Archives for October 2015

Audax Acquires California Products

by

Audax Private Equity has acquired California Products Corporation, a maker of interior and exterior paints and stains, from Delos Capital which had acquired the company in December 2013. Delos remains a minority investor in California Products.

California Products is a provider of branded architectural interior and exterior paints and stains, tennis court and other sports surfaces coatings systems, and mold and abatement remediation coatings. The company is led by Steven McMenamin, President.  California Products was founded in 1926 and is based north of Boston in Andover, MA (www.calprocorp.com).

The buy of California Products gives Audax a second company to add to its specialty products platform which currently includes in Nicoat, a manufacturer of water-based and UV-curable coatings used in graphic art, packaging, and specialty coating applications, which Audax acquired in March 2015 from Caltius Equity Partners. Continuing its private equity lineage, Caltius acquired Nicoat from Prairie Capital which first invested in the company in 2005. Nicoat is based just outside Chicago in Itasca, IL (www.nicoat.com).

Audax plans to operate California Products and Nicoat as standalone businesses but will view them as one specialty products platform. Audax will seek to monetize synergies where it can through combined raw material purchasing, technological collaboration, and shared services.  As you would expect, Audax plans to grow the platform through acquisitions in both new and existing end markets, products lines, and technologies as well as through organic growth.

“Our entire organization is excited to partner with Audax and Nicoat in our vision to create a specialty formulated products platform, leveraging Audax’ experience in building companies through acquisition, including within the specialty chemicals sector, with our leading brands, scalable operations, and talented leadership and employees,” said Steven McMenamin, President of California Products.

“We are thrilled to partner with Steven McMenamin and his senior management team who have built California Products into a market leading platform in its core end markets through organic growth and several acquisitions,” said Don Bramley, a Managing Director of Audax Group. “We look forward to working together with him as well as Pete Longo, who served as California Products’ CEO and has now joined the board of the combined platform, to accelerate growth organically and through acquisition and build upon the successes they have achieved.”

The Audax Group makes control investments of $10 million to $100 million in middle market companies with transaction values of $25 million to $500 million. Sectors of interest include industrial manufacturing; energy; outsourced industrial services; consumer products; healthcare devices and services; non-asset based logistics; technology; aerospace & defense; business services; and direct marketing.  Audax has over $6 billion in assets under management in its private equity, mezzanine, and senior debt businesses. The firm was founded in 1999 and has offices in Boston, New York, and Menlo Park (www.audaxgroup.com).

Delos Capital, the seller of California Products, invests in lower middle market companies that have EBITDAs of $10 million to $30 million and are active in the chemicals, packaging, industrial, consumer sectors. The firm was founded in 2013 and is based in New York (www.deloscap.com).

“Delos Capital was fortunate to have backed the right company and management team in our fund’s first investment,” said Matt Constantino, Founder of Delos Capital. “Our investment in California Products yielded a great return for our institutional shareholders, and we are excited about our rolled equity going forward.”

Middle-market investment bank Grace Matthews (www.gracematthews.com) was the financial advisor to California Products. The transaction was led by Andy Hinz, a Director at Grace Matthews.  Goodwin Proctor was California Products’ legal counsel and Kirkland & Ellis served as legal counsel to Nicoat and Audax.

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-30-15

Calling the Crest, Continued

by

By Andrew Greenberg, CEO GF Data –

The “Calling the Crest” article published a few weeks ago generated a wide response.  Most of GF Data’s correspondents seemed to agree with the thesis that it may be early to say this “seller’s market” has crested, but that a tightening in the debt markets will be the most likely cause of a correction when it comes.

Most of the questions we received centered on two points:

  1. How will a tightening affect deals of different sizes in the middle market, given that leveraged finance is more available to – and utilized more heavily by – the buyers of larger companies?
  2. What is the basis for our view that, in the absence of some cataclysmic macro event, this retrenchment is likely to have “an unmistakable but moderate” impact on valuations, rather than causing a more severe decline?

Let’s tackle the size question first.  Our subscribers are familiar with the “size premium” we track regularly – the spread between valuations on platform buyouts in the $10 million to $50 million and $50 million to $250 million value ranges. (The GF Data universe comprises transactions completed by private equity firms and other sponsors, including more than 200 current active contributors.)

This “size premium” spread has been unusually high in the past 18 months.  The chart below focuses on the lowest and highest valuation tiers in our universe and disaggregates the size premium.  The differential in total debt is defined as the spread due to “leverage.”  The balance of the spread is given the catch-all label of “scale.”

[Click chart to enlarge]

What can we draw out of this decomposition of the size premium?

  • The total premium has been consistently higher in the years since 2011 than the years prior, perhaps reflecting the profusion in number of capital providers and in amount of capital available to support sponsored transactions.
  • The portion of the premium accounted for by greater leverage has been remarkably consistent over the past four and a half years – between 1.2x and 1.4x in each period.
  • The portion of the premium that we are attributing to “scale” – all of the other reasons why larger firms are valued more highly than similar smaller ones – has also been consistent, in the range of 1.0x to 1.1x for every period except 2012.

In the first six months of this year,  platform acquisitions in the $100 million to $250 million Total Enterprise Value (TEV) range traded at an average of 8.3x TTM Adjusted EBITDA, compared to 6.0x in the $10 million to $25 million bracket, with the leverage premium accounting for about half of the differential.

We conclude that for a $100 million to $250 million transaction, about 1.2x in value is due to greater debt utilization, and thus “at risk” to a contraction in debt availability.

In the $25 million to $100 million TEV range, the “at risk” piece is about .7x (see footnote below). While the GF Data universe is capped at $250 million in TEV, we assume that the same methodology would show greater amounts at risk on larger transactions.

This brings us to the second question – what is the basis for thinking that a debt-driven market move is likely to be moderate?

The assertion in the original article was based on:  (1) the amount of capital available; (2) the range of capital providers serving the middle market; (3) the generally positive economic conditions prevailing in the United States; and (4) expectations for corporate performance in the industries in which our data is concentrated.

One of our contributors asked if this view took account of the current financial condition of the publicly traded Business Development Corporations (BDCs) that have assumed such an active profile in the swath of market we cover.   He raised the frequently cited concern that a number of BDCs are trading at market valuations below their book value.

This is getting outside of our own core expertise, but it got us curious. The chart below shows the market performance of BDCs with TEVs in excess of $1.25 billion since the beginning of this year.

[Click chart to enlarge]

The two rightmost columns show stock price in relation to book value.   We find it interesting to note that among these eleven companies, the five largest are currently valued at discounts to book value, the six smallest at premiums.   BDCs with lesser enterprise values based on their current stock prices are generally trading at less than book value, with a handful of exceptions.

What exactly this means with respect to individual companies and the BDC sector, we will leave to those who follow the industry more closely.  For now, we will stick with our view that the middle-market transaction finance industry is varied enough and capitalized sufficiently to retrench in a measured, rather than dramatic, fashion.

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 more information, visit www.gfdataresources.com.

.

______________________________________
Footnote: (1) At $25 million to $100 million TEV, the total size premium in relation to the $10 million to $25 million bracket is 1.5x, with the leverage differential accounting for .7x and scale .8x.  I want to acknowledge that for purposes of this analysis, we are assuming no covariance between the two premium components, which in practice is almost certainly not the case.  For example, a buyer might stretch in valuation on a platform acquisition based on the belief that an accommodating debt market likely will support add-ons. That increment appears in “scale” but reflects a view of “leverage.”.

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-30-15

Jon Winkelried to Join TPG as Co-Chief Executive Officer

by

Jon Winkelried, the former Goldman Sachs President and Co-Chief Operating Officer, has been named Co-Chief Executive Officer of TPG Holdings.

Mr. Winkelried will assume his new role in early November and will be based in TPG’s San Francisco office. He will work alongside TPG Co-Founder and current Chief Executive Officer Jim Coulter. David Bonderman, who co-founded TPG with Mr. Coulter, will continue in his role as Co-Founder and Chairman of TPG.

Mr. Winkelried – who has been characterized in the press as “the man who walked away from Goldman Sachs” – spent 27 years at the firm and in addition to being President and Co-Chief Operating Officer, he held many other senior positions including co-head of the firm’s investment banking division, co-head of its fixed income, currency and commodities division, and head of the firm’s leveraged finance business.

Mr. Winkelried currently manages JW Capital Partners (his investment firm) which is active in the technology, real estate, healthcare, and natural resources sectors. He is also a strategic advisor and partner at Thrive Capital, a New York-based venture capital firm. In addition to his investing activities, Mr. Winkelried is also an advisor to TPG’s special situations and credit platform which is named – appropriately – TPG Special Situations.

“I have always admired TPG under Jim’s and David’s leadership and, as an advisor to TPG Special Situations, have had the opportunity to grow closer to the firm,” said Mr. Winkelried. “Building on the momentum, expanded platform, and significant talent, I am excited about the opportunity to be part of TPG’s next era.”

John Coulter had this to say on the addition of Mr. Winkelried, “Jon brings experience, insights and creativity to TPG as we continue our evolution as a firm. During the past 23 years, TPG has built a worldwide alternative asset platform, differentiated ourselves as an industry leader in products, industries and geographies, and created new and dynamic opportunities for our investors. As we enter our next era of growth, Jon’s track record of building great investment businesses will be fundamental.”

TPG was founded in 1992 and makes investments throughout North America, Europe, Asia and Australia.  Sectors of interest include industrials, retail, consumer, financial services, travel and entertainment, technology, media and communications, and healthcare.  The firm has offices in San Francisco, Fort Worth, Austin, Dallas, Houston, New York, Beijing, Hong Kong, London, Luxembourg, Melbourne, Moscow, Mumbai, São Paulo, Shanghai, Singapore and Tokyo (www.tpg.com).

“As we operate in an increasingly complex financial environment, it is important to have strong leadership,” said Mr. Bonderman. “The combination of Jim and Jon brings together complementary skill sets that will benefit our firm greatly. I look forward to working with them both to achieve future success at TPG.”

Mr. Winkelried received a BA in Economics from the University of Chicago in 1981 and an MBA from the Graduate School of Business at the University of Chicago in 1982.

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-29-15

IBM Acquires Weather Company’s Cloud

by

IBM has entered into an agreement to acquire The Weather Company’s B2B, mobile and cloud-based web properties, including WSI, weather.com, Weather Underground and The Weather Company brand for a reported $2 billion.

The Weather Channel, which is the cable/television segment of The Weather Company (TWC), is not part of this transaction but will license weather forecast data and analytics from IBM under a long-term contract. TWC is owned by Blackstone, Bain Capital and NBCUniversal which acquired the company for $3.5 billion in 2008.

The acquisition is the result of an alliance formed by TWC and IBM earlier this year that provided for IBM to license TWC’s cloud data platform and to provide businesses and developers with real-time weather information.

This acquisition will combine IBM’s cognitive and analytics platform and TWC’s cloud data platform, which powers the fourth most-used mobile app daily in the United States and handles 26 billion inquiries to its cloud-based services each day. TWC’s information models analyze data from three billion weather forecast reference points, more than 40 million smart-phones and 50,000 airplane flights per day, allowing it to offer a huge range of data-driven products and services to more than 5000 clients in the media, aviation, energy, insurance and government industries. TWC is headquartered in Atlanta (www.theweathercompany.com).

For IBM, this transaction will extend the reach of its cloud data services capabilities and expand the business capabilities and consumer reach of the acquired TWC assets.  Using TWC’s cloud-based data platform, IBM will be able to collect larger and more varied and higher volume data sets, store them, analyze them and in turn distribute them across its Watson platform.

“The Weather Company’s extremely high-volume data platform, coupled with IBM’s global cloud and the advanced cognitive computing capabilities of Watson, will be unsurpassed in the Internet of Things, providing our clients significant competitive advantage as they link their business and sensor data with weather and other pertinent information in real time,” said John Kelly, senior vice president, IBM Solutions Portfolio and Research. “This cloud platform will position IBM to arm entire industries with deep multimodal insights that will help enterprises gain clarity and take action from the oceans of data being generated around them.”

Blackstone is one of the world’s largest investment and advisory firms. The firm’s alternative asset management businesses include the management of private equity funds, real estate funds, hedge fund solutions, credit-focused funds and closed-end funds. Blackstone also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Blackstone is headquartered in New York (www.blackstone.com).

Bain Capital manages several pools of capital, including private equity, venture capital, and public equity and leveraged debt assets. The firm has more than $75 billion in assets under management. Since its inception in 1984, Bain Capital has made private equity investments and add-on acquisitions in more than 450 companies in a variety of industries around the world. The firm has offices in Boston, New York, Chicago, Palo Alto, London, Munich, Dublin, Luxembourg, Tokyo, Shanghai, Hong Kong, Mumbai and Melbourne (www.baincapital.com).

Ropes & Gray (www.ropesgray.com) represented Bain Capital and The Blackstone Group on this transaction. The Ropes & Gray team included private equity partners Newcomb Stillwell, William Mone, and Neill Jakobe.

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-29-15

Monroe Heads North with New Hire

by

Monroe Capital has decided to expand its presence and coverage in Canada and has hired Mark Sturrock to lead its origination efforts there.  Mr. Sturrock will be based in Toronto.

“We are very excited to have Mark as part of the Monroe Capital team,” said Ted Koenig, President & CEO of Monroe Capital. “The expansion of our product offering in Canada is consistent with our plan to deepen our presence in the middle market throughout North America. Mark will be responsible for leading the firm’s Canadian lending efforts in private equity sponsored and non-sponsored transactions.”

Prior to joining Monroe, Mr. Sturrock was a Senior Managing Director at Salus Capital Partners. He has also held senior management positions at Canadian Imperial Bank of Commerce, Wells Fargo Foothill Canada and at Royal Bank of Canada.  In total, Mr. Sturrock has nearly 30 years of experience in the Canadian debt market, asset based lending, commercial lending and international trade. He earned his BA in Business Economics from Brock University in St. Catharines, ON.

Monroe Capital provides senior and junior debt and equity co-investments to middle-market companies. The firm was founded in 2004 and maintains offices in Chicago, Atlanta, Boston, Charlotte, Dallas, Los Angeles, New York and San Francisco (www.monroecap.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-29-15

Nautic Acquires Aerostar Aerospace

by

Nautic Partners has acquired Aerostar Aerospace Manufacturing in partnership with the company’s management team. Aerostar is a manufacturer of machined parts used in commercial aircraft, primarily in engines and in auxiliary power units.

Aerostar is active in manufacturing high-complexity parts using difficult to work with materials such as titanium, Inconel, (an alloy of nickel containing chromium and iron) and other hard-metal alloys. Aerostar has long-term contractual relationships with several Tier-I and Tier-II aerospace customers, and manufactures and services parts for some of the largest and most rapidly growing platforms in commercial aerospace.  The company was founded in 1983 and is headquartered in Phoenix (www.aerostaraerospace.com).

“The outlook for the commercial aerospace market is attractive, yet the supply chain for critical machined components remains quite fragmented,” said Chris Pierce, a Managing Director of Nautic. “Aerostar is a company with strong operations, good platform exposures, in-demand capabilities, and a blue chip customer base. This company is well-positioned to benefit from and drive consolidation in the space.”

Nautic Partners is a middle-market private equity firm with over $3 billion of equity capital under management. Nautic targets majority equity investments of $25 million to $75 million. Sectors of interest include industrial products, outsourced services, and healthcare. The firm was founded in 1986 and is headquartered in Providence, RI (www.nautic.com).

“In Nautic, we have found a partner who shares our values, and who will provide Aerostar with the resources it needs to grow far into the future,” said Brandon McDermott, CEO of Aerostar. “I am very proud of Aerostar’s talented management team and employees, and I expect an excellent partnership with Nautic.”

As part of Nautic’s investment in Aerostar, the company will expand to a new 55,000 sq. ft. facility and acquire state of the art equipment that will nearly double production capacity over the next few years.  “We look forward to working with the Aerostar team to build a larger business both organically and via targeted acquisition efforts,” said Nick Vidnovic, a Senior Associate of Nautic.

Greene Holcomb and Fischer (GHF) was the financial advisor to Aerostar. GHF is active in middle market mergers and acquisitions, private placements and financial advisory services.  Areas of specialization include consumer, food & agribusiness, healthcare, industrial products & services, business & education services, technology, and energy & infrastructure.  The firm has offices in Minneapolis, Phoenix, Seattle and Atlanta (www.ghf.net).

National Bank of Arizona (www.nbarizona.com) provided financing for the transaction.

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-29-15

Tailwind Buys AEA’s Colony Hardware

by

Colony Hardware, a portfolio company of AEA Investors since July 2007, has been acquired by Tailwind Capital.

Colony Hardware is a route-based distributor of tools, equipment, fasteners, supplies, safety products, as well as a provider of rental and repair services, to commercial construction and industrial accounts located in the Northeast, Midwest, and Mid-Atlantic regions. The company has over 25,000 SKUs from more than 750 different manufacturers.  Colony focuses on small-ticket, just-in-time orders delivered directly to the jobsite. Customers include general contractors, civil contractors, and other subcontractors across multiple building trades. The company is headquartered near New Haven in Orange, CT (www.colonyhardware.com).

Tailwind makes investments of $25 million to $100 million in lower middle market companies with enterprise values of up to $300 million that are active in the healthcare, business and communications services sectors. Since its founding in 2003, Tailwind has invested over $1.2 billion in 31 portfolio companies and has completed over 70 add-on acquisitions.  The firm has 31 investment professionals and senior operating executives and is based in New York (www.tailwind.com).

AEA, the seller of Colony, makes equity and debt investments in middle market companies that operate in the following sectors: retail and consumer products, services, specialty chemicals, and value-added industrial products. The firm manages approximately $9 billion of invested and committed capital. AEA was founded in 1968 and is headquartered in New York (www.aeainvestors.com).

BB&T Capital Markets – through its Commercial & Industrial Group – was the exclusive financial advisor to Colony on this transaction.  The firm services eleven industry verticals including aerospace, defense & government services; automotive aftermarket; commercial & industrial; financial services; food & agribusiness; logistics & transportation services; healthcare; education; energy; real estate; and retail & consumer. BB&T – the parent of BB&T Capital Markets – is one of the largest financial services holding companies in the US with $210 billion in assets. BB&T is headquartered in Winston-Salem, NC (www.bbtcapitalmarkets.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-29-15

NEP Invests in Christy Sports

by

Norwest Equity Partners has made an investment in Christy Sports, a retailer of ski and snowboard equipment and during the its off-season operates an outdoor furniture retail business.

Christy Sports is a specialty retailer of ski and snowboard equipment, apparel, and accessories and also provides custom fitting, mounting, tuning and repair services. The company has 40 retail stores located in resorts and ski areas across Colorado and Utah and operates multiple e-commerce sites.  In addition to the retail merchandise available in its stores, Christy provides ski and snowboard rental services. During the off-season, Christy operates an outdoor furniture retail business that allows it to use its operational infrastructure, employees and distribution facilities. Christy Sports was founded in 1958 and currently employs about 650 people. The company is headquartered in the Denver suburb of Lakewood (www.christysports.com).

“We are excited to work with CEO Patrick O’Winter and his management team to grow the business through geographic expansion and add-on acquisitions and feel confident that the combination of our capital and industry expertise will help Christy Sports to continue gaining market share,” said Todd Solow, a NEP partner.

Norwest Equity Partners (NEP) makes equity investments of $30 million to $150 million in companies operating in the agriculture, applied technology, business services, consumer products and services, distribution, diversified industrials, and healthcare sectors. In April 2015, NEP closed Norwest Equity Partners X, LP, a new $1.6 billion fund and Norwest Mezzanine Partners IV, LP, a new $800 million fund formed by NEP’s affiliated mezzanine investment firm, Norwest Mezzanine Partners (NMP). Norwest Equity Partners is headquartered in Minneapolis (www.nep.com).

ICR Partners (www.icrinc.com) was the financial advisor to Christy Sports and Goldberg Kohn (www.goldbergkohn.com) provided legal services.  Winston & Strawn (www.winston.com) provided legal services to NEP.

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-29-15

Vance Street Capital Exits Secure Technology

by

Vance Street Capital has entered into an agreement to sell Secure Technology Company to Benchmark Electronics for approximately $230 million in cash. Vance Street acquired a majority interest in Secure in October 2009.

Secure Technology is a provider of electronics, sub-systems, and components used in the industrial, aerospace and defense markets. The company’s products include rugged computer systems, RF components; electronic manufacturing services, and digital audio/video instrumentation products.  Secure’s products are often used in mission critical applications in which they are exposed to severe operating environments and are integrated into aircraft, surface-to-air missiles, torpedoes, locomotives, subway cars, tactical ground vehicles or are carried by soldiers and other combat personnel.  The company is headquartered in Santa Ana, CA (www.securetechnologycompany.com).

During its term of ownership, Vance Street achieved significant growth in sales and profitability as a result of an expansion of the company’s products and customer base in both the defense and non-defense end markets. Vance Street also completed three add-on acquisitions with the buys of Tactical Micro in January 2014; Lark Engineering in September 2013; and Smart Electronics & Assembly in May 2013.

“Following our acquisition of Secure in 2009, we took several steps to grow the business. These initiatives included the implementation of continuous improvement processes, the creation of an advanced technology division to capitalize on the company’s strong engineering capabilities, and the addition of new products, technologies and customers via strategic acquisitions,” said Richard Crowell, Managing Partner at Vance Street Capital. “Secure is an impressive organization and the success we have had in partnership with CEO Allen Ronk and his management team has been gratifying.”

Vance Street Capital makes control investments in companies with enterprise values up to $200 million. Sectors of interest include general industrial, aerospace & defense, and medical components and devices.  The sale of Secure is the fourth from Vance Street Capital’s current fund, Vance Street Capital II LP, which closed in 2008. The firm is based in Los Angeles (www.vancestreetcapital.com).

“Secure has benefitted significantly over the last six years from the operational support and strategic guidance Vance Street Capital provided,” said Mr. Ronk. “Since 2009 our team of engineers has grown from less than ten to over 55 and our program base has grown from less than 30 to over 135. We remain focused on the many opportunities we see to meet and exceed our customers’ needs and continue to drive growth.”

Benchmark Electronics (NYSE: BHE), the buyer of Secure, is an electronics manufacturing services company that provides product development and contract manufacturing services to original equipment manufacturing companies. Benchmark is headquartered in the Houston suburb of Angleton (www.bench.com).

Harris Williams & Co. is the financial advisor to Secure and O’Melveny & Myers is acting as its legal counsel.

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-28-15

Calvert Street Buys Abrasive-Form

by

Calvert Street Capital Partners has acquired Abrasive-Form, a precision creep-feed grinding manufacturer serving the industrial gas turbine, aerospace, automotive, and general industrial markets.

Creep feed grinding is a method of machining intricate forms and slots in a wide variety of materials. The process has several advantages over other machining and grinding methods, including increased accuracy, efficiency, improved surface finishes, burr reduction and the ability to grind heat treated materials.  Creep feed grinding was invented in Germany in the late 1950s by Edmund and Gerhard Lang.

Abrasive-Form’s product portfolio includes more than 400 custom-engineered metal component parts including turbine blades, vanes, shrouds, rotors, and sprockets. Abrasive-Form was founded in 1976 and is headquartered west of Chicago in Bloomingdale, IL (www.abrasive-form.com).

“We are thrilled to have found a partner who shares our vision for the next evolution of Abrasive-Form. With their growth orientation and operational expertise, Calvert Street will help us accelerate the implementation of our strategic growth plan,” said John Harig, President of Abrasive-Form.

Calvert Street makes control investments of $10 million to $20 million in companies that have an EBITDA from $5 million to $15 million and are located in the US or Canada.  Sectors of interest include industrial services, business services, healthcare IT, and specialty manufacturing sectors. The firm was founded in 1995 and is based in Baltimore (www.cscp.com).

Mid-market investment bank Livingstone Partners was the financial advisor to Abrasive-Form for this transaction. “Abrasive-Form has developed a leading global market position in the niche precision form grinding sector,” said Karl Freimuth, a Director at Livingstone. “We are proud to have advised Abrasive-Form on a successful sale and to have found an ideal partner in Calvert Street to support the company’s ambitious future growth plan.” Mr. Freimuth led the transaction for Livingstone.

Livingstone focuses on M&A and private capital transactions with values between $30 and $300 million in five sectors: business services; consumer; healthcare; industrial; and media & technology.  Abrasive-Form is Livingstone’s latest transaction in the power generation sector, a growing focus for the firm’s industrial team.  Livingstone is based in Chicago and has five international offices in Beijing, Dusseldorf, London, Madrid and Stockholm (www.livingstonepartners.com).

Godfrey & Kahn (www.gklaw.com) was the legal counsel to Abrasive-Form and Willkie Farr & Gallagher (www.willkie.com) advised Calvert Street.

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-28-15

Searchlight Acquires Roots

by

Searchlight Capital Partners has made a majority investment in Roots in partnership with the company’s co-founders Michael Budman and Don Green who have maintained a minority equity position in the company.

Roots is one of Canada’s leading lifestyle brands and sells women’s, men’s, children’s, and baby’s apparel; leather bags; footwear; active athletic wear; belts, small leather goods; and home furnishings. Roots has 220 retail stores in Canada, the United States and Asia and also has an active ecommerce business.   Roots maintains a state-of-the-art factory and distribution center in Toronto, both located near the company’s headquarters where all Roots products are designed. The company was founded in 1973 by Mr. Budman and Mr. Green, together with their wives, Diane Bald and Denyse Green (www.roots.com).

“Before making the decision to partner with Searchlight, Don and I had extensive discussions and meetings with the firm’s co-founders, Erol Uzumeri and Eric Zinterhofer, over a period of several months,” said Mr. Budman. “We were impressed by how well they understood and respected our brand. Not only do they have relevant experience, international expertise and financial resources to draw on, but they are also committed to Roots staying true to its longstanding values, culture and quality products.”

“Our investment will enable Roots to support its long-term growth ambitions,” said Canadian Searchlight co-founder Erol Uzumeri. “As one of the few iconic Canadian heritage brands, we see significant growth potential for Roots in both Canada and internationally across multiple distribution channels.”

Searchlight Capital Partners invests equity and debt in companies active in the telecom; communications, information and information technology services; business and financial services; industrial goods; and consumer sectors. The firm was founded in 2010 by its partners Oliver Haarmann, Erol Uzumeri, and Eric Zinterhofer. Searchlight is headquartered in London with additional offices in New York and Toronto (www.searchlightcap.com).

Toronto-Dominion Bank is providing debt financing for this transaction.

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-28-15

Paine & Partners Acquires Suba Seeds

by

Paine & Partners has signed an agreement to acquire Suba Seeds Company, a specialty vegetable and legume seed producer based in Italy.

Suba is a producer, packer and distributor of specialty vegetable seeds for professional, semi-professional and hobby garden markets. The company is also a contract supplier to major seed companies. Suba is the world’s leading producer of coriander (cilantro), and its portfolio of core crops include varieties of beans, peas, radish, cabbage, alfalfa, carrots, chicory and onion. Suba is supplied with its seed products through a network of more than 1,000 growers.  The company was founded in 1974 by Augusto Suzzi and is headquartered southeast of Bologna in Longiano, Italy (www.subaseeds.com/eng).

Paine & Partners provides equity capital for management buyouts, going private transactions, and company expansion and growth programs, for companies operating in the food and agribusiness industries.  The firm currently invests through its $893 million Paine & Partners Fund IV, which is solely dedicated to agribusiness investing. Paine & Partners was founded in 2006 and has offices in New York, Chicago and San Mateo, CA (www.painepartners.com).

Paine & Partners has previously invested in the seed industry through a predecessor fund that invested in Seminis, a developer, producer and marketer of vegetable and fruit seeds that was sold to Monsanto in 2005; and in Advanta, an agronomic seed company that was sold in 2006 to United Phosphorus.

“Our acquisition of Suba will provide Paine & Partners the opportunity to leverage our substantial in-house seed investment expertise and operating knowledge across the seed industry to build a global leading specialty vegetable seeds production platform,” said Kevin Schwartz, President and a founding Partner at Paine & Partners.

Paine & Partners intends to build on Suba’s competitive advantages by expanding into new markets, enhancing Suba’s portfolio with higher margin products and making strategic acquisitions.  “Suba has built an unmatched reputation for meeting the needs of our customers with our high quality and reliable seed products since our founding more than 40 years ago,” said CEO Marcello Tumedei.  “As we look toward the continued growth of our company, we have found an ideal partner in Paine & Partners, who shares our vision and confidence in Suba’s long-term growth prospects.  Paine & Partners has a proven track record and unparalleled expertise in agribusiness, and we look forward to benefiting from their experience and their resources as we take Suba to the next level.”

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-28-15

Arsenal Adds New Operating Partner

by

Arsenal Capital Partners has added Michael Huff to its team of operating partners. Mr. Huff’s prior experience includes senior operating positions with large public companies, as well as serving as CEO for private equity owned Citadel Plastics.

Mr. Huff will work within Arsenal’s specialty industrials group and is the firm’s 12th Operating Partner.  “Arsenal has built a diverse and dedicated team of world-class operating resources to help us grow our portfolio companies globally and we believe that Mike is an outstanding operating executive who will be able to apply the experience he has attained over the past 35 years to our current and new investments,” said John Televantos, a Partner who co-heads Arsenal’s Specialty Industrials group.

Mr. Huff has been with Citadel Plastics since 2008, most recently as President and CEO for the past five years.   In June 2015, HGGC (formerly Huntsman Gay Global Capital) and Charlesbank Capital Partners sold Citadel Plastics to strategic buyer A. Schulman. Prior to his time at Citadel, Mr. Huff was with Johns Manville from 2003 to 2007 as a Vice President, Operations and more recently as VP/General Manager.  From 1982 to 2003 he served in increasing operational capacities for GE Plastics.

Arsenal Capital Partners invests in middle-market specialty industrial and healthcare companies that have $50 million to $250 million in enterprise value.  Industries of specific interest include specialty & fine chemicals; segments of healthcare; transportation and logistics; power generation; aerospace & defense; and process industry components and services.  Arsenal has $1.7 billion of committed capital under management. The firm was founded in 2000 and has offices in New York and Shanghai (www.arsenalcapital.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-28-15

Bregal Acquires NATHAN Sports

by

United Sports Brands, a portfolio company of Bregal Partners, has acquired NATHAN Sports, a designer of support equipment used by runners.

NATHAN Sports designs hydration and visibility equipment including hydration vests, belts, handhelds, bottles, running packs, visibility products and reflective vests. The company’s products are sold by specialty running shops, outdoor retailers, and sporting goods stores in 45 countries. NATHAN Sports is headquartered in the Philadelphia suburb of Sharon Hill (www.NathanSports.com).

“We’re excited to add NATHAN to the growing United Sports Brands portfolio of authentic brands. NATHAN is an ideal complement to the current portfolio of United Sports Brands products, and we look forward to working with the NATHAN team, further fueling this powerful brand’s growth,” said Tony Armand, chief executive officer of United Sports Brands.

NATHAN is the fifth brand in United Sports Brands’ portfolio, which includes Shock Doctor (a maker of mouth guards – www.shockdoctor.com); McDavid (sports medicine, sports protection and performance apparel – www.mcdavidusa.com); Cutters (athletic gloves – www.cutterssports.com); and XO Athletic (athletic cups and sports protection – www.xoathletic.com). United Sports is headquartered in the Minneapolis suburb of Minnetonka.

NATHAN’s principal owner and chairman, Jon Reichlin, will be an investor in United Sports Brands and remain a contributor to the NATHAN brand. NATHAN will relocate operations to United Sports’ headquarters in Minnesota and California in phases beginning in 2016.

Bregal Partners invests from $25 million to $90 million of equity in companies operating in the consumer, food & retail, energy services and healthcare services. Target investments typically have $15 million to $75 million or more of EBITDA. The firm has $600 million of committed capital funded by a sixth-generation family foundation.  Bregal Partners is based in New York (www.bregalpartners.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-27-15

Bunker Hill Exits SunBrite

by

Bunker Hill Capital has sold its portfolio company SunBrite Holding Corporation to SnapAV, a portfolio company of General Atlantic. Bunker Hill acquired SunBrite in December 2010 from the company’s original founders and several individual shareholders.

SunBrite is a designer, manufacturer and supplier of all-weather outdoor televisions, outdoor digital displays and related accessories. The company’s products can withstand heavy rain, moisture, dust and insects, and can operate in extreme temperature ranges. SunBrite sells its products in the US and internationally for both residential and commercial applications. The company is headquartered near Los Angeles in Thousand Oaks, CA (www.sunbritetv.com).

“The sale of SunBrite represents a solid return for our limited partners, and we are grateful to Cameron Hill and the entire SunBrite management team for their hard work and devotion to the business over the years, as well as the support from our financing partners, Zions First National Bank and Avante Mezzanine Partners,” said Brian Kinsman, a Managing Partner of Bunker Hill Capital.

Bunker Hill makes control investments in lower middle market companies with EBITDAs between $5 million and $20 million, and enterprise values up to $120 million.  Sectors of interest include industrial products, business services, consumer products, and specialty retail.  The firm has offices in Boston and San Diego (www.bunkerhillcapital.com).

“Bunker Hill’s proactive, hands on approach to growing our business was a key success factor in taking the business to the next level,” said CEO Cameron Hill of SunBrite.

The buyer of SunBrite is SnapAV, a manufacturer and wholesaler of custom audio/visual products, accessories, and software based in Charlotte (www.snapav.com).  SnapAV has been a portfolio company of General Atlantic since June 2013.

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-27-15

Topspin Acquires JD Beauty

by

Topspin Partners has acquired a majority interest in JD Beauty, a designer and marketer of branded hair brushes and beauty care accessories.

Jeff Rosenzweig, the founder and CEO of JD Beauty, will continue to lead the company under Topspin ownership.  “We are excited to have Topspin as our partner.  Their expertise and network in the personal care industry will be invaluable as we grow our brand and expand our market presence,” said Mr. Rosenzweig.  “Topspin’s strategic insight will be helpful as we consider various avenues for growth.”

According to Topspin, JD Beauty’s flagship detangling brush, the Wet Brush, is the number one hair brush brand in the professional channel and the fastest-growing hair brush brand in the consumer retail channel.

“The Wet Brush reinvigorated the hair brush category with design and function and redefined the ‘detangling brush,'” said Leigh Randall, Managing Director at Topspin. “JD Beauty has established tremendous consumer and stylist acceptance and a loyal and growing base of consumers as evidenced by its rapid growth over the last few years. We intend to expand the Wet Brush brand into complementary new channels.”

Topspin Partners makes control investments in profitable and established lower middle-market businesses. Sectors of interest include health and wellness, niche consumer, food and beverage, business services and security. The firm is based near New York City in Roslyn Heights, NY (www.topspinpe.com).

“JD Beauty’s beginnings date to 1977, when I started selling beauty products at local flea markets. My mom’s basement in Queens was my first warehouse. I had no idea that we would evolve into one of the leading marketers and manufacturers of professional hairbrushes in the world. Here we are, 38 years later and JD Beauty Group is known for thousands of items,” said Mr. Rosenzweig.

JD Beauty is based on Long Island in Hauppauge, NY (www.jdbeauty.com).

Intrepid Investment Bankers (www.intrepidib.com) was the financial advisor to JD Beauty.

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-27-15

Stoic Buys Store It Cold

by

Stoic Holdings has acquired Store It Cold, a provider of cooling technology used in the walk-in cooler industry.

Store It Cold’s primary product is the CoolBot, a patented device that is used to create a low-cost walk-in cooler using a standard window or mini-split air conditioner. CoolBots are used in the agricultural, floral, brewing, dairy, grocery, seafood, restaurant, hunting, wine and transportation markets.  Since founding in 2007, Store it Cold has sold over 27,000 CoolBots across 58 countries (www.storeitcold.com).

In buying Store It Cold, Stoic Holdings partnered with the existing owners and the senior management team to complete the transaction, including founder Ron Khosla, who will be active with technical development of the CoolBot post closing. “I developed this technology as a small farmer who needed an affordable cold storage solution for my harvest,” said Mr. Khosla. “After many years of success, we are excited to partner with Stoic as we scale the business and continue to deliver high-quality cooling solutions to our customers.”

“Since founding in 2007, Store It Cold has earned its reputation for superior product performance, a strong customer value proposition, and exceptional customer service by manufacturing an outstanding product that cost effectively serves its customers’ cooling needs,” said Ryan Berk, a partner at Stoic. “We are excited to partner with Store It Cold and support its next phase of growth.”

Stoic Holdings invests in lower middle market companies that have operating income of $1 million to $10 million. Sectors of interest include manufacturing and industrial services; niche distribution and logistics; specialty materials; business services; testing and inspection; seafood and agribusiness; environmental services; aerospace and defense; and healthcare services. Stoic was founded in 2014 by Ryan Berk and Michael Dworkis and is headquartered in Denver (www.stoicholdings.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-27-15

Stone-Goff Has Fund II Close

by

Stone-Goff Partners has held a closing for its second fund, Stone-Goff Partners Fund II, LP, (Fund II).

Stone-Goff (SGP) invests from $6 million to $20 million of equity in lower middle market companies that are active in the consumer, leisure, information, service, media and retail sectors. SGP is led by its founders Hannah Stone Craven and Laurens Goff, who together have more than 40 years of private equity experience. SGP was founded in 2010 and has offices in New York and Boston (www.stonegoff.com).

This closing for Fund II includes a capital commitment from lead investor Carl Marks & Co. “We are impressed by Hannah, Laurens and the business they have built together over the last few years,” said Mark Claster, President of Carl Marks. “We look forward to a long and fruitful future together.”

SGP announced last week its first Fund II investment, The Greene Turtle Sports Bar & Grille, a 41-unit, sports-themed casual dining restaurant chain based in Maryland with units located from Virginia to New York. “We continue to identify and invest in companies with a great track record of stable, profitable growth,” said co-founder and partner Laurens Goff, “and we look forward to announcing additional investments in the near term.”

Carl Marks & Co. is a family-owned and -operated merchant bank that is active in advisory services, distressed investments, investment management, private equity, and real estate.  “I’m delighted to have Hannah, Laurens and their team on board and excited to add another new team to the Carl Marks family,” said Katherine Boas, Executive Vice President at Carl Marks and a fourth-generation family member leading its growth. “They set the bar high as we begin our tenth decade.”

Carl Marks & Co. was founded in 1925 and is headquartered in New York (www.carlmarks.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 10-27-15