Archives for September 30, 2016

Stone-Goff Sells Learners Edge

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Stone Goff Partners has sold its portfolio company Learners Edge to L Squared Capital Partners. Stone Goff acquired Learners Edge in September 2013.

Learners Edge is a direct-to-teacher provider of online professional development, continuing education and master’s degree programs for K-12 teachers. Teachers use the company’s products to satisfy their teacher certification requirements or to move up their salary scale within their school district through additional education. Learner’s Edge partners with academic institutions such as Augustana College, Aurora University, Colorado State University-Pueblo, Marygrove College, Pacific-Lutheran University and Lourdes University to provide degree-eligible credits to teachers.

According to Stone-Goff, Learners Edge is the largest online direct-to-teacher continuing education provider in the US. The company was founded in 2002 by two middle-school teachers, Joe Cotter and Kyle Pederson and is based near Minneapolis in Lakeville, MN (www.learnersedgeinc.com).

“The Learners Edge team – led by CEO Joe Cotter – developed a clear, mission-driven approach for the development and dissemination of continuing education for teachers. Our successful exit is a testament to the value created by the management team since our investment and demonstrates the company’s strength in helping on-the-ground teachers improve classroom instruction and student learning,” said Hannah Craven, co-founder of Stone-Goff Partners. “As the company’s first outside investor, we are honored to have been able to partner with Joe, Kyle, Julie Yaeger, Jenny Oelkers, Mark Hrubes and the entire Learners Edge team.”

Stone-Goff 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. The firm was founded in 2010 by Hannah Craven and Laurens Goff and has offices in New York and Boston (www.stonegoff.com).

Avante Mezzanine Partners backed Stone Goff’s acquisition of Learners Edge in September 2013 by providing both a senior unitranche financing and an equity co-investment. Through the sale to L Squared, Avante generated a 43% unlevered (Avante is an SBIC) compounded annual rate of return on its investment. Avante also participated in L Squared’s transaction by providing a portion of the debt financing and co-investing in the equity.

“Under the leadership of CEO Joe Cotter and his terrific team, Learners Edge has enjoyed strong organic growth and solidified its position as a leading continuing professional education provider for teachers in this country during the last three years,” said Avante Managing Partner Natasha Fox.

Avante Mezzanine 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.  Avante has offices in Los Angeles and Boston (www.avantemezzanine.com).

L Squared Capital Partners,the buyer of Learners Edge, invests from $15 million to $75 million of equity in technology-enabled services, industrial technology, and education companies.  Targeted investments will have revenue of $10 million to $100 million and EBITDA of $3 million to $20 million.  The firm was founded in 2014 and has offices in Newport Beach and Chicago (www.lsquaredcap.com).

George K. Baum Capital Advisors (www.gkbcapitaladvisors.com) was the financial advisor to Learners Edge on this transaction.

© 2016 Private Equity Professional • 9-30-16

CI Capital Partners Buys Liquid Technology

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Tech Air, a portfolio company of CI Capital Partners, has completed the add-on acquisition of Florida-based Liquid Technology Corporation. This is the 16th add-on acquisition completed by Tech Air since being acquired by CI Capital Partners in December 2010.

Liquid Technology supplies a full line of specialty gases and mixes throughout the country. In addition to its specialty gases, other products include gas detector, hydrogen sulfide monitors, combustible gas detectors, and gas bottles. Liquid Technology is headquartered near Orlando in Apopka, FL and has an operating facility near Houston in Pasadena, TX (www.liquidtechcorp.com).

Tech Air is a packager and distributor of industrial, medical and specialty gases, welding equipment and supplies.  The company has more than 10,000 customers that operate across a range of industries.  With the closing of the these acquisitions, Tech Air now operates through 36 branch and fill locations in the Northeast, Southeast, Southwest and West.  Tech Air was founded in 1935 and is headquartered in Danbury, CT (www.techair.com).

“The acquisition of Liquid Technology will greatly enhance Tech Air’s specialty gases production capabilities and its locations in Orlando and Houston perfectly complement our existing specialty gas production in California,” said Myles Dempsey, Jr., Chief Executive Officer of Tech Air.

With the acquisition of Liquid Tech, Tech Air now has the ability to supply specialty gas customers throughout the US. “Tech Air has made tremendous progress in executing its acquisition strategy,” said Joost Thesseling, Managing Director at CI Capital. “Myles and the rest of the management team have transformed the company into a multi-regional player and established a reputation as a preferred buyer.”

CI Capital Partners invests from $25 million to $100 million in middle market companies in the following sectors: business services, consumer services, distribution, government services and defense, and light manufacturing. Since its founding in 1993, CI Capital and its portfolio companies have made more than 190 acquisitions representing over $8 billion in enterprise value. The firm is based in New York (www.cicapllc.com).

In a separate transaction, Tech Air has also signed an agreement to acquire the specialty gas distribution assets of Linden, NJ-based JW Goodliffe & Son. Closing of this transaction is expected to take place in the fourth quarter.

© 2016 Private Equity Professional • 9-30-16

Tenex Invests in SES Foam

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Tenex Capital Management has acquired SES Foam, a manufacturer of polyurethane spray foam insulation sold to the North American residential construction industry.

SES Foam’s open and closed cell wall foam products are currently used by a select number of authorized insulation contractors in various regions of the US. The company also produces and markets roofing foam. SES Foam was founded in 2010 and is headquartered in Houston (www.sesfoam.com).

Tenex Capital also owns GreenFiber, the largest manufacturer and marketer of cellulose insulation products made with recycled paper fibers. GreenFiber sells to building supply retailers, manufactured housing builders and insulation contractors. The company has 10 manufacturing facilities located throughout the US and Canada and is headquartered in Charlotte, NC (www.greenfiber.com). Tenex acquired GreenFiber in December 2013.

“As building codes across the country continue to require more energy-efficient building envelopes, spray foam insulation’s technical features will provide enhanced solutions over traditional materials,” said Mike Green, CEO and Managing Director of Tenex. “SES is well-positioned to capitalize on that trend with its products and services for contractors.”

Tenex Capital Management invests up to $100 million in middle-market companies in the industrial, manufacturing, and health and business services sectors. The firm has $452 million of committed capital and is based in New York (www.tenexcm.com).

“With the backing from Tenex and the broad geographic footprint of our new partner GreenFiber, we will be able to more quickly deepen the level of service we already provide to our growing base of highly loyal contractors,” said Charles Valentine, President of SES. “In addition, we will be able to roll out a combination of products and services to a wider set of contractors outside of Texas and the Southeastern US.”

© 2016 Private Equity Professional • 9-30-16

Apollo Closes Buy of Outerwall

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Apollo Global Management has completed its acquisition of publicly traded Outerwall, Inc. for approximately $1.6 billion.

Outerwall (formerly Coinstar, Inc.) operates a network of movie and video game rental kiosks, coin-cashing machines, and consumer electronic recycling kiosks. Coinstar offers self-service coin-counting at almost 20,000 kiosks where consumers can convert their coins to cash or to other stored value products such as gift cards. Coinstar processes more than $3 billion of coins annually. The company also owns the Redbox DVD rental service which provides new-release movie and video-game rentals through a national network of almost 40,000 self-service kiosks. Outerwall also operates ecoATM which has 2,400 kiosks where consumers can recycle their old cell phones, MP3 players and tablets for cash. The company was founded in 1991 by Jens Molbak and Dan Gerrity and began trading publicly in July 2013. Outerwall is headquartered in Bellevue, WA (www.outerwall.com) (www.coinstar.com) (www.redbox.com) (www.ecoATM.com).

With the closing of this transaction, Apollo has announced that the company’s three business groups will be managed and operated as three separate businesses. Galen Smith was named the Chief Executive Officer of Redbox, and James Gaherity and David Maquera were promoted from serving as Presidents to Chief Executive Officers of the Coinstar and ecoATM businesses, respectively. In connection with the closing of the transaction, Erik Prusch, Chief Executive Officer of Outerwall, will be leaving the company. David Sambur, a partner at Apollo, led the Outerwall transaction.

Apollo has total assets under management of $186 billion in private equity, credit and real estate funds invested across a core group of nine industries:  chemicals; commodities; consumer & retail; distribution & transportation; financial & business services; manufacturing & industrial; media, cable & leisure; packaging & materials; and satellite & wireless. The firm has offices in New York, Los Angeles, Houston, Chicago, Bethesda, Toronto, London, Frankfurt, Madrid, Luxembourg, Mumbai, Delhi, Singapore, Hong Kong and Shanghai (www.agm.com).

Morgan Stanley & Co. was the financial advisor to Outerwall. LionTree Advisors, Bank of America Merrill Lynch, Barclays, Credit Suisse and Jefferies served as financial advisors to Apollo.

© 2016 Private Equity Professional • 9-30-16

SFW Invests in DaySmart

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SFW Capital Partners has made an investment in DaySmart Software, a provider of business management software used by small and medium sized companies, specifically salons, pet groomers and medical spas.

The new capital will be used to support DaySmart’s plans to grow its sales and marketing capabilities, develop new products, and enter new markets. DaySmart’s co-founders, Mark and Chris Jackson, who currently serve as the President and Vice-President, respectively, will continue in their current positions.

DaySmart’s suite of products includes appointment scheduling, customer information management, employee scheduling, payroll, and product inventory management. The company’s customers include tens of thousands of salons, spas, and pet groomers and its products are used by more than 50,000 consumer service professionals.

“After a thorough process evaluating a breadth of investment partners, we feel strongly that SFW’s relevant experience supporting the growth and development of software and information businesses, their deep knowledge of our company and markets and their strong industry-specific network will best position DaySmart for accelerated growth and development,” said Mark Jackson.

SFW Capital Partners focuses exclusively on analytical tools and services companies, including providers of instrumentation, software, information and analytical services. SFW typically invests from $10 million to $75 million of equity in middle market companies that have up to $25 million in EBITDA. The firm has offices in Rye, NY and Hudson, OH (www.sfwcap.com).

“DaySmart fits perfectly with our investment focus on businesses that offer critical workflow, information, and decision support solutions,” said SFW’s Omair Sarwar, who will be a member of the DaySmart Board of Directors. “

DaySmart was founded by in 1999 and is based in the Detroit suburb of Wixom, MI (www.daysmart.com) (www.saloniris.com) (www.123petsoftware.com) (www.medicalspasoftware.com).

© 2016 Private Equity Professional • 9-30-16