Archives for August 2016

Wingate Sells Dunn Paper to Arbor

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Wingate Partners has sold Dunn Paper to Arbor Investments. Wingate acquired Dunn Paper in July 2010 from Meriturn Partners.

Dunn Paper is a supplier of made-to-order specialty papers and tissues used in the food packaging and consumer product markets. Products include specialty waxed, coated, and uncoated machine glazed papers used in various foodservice and flexible packaging markets as well as high absorbency, porous and lightweight tissue products for niche consumer applications. The company, led by CEO Brent Earnshaw, has six mills located throughout the eastern US and Canada and is headquartered in Port Huron, MI (www.dunnpaper.com).

During Wingate’s six years of ownership the company saw a four-fold increase in revenue and an eight-fold increase in EBITDA. This performance improvement was the result of both organic growth and add-on acquisitions. In December 2014 Dunn acquired from Clearwater Paper Corporation its specialty mills business which produces specialty napkins, tissues and food packaging paper. This acquisition included five Clearwater Paper specialty tissue and machine glazed paper mills.

“Brent and the Dunn team have done an outstanding job of executing day in and day out to achieve a compelling vision.  They are first class people and world class operators.  It’s been a privilege to partner with them,” said Brad Brenneman, a Partner at Wingate.

Wingate Partners makes control equity investments in manufacturing, distribution and service businesses, typically with revenues between $50 million and $250 million. The firm was founded in 1987 and is headquartered in Dallas (www.wingatepartners.com).

“Dunn represents the ideal type of investment for Wingate,” said Brian Steinbrueck, a Partner at Wingate. “Prior to our investment, Dunn had been a relatively fragile business in a difficult industry.  However, Dunn has consistently provided a highly valuable service to its customers and the Dunn team has done a terrific job of executing on opportunities to make the business more differentiated and successful.”

“Wingate has been a great partner,” said Mr. Earnshaw. “They have brought a wealth of experience and a low-ego, highly approachable style that has made them a pleasure to partner with.  The Dunn team looks forward to continuing our growth with our new partners at Arbor.”

Arbor invests in the food, beverage and related industries. Typical targets will have annual revenues of up to $300 million and EBITDA from $5 million to $50 million. Since founding in 1999 the firm has acquired or invested in over 44 companies that were active in the frozen foods, baked goods, dairy, protein, foodservice equipment, bottling, ingredients, packaging, and distribution segments. In July 2016 Arbor closed its fourth equity fund, Arbor Investments IV, LP, with$765 million of capital and its first subordinated debt fund, Arbor Debt Opportunities Fund I, LP, with $125 million of capital. Fundraising was completed in just 90 days and both funds were significantly oversubscribed. Arbor is based in Chicago (www.arborpic.com).

Houlihan Lokey (www.hl.com) was the financial advisor to Dunn Papers and Wingate Partners. The Houlihan Lokey team was led by Senior Managing Director Bill Peluchiwski and Director Matt Bowersox.

© 2016 Private Equity Professional • 8-31-16

CD&R to Buy Drive DeVilbiss from Ferrer Freeman

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Clayton, Dubilier & Rice has agreed to acquire Drive DeVilbiss Healthcare, a manufacturer of medical products, from Ferrer Freeman & Company. The transaction is expected to close in the fourth quarter of 2016.

Drive DeVilbiss Healthcare is a manufacturer of medical products such as wheelchairs, sleep surfaces, beds, respiratory equipment, power wheelchairs, power scooters, and patient room equipment. The company’s products are sold into the homecare, long-term care, retail and e-commerce channels. Drive DeVilbiss serves a customer base of more than 15,000 dealers, home healthcare providers, healthcare distributors, retailers and e-commerce companies and sells its branded products in more than 80 countries around the world. The company is led by Harvey Diamond and is headquartered on Long Island in Port Washington, NY (www.drivemedical.com).

Drive DeVilbiss was formed in 2015 when Drive Medical – a portfolio company of Ferrer Freeman – acquired DeVilbiss Healthcare from Vestar. Since 2002 the company has completed 25 acquisitions that expanded its product portfolio, geographic reach and manufacturing capabilities.

“Drive’s management team has done an exceptional job of identifying and capitalizing on the increasing demand for its products across multiple channels,” said CD&R Partner Richard Schnall. “We intend to play a constructive role by supporting a very talented management team as it continues to grow the business organically and through acquisitions.”

“We believe Drive has substantial runway for continued organic growth and the company also has a strong pipeline of acquisitions which should result in continued robust growth in the years ahead,” said Derek Strum, a CD&R Principal.

CD&R invests in European and US-based businesses.  Since founding in 1978, the firm has invested $22 billion in 70 companies across a range of industries with a total transaction value of approximately $100 billion. CD&R is based in New York and London (www.cdr-inc.com).

Committed financing for this transaction has been obtained from Barclays, JPMorgan Chase, Citigroup, Capital One, and HSBC (USA). Drive DeVilbiss’ financial advisor was Robert W. Baird & Co. (www.rwbaird.com).

© 2016 Private Equity Professional • 8-31-16

Sterling Partners Invests in Panopto

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Sterling Partners’ Education Opportunity Fund has made an investment in Panopto, a provider of video content management, recording, and live streaming services.

Panopto was founded in 2007 and sells software that enables businesses and universities to create secure, searchable video libraries. Panopto was founded by technology entrepreneurs and software design veterans at Carnegie Mellon University’s School of Computer Science. The company is led by CEO Eric Burns and is headquartered in Seattle with offices in Pittsburgh, London, Hong Kong, Beijing, and Sydney (www.panopto.com).

Since its founding, the company has amassed more than two million videos in its cloud-based video platform, making it the largest repository of expert learning videos in the world. Each month, customers stream more than 100 years of video from Panopto Cloud, which has experienced 20% compound quarterly growth since 2012. For two years running, the company has been recognized by Gartner as a “Leader” in enterprise video content management and has been ranked as one of the fastest growing companies on Deloitte’s Fast 500 list. Current clients include New York Life, GE Healthcare Digital, Yale University, Brown University, and the Wharton School of Business.

“Within five years, video will be the dominant form of online communication,” said Jason Rosenberg, a Managing Director with the Education Opportunity Fund. “As demand for this technology continues to accelerate, Panopto is leading the industry in product innovation and organizational capability. With its explosive growth in the enterprise, its dominant position in higher education, and its significant technological advantages over its competitors, Panopto is set to emerge as the leader in this multibillion-dollar market. We’re thrilled to partner with the company and the leadership team as they continue to scale.”

Sterling Partners focuses on investing growth capital in small and mid-market companies in industries with positive, long-term trends, including education, healthcare, and business services. Sterling manages over $5 billion in institutional capital. The firm was founded in 1983 and has offices in Chicago, Baltimore, and Miami (www.sterlingpartners.com).

© 2016 Private Equity Professional • 8-31-16

H.I.G. Acquires  CXtec and TERACAI

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H.I.G. Capital has acquired CABLExpress Corporation (DBA CXtec) and TERACAI Corporation.

CXtec is a provider of refurbished networking and telephony hardware and data center cabling products. The company was founded in 1978 by William Pomeroy. Mr. Pomeroy first ran the business out of his home, originally dealing in used IBM System 370 mainframe options. With closing of the transaction, Mr. Pomeroy has retired as CEO but will continue to serve on the board of directors and retain an ownership interest in the company. Today, CXtec sells its refurbished products to a diversified list of blue-chip customers. The company is headquartered in Syracuse (www.cxtec.com).

TERACAI designs, installs and manages networking, communications, and datacenter equipment. The company is also headquartered in Syracuse (www.teracai.com).

Pete Belyea, who has been with both CXtec and TERACAI for more than 26 years in various leadership capacities including most recently as President, has assumed the role of Chief Executive Officer of CXtec/ TERACAI. “We’re excited to partner with H.I.G. Capital, a highly respected investment firm with significant industry expertise,” said Mr. Belyea.

“CXtec is a leader in the market for refurbished networking and telephony hardware, and we look forward to supporting the continued expansion of the company’s product and service offerings,” said Richard Stokes, a Managing Director at H.I.G. “CXtec and TERACAI are exceptionally well-positioned for continued growth, driven by a compelling value proposition and attractive industry tailwinds.”

H.I.G. specializes in providing capital to small and medium-sized companies and invests in management-led buyouts and recapitalizations of manufacturing or service businesses. H.I.G. has more than $20 billion of capital under management. The firm was founded in 1993 and is based in Miami with additional offices in Atlanta, Boston, Chicago, Dallas, New York, San Francisco, London, Hamburg, Madrid, Milan, Paris, and Rio de Janeiro (www.higcapital.com).

© 2016 Private Equity Professional • 8-31-16

KLH Reaches Fund III Final Close

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KLH Capital has held a final close of KLH Capital Fund III, LP with $155 million in committed capital. KLH began fundraising in January 2016 and had a first close at $135 million in July. According to KLH, all of the investors from the firm’s second fund have invested in Fund III, including a substantial portion from KLH’s partners and founders.

“The final closing represents the strong confidence our limited partners have in our investment strategy and we are humbled to be investing on their behalf,” said Will Dowden, Partner.

KLH Capital is a SBIC-licensed private equity firm that invests in manufacturing, distribution and service companies with revenues between $10 million and $100 million and EBITDA of at least $2 million. Beginning with Fund III, KLH will make minority equity investments in addition to control investments. The firm is headquartered in Tampa (www.klhcapital.com).

Fund III made its first investment in May 2016 with the recapitalization of BMI Merchandise, a distributor of redemption and prize merchandise to family entertainment centers, amusement arcades, bowling centers, restaurants, cruise ships, movie theaters, theme parks, skating centers and sports complexes. BMI Merchandise has a 60,000 sq. ft. corporate headquarters and distribution center and is based about 70 miles south of New York City in Lakewood, NJ (www.bonitamarie-intl.com).

With the closing of Fund III, KLH added Josh Kuder to the firm as its newest partner. Mr. Kuder will be responsible for sourcing, closing, and managing investments.

“Josh will be a great asset for us as we expand our ability to provide solutions to management teams, entrepreneurs and business owners,” said James Darnell, a Partner at KLH. “He has a great track record as an investor and leader in the lower middle market, and is the perfect fit to round out our team.”

Prior to joining KLH, Mr. Kuder was a Senior Principal at Enhanced Capital Group, an SBIC-licensed private equity firm investing in lower middle market companies. Earlier in his career, he was Vice President and Head of Business Development for Linx Partners; Vice President and Co-Head of Transaction Origination for Florida Capital Partners; and Senior Analyst in the investment banking department of Legg Mason Wood Walker. Mr. Kuder has a BS in business administration from the University of Richmond.

© 2016 Private Equity Professional • 8-31-16

Crutchfield Capital Adds New Director

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Crutchfield Capital, a middle-market investment bank, has hired William (Bill) Cornelius as a new Director.

Mr. Cornelius has 12 years of investment banking, principal investing, commercial banking, and business operations experience. Before joining Crutchfield, he was a partner at Trinity Duke Partners, an investment firm based in Houston. While he was at Trinity Duke he was the president of Southern Brush Pipeline Services, a provider of GPS data and surveying services. Prior to Trinity Duke, he was a consultant at The Boston Consulting Group from August 2011 to May 2013. Mr. Cornelius has a BBA degree from Baylor University and an MBA degree from Duke.

“We are delighted to have Bill – an experienced banker, business owner, and investor with deep contacts in the Houston area – join our leadership team. Bill brings a wealth of personal and professional relationships to our firm, and we expect him to be an exceptional advocate for our clients,” said Eric Roddiger, Managing Director.

Crutchfield Capital is a middle-market investment banking firm offering corporate finance advisory services to public and private companies, financial sponsors, and private investors. The firm was founded in 1991 and is based in Houston (www.crutchfieldcapital.com).

© 2016 Private Equity Professional • 8-26-16