Archives for November 2015

Sverica Acquires Synoptek

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Sverica Capital Management has acquired Synoptek, a provider of outsourced IT managed services.

Synoptek provides help desk support, cloud hosting, disaster recovery, as well as consulting and project management services. Synoptek is headquartered in Irvine, CA with additional offices in Denver, Sacramento, San Francisco, and Boise (www.synoptek.com).

“We started tracking Synoptek in 2013 and first met CEO Tim Britt early in 2014,” said Frank Young, Managing Director at Sverica. “Tim and the team have impressed us with the tremendous growth they have experienced in that timeframe. Synoptek is now emerging as one of the largest managed service providers in the country, and we are very excited to partner with them to continue on their path of innovation and growth.”

Sverica invests in service oriented businesses and light industrial manufacturers. The firm targets companies with enterprise values under $100 million and EBITDAs greater than $3 million. Sverica was founded in 1993 and has raised over $500 million of investment capital across multiple funds.  The firm has offices in Boston and San Francisco (www.sverica.com).

“Synoptek brings enterprise technology services to organizations that don’t have large IT departments. Ultimately, our customers have better IT capabilities and services by leveraging Synoptek’s shared IT services such as cloud computing infrastructure, network management services, security services, and help desk services.” said Tim Britt, Chief Executive Officer of Synoptek. “Our partnership with Sverica will enable us to continue to execute our plans for acquisitive and organic growth as we strive to become the leading branded IT managed services provider in the country.”

The acquisition of Synoptek is the first made by Sverica’s fourth fund – Sverica International Investment Fund IV, LP – which is currently being raised with a target of $250 million.

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-5-15

Freeman Spogli Invests in Regent

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Freeman Spogli & Co. has made an investment in Regent Holding Company, a designer, marketer and supplier of home décor and accent products.

Regent markets its products through 12,000 independent and chain retailers in the US and over 3,500 customers in Europe. The company products – totaling more than 8,000 SKUs across more than 30 home décor product categories – are sold primarily under two trade brands, Creative Co-Op in the US and Bloomingville in Europe.  Products include jewelry, candle holders, clocks, coasters, decorative trays & bowls, frames, figurines & statues, and other home decor items. The company is led by its CEO Eugene Wang. Regent was founded in 2001 and is headquartered in Memphis (www.creativecoop.com).

“Regent is well-positioned as a critical link in the supply chain between independent retailers and low-cost overseas manufacturers, offering its customers a unique combination of product selection, customer service and reliability,” said Brad Brutocao, a Partner at Freeman Spogli.

Also investing in this transaction were the current owners – the Wang family – and the senior management of Regent. “The Wang family has successfully grown the company from a small regional operation to a recognized global competitor in the home décor category.  We are thrilled to be partnering with them and management in this next phase of growth,” added Mr. Brutoca.

Freeman Spogli invests in middle market consumer and distribution companies. Since its founding in 1983, the firm has invested over $3 billion in 52 portfolio companies with an aggregate transaction value of $20 billion.  Freeman Spogli has offices in Los Angeles and New York (www.freemanspogli.com).

Piper Jaffray (www.piperjaffray.com) was the exclusive financial advisor to Regent. Morgan, Lewis and Bockius (www.morganlewis.com) was the company’s legal advisor. Ropes & Gray (www.ropesgray.com) was the legal advisor to Freeman Spogli.

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-5-15

Lovell Minnick Closes Fourth Fund

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Lovell Minnick Partners has completed fundraising for its fourth institutional buyout fund, reaching the hardcap of $750 million and surpassing the $550 million target. The firm’s prior fund, Lovell Minnick Equity Partners III, closed in February 2010 with $455 million of commitments.

Investors in the new fund include endowments, foundations, insurance companies, pension funds, and family offices. Fund IV received commitments from many limited partners who invested in earlier funds, including Goldman Sachs Asset Management, RCP Advisors, Twin Bridge Capital Partners, and PPM America on behalf of certain clients. New investors include MassPRIM and the W.K. Kellogg Foundation.

“Lovell Minnick is very grateful for the support we continue to receive from our limited partners, and we appreciate the new relationships we have developed with an outstanding group of investors who embrace our focus on middle-market financial services,” said Jeffrey Lovell, Chairman of Lovell Minnick Partners. “We see attractive opportunities across such themes as investment solutions, underserved credit markets, outsourcing, and consolidation. We look forward to building another portfolio of growing, dynamic companies where we can support management in realizing their strategic objectives.”

Lovell Minnick provides buyout and growth capital to middle-market financial services companies, typically making equity commitments of between $20 million and $100 million. Areas of specific interest include asset management, financial product distribution, insurance and securities brokerage, banks, and specialty finance.

Fund IV has already closed on three portfolio companies: J.S. Held, acquired in March 2015, is a consultant to insurance carriers on property loss, dispute resolution, and construction services (www.jsheld.com); LSQ Funding, acquired in April 2015, is a technology-enabled provider of working capital services to small and mid-sized businesses (www.lsq.com); and Worldwide Facilities, acquired in July 2015, is a wholesale insurance brokerage (www.wwfi.com).

Lovell Minnick firm is the successor to the private equity affiliate of Putnam Lovell Securities which was established in 1999 by Jeffrey Lovell and James Minnick. Lovell Minnick has offices in Philadelphia and Los Angeles (www.lovellminnick.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-5-15

Two More Salus Capital Pros Join Monroe

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Monroe Capital has expanded its industry reach with the launch of a new retail and consumer products lending group. Leading the new effort will be Andy Moser and Marc Price who join Monroe from Salus Capital Partners. Mr. Moser and Mr. Price will be based in Monroe’s Boston office.

“We are excited to establish this new group focusing on retail and consumer products asset based lending. This new finance group complements our existing healthcare, technology, media, and ESOP focused verticals,” said Ted Koenig, President & CEO of Monroe Capital.

Prior to joining Monroe, Mr. Moser was the President and CEO of Salus Capital Partners which he co-founded in 2011. Salus Capital – a Boston-based portfolio company of the Harbinger Group – is a provider of senior secured asset-based loans to the small and middle-market across a variety of industries.  Like Mr. Moser, Mr. Price joins Monroe Capital from Salus where he was the Executive Vice President and a co-founder.  Both Mr. Moser and Mr. Price exited Salus in April 2015 after the firm incurred losses from loans made to RadioShack which filed for bankruptcy protection in February 2015.

“Andy and Marc are both seasoned professionals. Their talents, combined with Monroe’s leading reputation, deep and long term capital base, and credit focused infrastructure, will create the ‘go to’ financing partner for companies and private equity sponsors alike in the retail and consumer products space.”

This is the third staff addition for Monroe from Salus in the past two weeks. In late October the firm hired Mark Sturrock – a Senior Managing Director at Salus – to lead its origination efforts and coverage of both private equity sponsored and non-sponsored transactions in Canada.  Mr. Sturrock is based in Toronto.

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 • 11-5-15

Olympus Exits Woodcraft Industries

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Olympus Partners has sold Woodcraft Industries, a kitchen and bath cabinet manufacturer, to Quanex Building Products for $248 million in cash.  Woodcraft has been a portfolio company of Olympus since January 2007 when it acquired the company from Behrman Capital.

Woodcraft provides doors and components to OEMs in the kitchen and bathroom cabinet industry. The company supplies an array of hardwood and engineered wood products including doors, face frames, moldings, drawer fronts, and other components. Woodcraft serves the stock, semi-custom, and custom segments of the kitchen and bathroom cabinet markets. The company has 13 manufacturing facilities in North America and employs about 1,500.  Woodcraft is headquartered north of Minneapolis in St. Cloud, MN (www.woodcraftind.com).

In the first year post acquisition, Woodcraft is expected to add $240 million in revenues at a 13% EBITDA margin to Quanex.  Woodcraft’s current management team, led by President and CEO Dale Herbst, will continue to operate Woodcraft from its St. Cloud headquarters as a stand-alone, wholly-owned subsidiary of Quanex.

“Olympus has been a great partner to Woodcraft, supporting growth initiatives, operational improvements and broadening our product offering. They have helped to position us well for continued growth as industry tailwinds accelerate,” said Mr. Herbst.

Olympus, with $5.5 billion of total capital under management, provides equity capital for middle market management buyouts and for companies needing capital for expansion.  Sectors of interest include restaurants, consumer products, healthcare services, financial services and business services.  The firm was founded in 1988 and is based in Stamford (www.olympuspartners.com).

Quanex Building Products (NYSE:NX) manufacturers window components that include flexible insulating glass spacers, extruded vinyl profiles, window and door screens, solar panel sealants, and precision-formed metal and wood products for original equipment manufacturers in the residential and commercial window and door industries. The company – with annual sales of approximately $620 million – sells its products through its direct sales force, distributors, and independent sales agents. Quanex is headquartered in Houston (www.quanex.com).

Harris Williams advised Woodcraft. The transaction was led by Mike Hogan of Harris Williams’ Building Products & Materials Group and Glenn Gurtcheff, Ryan Freeman and Andy Warczak of the firm’s Consumer Group.

Wells Fargo was the financial advisor to Quanex.  Quanex will finance the $248 million purchase price with a $310 million term loan and borrowings under a new $100 million revolver.

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-3-15

Norwest Equity Partners Acquires Marco

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Norwest Equity Partners (NEP) has acquired Marco, a provider of business technology services to small and medium-sized business. Marco has been owned for the last 28 years by its employees through an employee stock ownership plan.

Marco provides planning, design, implementation and support for copiers/printers, business IT services, managed services, hosted/cloud services, carrier services, phone systems, document management and audio/video systems. The company is organized under three business divisions: Copier/Printer, IT, and Carrier Services. Marco serves more than 25,000 customers through 920 employees in 42 locations across Minnesota, Wisconsin, North Dakota, South Dakota, Iowa, Illinois, and Nebraska. Marco is led by its CEO Jeff Gau.  The company was founded in 1973 by Gary Marsden and Dave Marquardt as a small typewriter shop in St. Cloud, MN which is still the company’s headquarters (www.marconet.com).

In the past three years, Marco has acquired 15 companies and added 430 employees to its workforce. The company has plans to build a 30,000 square foot building adjacent to its St. Cloud corporate headquarters next year to support its continued growth.  NEP plans to grow Marco through a combination of initiatives including developing new customer channels, expanding geographically via acquisitions, and developing new products.

“Our firm has extensive experience working with companies like Marco, and we are excited to partner with Jeff Gau and his management team to help them continue growing and building into an even stronger company,” said Tim DeVries, NEP Managing General Partner. “Marco’s leadership, culture and customer-centric approach were key investment drivers for us. We also appreciate our shared Minnesota roots and long history in our respective businesses. Our partnership with Marco is a great fit.”

Norwest Equity Partners 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 $1.6 billion fund and Norwest Mezzanine Partners IV, LP, an $800 million fund formed by NEP’s affiliated mezzanine investment firm, Norwest Mezzanine Partners. Norwest Equity Partners is headquartered in Minneapolis (www.nep.com).

Financing was provided by Antares Capital (www.antarescapital.com), Ally Corporate Finance (www.ally.com/corporate-finance), BMO Capital Markets (www.bmocm.com), and Norwest Mezzanine Partners (www.nmp.com).

Minneapolis headquartered investment bank Chartwell Capital Solutions (www.chartwellfa.com) served as financial advisor to Marco.

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-3-15

ACON Acquires Funko from Fundamental

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ACON Investments has acquired Funko from Fundamental Capital which acquired the company in June 2013.

Funko designs, imports and markets a portfolio of collectible products under licensing agreements with most of the leading creators and marketers of pop culture today. Funko deploys these licenses across several product platforms including vinyl figures, bobble-heads and plush characters. The company’s products are sold through multiple retail outlets including specialty stores, mass-market retailers, e-commerce, international and direct-to-consumer. Funko was founded in 1998 and is headquartered in Everett, WA (www.funko.com).

Under ACON ownership, Funko will continue to be led by CEO Brian Mariotti and other members of the existing senior management team, who will all be meaningful equity owners alongside ACON. Fundamental Capital will continue as a member of the board of directors and have a minority equity interest in the business.

“We are excited to be partnering with Brian and the entire Funko team,” said Ken Brotman, Founding Partner of ACON. “Funko has established itself as a fore-runner in the pop culture space and we look forward to building value in a business that is very well positioned for continued growth.”

“The growth Funko experienced following our partnership with Fundamental Capital has been spectacular,” said Mr. Mariotti. “Now we’re ready to take Funko to the next level and I look forward to partnering with ACON and benefiting from their experience to help us get there. As Funko continues to be a category disrupter in the pop culture and entertainment space, ACON’s expertise will be a welcome asset.”

ACON invests from $20 million to $150 million of equity capital in middle-market companies. The firm pursues a theme-based investment strategy by focusing on industries and businesses at key inflection points in their development and pursues these opportunities in partnership with established management teams. The firm was founded in 1996 and has offices in Washington, DC (headquarters); Los Angeles; Mexico City; Sao Paulo; and Bogota (www.aconinvestments.com).

Equity financing for the transaction will come from ACON’s third US domestic buyout fund, ACON Equity Partners III, LP. Debt financing for the acquisition is being provided by PNC Bank (www.pnc.com) and Cerberus Business Finance (www.cerberuscapital.com). Harris Williams & Co. (www.harriswilliams.com) was the exclusive financial adviser to Funko.

Fundamental Capital invests in small to mid-sized growth companies operating in the consumer products and services sectors that have revenues between $5 million and $50 million and EBITDA of at least $2 million. The firm was founded in 2004 and is based in San Francisco (www.fundamentalcapital.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-3-15

Riverside Adds On with Buy of Traffic Specialties

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Area Wide Protective, a portfolio company of The Riverside Company, has acquired Traffic Specialties. Riverside acquired Area Wide Protective from Blue Point Capital Partners in June 2015. The buy of Traffic Specialties is the first add-on acquisition for Area Wide Protective.

Area Wide Protective (AWP) helps direct or re-route traffic in support of construction, repair, or maintenance projects affecting public roads.  The company provides on-site technicians, equipment and vehicles, in addition to permitting and design services.  AWP has a variety of customers but mainly serves utilities, utility contractors, and telecommunications companies.  The company has more than 1,800 employees and a fleet of nearly 900 trucks and works out of 50 locations in 17 states throughout the Midwest, East, and Southeast.  AWP is led by its President and CEO John Sypek. The company is headquartered near Akron in Kent, OH (www.awptrafficsafety.com).

Traffic Specialties (TSI) provides similar services as AWP and serves similar customers including utilities, utility contractors and the roadway construction, repair and maintenance market. Traffic Specialties is headquartered in the Atlanta suburb of Stone Mountain, GA (www.georgiatrafficcontrol.com).

“TSI is an excellent complement to AWP,” said Riverside Partner Chris Jones. “Both companies are proven leaders in the market, and customers will benefit from the resources and scale that will result from combining the two entities.”  Working with Mr. Jones on the transaction for Riverside were Vice President Ryan Richards, Associate Jordan Suydam and Operating Partner Tom Anderson.

The Riverside Company is a global private equity firm focused on investing in and acquiring growing businesses valued at up to $300 million (€200 million in Europe). Since its founding in 1988, Riverside has invested in more than 380 transactions. The firm’s international portfolio includes more than 70 companies. Riverside is headquartered in New York with additional offices in Atlanta, Chicago, Cleveland, Dallas, Los Angeles, San Francisco, and London (www.riversidecompany.com).

Kirkland & Ellis (www.kirkland.com) was the legal advisor to Riverside on the transaction.

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-3-15

Dunes Point Acquires Standard Locknut

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Industrial Group Holdings, a portfolio company of Dunes Point Capital, has acquired Standard Locknut, a manufacturer of bearing accessories used in OEM and replacement applications.

Standard Locknut’s bearing accessories include locknuts, lock washers, sleeves, and pillow blocks. Pillow blocks are a type of cast iron or cast steel bearing housing that is used to provide support for a rotating shaft. Standard Locknut sells its products to a variety of end markets including heavy construction, paper, mining, oil field, energy, and automotive. The company was founded in 1949 and is headquartered north of Indianapolis in Westfield, IN (www.stdlocknut.com).

Dunes Point Capital (DPC) is a family office and private investment firm that makes control investments in companies operating in the general industrial and energy sectors. DPC targets companies with enterprise values of up to $500 million.

DPC was founded in 2013 by Timothy White, a former Senior Managing Director of GSO Capital Partners and Blackstone where he served as Head of GSO Private Equity Investing, Co‐Head of Mezzanine Investing, and Co-Portfolio Manager for GSO’s Capital Opportunities Fund I.  Dunes Point Capital is based in Rye, NY (www.dunespointcapital.com).

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-3-15

Revelstoke Closes at Hardcap

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Revelstoke Capital Partners has completed the fundraising for Revelstoke Capital Partners Fund I, LP and Revelstoke Capital Partners Co-Investment Fund I, LP. These two funds – the first institutional funds raised by the firm – collectively raised $303 million and were substantially oversubscribed and above target.

Investors in the new funds include insurance companies, endowments, funds of funds, pension plans, sovereign wealth funds and family offices. “We garnered significant support from our limited partner base and believe this is a result of our focus on, and deep experience in, middle market healthcare and business services industries coupled with our highly differentiated and value added approach to post investment strategic planning,” said Mark King, Co-Founder, Managing Partner and CEO of Revelstoke.

Revelstoke invests from $10 million to $250 million in companies that have at least $5 million of EBITDA.  Sectors of interest include healthcare services and products; transportation and logistics; specialty distribution; energy and energy services; building products; business and outsourced services; marketing services; financial services; industrial services; and medical technology.  Since founding in 2013, Revelstoke has raised more than $515 million in equity commitments. The firm is headquartered in Denver (www.revelstokecp.com).

“The close of these funds caps a highly productive year for Revelstoke during which we acquired three platform companies, completed five add-on acquisitions and successfully exited our first portfolio company,” said Simon Bachleda, Co-Founder and Managing Partner of Revelstoke. “Our seasoned investment team and stable of operating partners are actively evaluating numerous new investment opportunities while continuing to provide strategic guidance in growing our existing businesses organically and through add-on acquisitions.”

New York and London-based Beartooth Advisors (www.beartoothadvisors.com) was the lead fundraising advisor on certain limited partner relationships. Ropes & Gray (www.ropesgray.com) was the legal advisor to Revelstoke.

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-3-15

LBC Provides Mezz to Back Audax Buy of Techniks

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LBC Credit Partners provided a secured mezzanine loan to support the September acquisition of Techniks Industries  – a provider of industrial cutting tools and tool holders – by Audax Private Equity.

Techniks Industries was formed by the merger of NAP Gladu and Techniks in 2012.  Today, NAP Gladu manufacturers and services wood and metal cutting tools used in building materials and industrial end markets, and Techniks supplies tool holding and work holding products used in CNC machine applications for general industrial end markets. The company is based in Indianapolis (www.techniksusa.com).

LBC Credit Partners – the agent and sole lead arranger for this transaction – is a provider of middle market financing to companies with EBITDAs generally greater than $10 million. Products include senior term, unitranche, second lien, junior secured and mezzanine debt and equity co-investments supporting sponsored and non-sponsored transactions. LBC invests from $10 million to $50 million per transaction supporting acquisitions, growth strategies, refinancings, recapitalizations, and restructurings. LBC is headquartered in Philadelphia with additional offices in Chicago and Greenwich (www.lbccredit.com).

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).

CIT Group (www.cit.com/corporatefinance) provided the senior debt financing for the acquisition of Techniks Industries by Audax.

© 2015 PEPD • Private Equity’s Leading News Magazine • 11-3-15