River Associates Buys Tape Maker Action Fabricators

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River Associates Investments has acquired Action Fabricators, a maker of tapes, adhesive and non-adhesive-backed foams, rubbers, and plastics that are used in automotive, electronics, appliance, security, furniture and health care applications.

“The team at Action Fab are the kind of talented, honest and hardworking people that we enjoy being in business with,” said Mike Brookshire, a Partner at River Associates. “Management has done a great job establishing a solid business, and we look forward to helping the team continue to explore both organic and acquisitive growth opportunities.”

River Associates invests in companies with revenues of $20 million to $100 million and EBITDA of $3 million to $12 million.  Sectors of interest include niche manufacturing, high margin distribution and industrial services. The firm was founded in 1989 and to date has completed 75 investments, including platform and add-on acquisitions. River Associates is based in Chattanooga, TN (www.riverassociatesllc.com).

Maranon Capital (www.maranoncapital.com) and Crescent Capital (www.crescentcap.com) provided mezzanine financing and made equity co-investments to back the acquisition of Action Fabricators by River Associates.

Action Fabricators was founded in 1989 and operates out of a 70,000-square-foot facility located in Grand Rapids, MI (www.actionfab.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-10-15

Serent Merges Cardon Outreach with Diversified Healthcare

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Cardon Outreach, a portfolio company of Serent Capital, has merged with Diversified Healthcare Resources (DHR), a California-based provider of eligibility and enrollment services for hospitals and healthcare facilities.  Serent Capital remains the majority owner of the combined company.

Serent originally invested in Cardon Outreach, a provider of third party eligibility and other revenue cycle management services for hospitals, in January 2011.  Since Serent’s initial investment, Cardon Outreach has recorded strong organic revenue growth, invested in its technology platform, and completed three add-on acquisitions.  As a result, Cardon Outreach is growing at over 20% per year organically, and has achieved overall revenue growth exceeding 30% annually since 2011.

According to Serent, the merger with DHR creates a leading independent, national provider of technology-enabled eligibility and revenue cycle management services, with a suite of service offerings that includes patient eligibility, third-party liability, disability, and accounts receivable collection.  As one entity, the companies will serve over 600 hospitals and 300 clinics and will have more than 1,100 employees. Cardon Outreach is based in Houston (www.cardonoutreach.com) and DHR is based in Anaheim (www.diversifiedhealthcare.org).

Specific benefits to the merger include providing Cardon Outreach access to the California market, the country’s largest and most complex Medicaid market; cross-selling Cardon’s services to DHR’s client base; and realizing benefits of scale from each company’s investments in technology.  Looking towards the future, Serent sees significant organic and acquisition-driven growth opportunities in this highly fragmented market.

Serent Capital invests from $10 million to $50 million in service businesses with revenues of $10 million to $100 million and EBITDAs up to $15 million.  Transaction types include buyouts, recapitalizations and growth capital. The merger with DHR represents Serent’s sixth healthcare investment since 2010.  The firm is based in San Francisco (www.serentcapital.com).

Cain Brothers, a Chicago-based investment bank specializing in the healthcare industry, advised Serent and Cardon Outreach on this transaction (www.cainbrothers.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-10-15

Moelis Invests in FAST

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Moelis Capital Partners has made an investment in Flexible Architecture and Simplified Technology (FAST), a provider of software to life insurance companies.

FAST provides software that is used for life insurance policy administration, new business, underwriting, distribution management and claims processing. FAST was founded by the former leaders of NaviSys, an insurance industry software provider that was sold to Accenture in 2006.  FAST is headquartered in Edison, NJ (www.fasttechnology.com).

“FAST has the most innovative core life insurance software platform in the marketplace, and we believe the company is ideally positioned to continue capitalizing on the software modernization trend within the insurance industry,” said Joel Killion, a Partner at Moelis Capital.

Moelis Capital Partners (MCP) was founded in 2007 in connection with the formation of investment bank Moelis & Company.  The firm manages $870 million of committed capital and specializes in traditional private equity investments in the middle market.  MCP is based in New York (www.moeliscapital.com).

“MCP’s objectives for the business are directly in line with where I want to take FAST,” said Tom Famularo, Chief Executive Officer of FAST.  “I believe our customers will be well-served by this relationship, as MCP is a strong capital partner with significant resources and insights that will accelerate our maturity as an organization.”

Celent (www.celent.com), a financial and technology consulting firm owned by Marsh & McLennan, assisted MCP with industry due diligence.  “We were pleased to assist MCP in their analysis of the market for policy administration systems,” said Tom Scales, Research Director, Celent, “Insurers are under pressure to respond to the digital age and are being held back by their legacy state.  FAST is recognized as one of the technology leaders in the US marketplace, and is well-positioned to capture growth as insurers look to acquire more agile technology solutions.”

Sherman & Company (www.sherman-company.com), a Charlotte-based investment bank that specializes in the insurance industry, was the financial adviser to FAST on the transaction.

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-10-15

 

Avante Closes Fund II Above Target

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Avante Mezzanine Partners has held an above target final closing of Avante Mezzanine Partners SBIC II, LP (Fund II) with $250 million of capital commitments, including leverage from the Small Business Administration.  Avante will pursue the same investment strategy for Fund II as it did for its inaugural fund, providing debt and junior capital to lower middle market businesses with $3 million to $15 million in EBITDA.

Avante was able to close up Fund II within 6 months of starting fundraising and the fund was oversubscribed by 33%.  Limited partners in Fund II include new and existing investors including pension funds, family offices, banks, and other institutional investors.

“My partners and I are grateful for the overwhelming support we received from our existing investors and are excited to welcome many new limited partners to our fund,” said Jeri Harman, Managing Partner & CEO of Avante.  “We continue to believe that the lower middle market presents an attractive opportunity to invest junior capital and generate superior risk-adjusted returns for our investors.”

Avante, with offices in Los Angeles and Boston, provides unitranche/one-stop debt, mezzanine, and minority equity investments of $5 million to $25 million to sponsored and non-sponsored companies with EBITDAs from $3 million to $15 million. Sectors of interest include aerospace and defense; business services; consumer products; distribution; education; healthcare and life sciences; industrial manufacturing; security products and services; software and IT services; and specialty chemicals and coatings (www.avantemezzanine.com).

“We are thrilled and humbled to have the support of such a diverse group of institutional and family office investors who enabled us to raise our fund above target,” said Ivelisse Simon, the Partner at Avante who led the fundraising effort.  “With Fund II officially closed, our plan is to continue to leverage our strong market reputation and longstanding relationships, creative and responsive approach to the market, and disciplined investment selection process to build an attractive portfolio of debt and equity investments.”

Avante’s first fund closed above target in January 2012 with capital commitments of $218 million.

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-10-15

Monomoy Adds Distressed Debt Pro to Team

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Monomoy Capital Partners has hired Jordan Matusow to focus on sourcing new investments in the debt securities of distressed and underperforming businesses. He joins Monomoy from Nomura Securities, where he was an Executive Director in their credit sales group focused on a range of products, including distressed debt.

“We are thrilled to welcome Jordan to the Monomoy team,” said Justin Hillenbrand, a founding partner of Monomoy. “We believe that the next business cycle will provide attractive opportunities to acquire underperforming middle market businesses through their debt securities, and Jordan’s experience and relationships will position Monomoy for continued success in the firm’s core investment program.”

Mr. Matusow has over 10 years of experience in financial services and the capital markets.  Prior to his time at Nomura, he was an Executive Director at UBS Securities in credit sales and debt capital markets. Mr. Matusow has a BA from the University of Pennsylvania and a JD from the Benjamin N. Cardozo School of Law at Yeshiva University.

Monomoy Capital Partners makes control investments in middle market businesses with $50 million to $500 million in annual sales. Sectors of interest include manufacturing, distribution, consumer product and foodservice industries. Over the past ten years, Monomoy has acquired over 40 middle market companies from a variety of sellers (including family owners, public companies, lenders and financial sponsors) in a wide range of special situations (including bankruptcy, asset sales, equity sales and restructurings).  The firm s headquartered in New York (www.mcpfunds.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 9-10-15