Archives for November 17, 2016

O2, Oakland and Tecum to Consolidate Counter Sector

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Private equity firms O2 Investment Partners and Oakland Standard have formed Clio Holdings to serve as a consolidator of local and regional countertop supply and fabrication businesses. Tecum Capital Partners also invested in this transaction by providing both mezzanine debt and an equity co-investment.

Clio will be used to acquire regional countertop suppliers and fabricators – a highly fragmented industry -and provide them with needed capital and expertise to upgrade, differentiate and professionalize their operations.

Clio has already completed two acquisitions and is seeking new opportunities in major metro areas across the United States. In September 2016, Clio acquired Granite Source, a stone countertop fabrication and installation business primarily serving metropolitan Washington DC, Virginia and Maryland. The company was founded by Nicholas Draper in 1999 and is based in Chantilly, VA (www.granitesource.net). The first acquisition, prior to the formation of the Clio holding company, was the buy of Princess Marble by Oakland Standard in June 2016. Princess is a fabricator and installer of natural and manufactured stone products primarily serving metropolitan Minneapolis-Saint Paul. Princess Marble was founded by Bill Jenkins in 1998 and is based south of Minneapolis in Burnsville, MN (www.princessmarblegranite.com).

Both Mr. Draper and Mr. Jenkins have joined the Clio platform, reinvested in the combined business and are actively engaged in the execution of the Clio strategy.

“We have been extremely impressed by Oakland Standard’s exhaustive market diligence and well-developed strategy,” said Todd Fink, Managing Partner of O2. “We are excited to partner with them not only for this investment, but also in future acquisitions as we grow the Clio platform together. I also want to thank Tecum Capital for their insights and flexibility in providing the financing for the transaction.”

O2 Investment Partners makes control investments of $5 million to $75 million in companies with EBITDAs from $2 million to $10 million located anywhere in the US and Canada but has a preference for the Midwest and the Great Lakes regions. Sectors of interest include niche manufacturing, niche distribution, select service businesses, and certain technology businesses. O2 Investment Partners is based in the Detroit suburb of Bloomfield Hills (www.o2investment.com).

Oakland Standard invests in US and Canada-based companies that have less than $10 million of EBITDA. Sectors of interest include niche manufacturers, value-added distributors, general industrial and automotive, and building products. The firm is based in the Detroit suburb of Birmingham (www.oaklandstandard.com).

Tecum Capital Partners, a $200 million SBIC investment fund, invests from $3 million to $15 million of subordinated debt and equity in companies that have revenues of $8 million to $100 million and EBITDA of at least $2 million. Tecum Capital Partners is based in the Pittsburgh suburb of Wexford (www.tecum.com).

© 2016 Private Equity Professional • 11-17-16

Homestead Hits Hard Cap

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Homestead Capital USA, a private equity firm investing in operating farmland in the United States, has held a final close of its second fund, Homestead Capital USA Farmland Fund II, LP, at its hard cap of $400 million. The fund had an original target of $350 million. Homestead did not use a placement agent for this fundraise. Homestead’s first fund closed in June 2015 with $173 million in capital commitments.

Limited partners in the new fund include pension funds, endowments, foundations, funds of funds, high net worth individuals and insurance companies. “We are very pleased with the support we received from returning investors and the quality of new limited partners that we were able to attract to Fund II,” said Gabe Santos, a co-founder and portfolio manager of Homestead.

According to Homestead, demand for Fund II reflected investor interest in farmland as an asset class and the opportunity it offers to produce strong risk-adjusted returns, provide portfolio diversification, and provide a hedge against inflation.

Homestead’s current portfolio includes farms across 11 states that produce 16 different crops and the firm will continue its focus on making row and permanent crop
farmland investments in the Mountain West, Pacific, Midwest and Delta regions.

“With the capital from Fund II, we plan to continue to execute on our value-add investment strategy. Because of our local presence and broad agricultural network, we are seeing many attractive investment opportunities in our targeted regions,” said Dan Little, a co-founder and portfolio manager of Homestead.

Legal services for this fundraise were provide to Homestead by Kirkland & Ellis. The Kirkland team was led by investment funds partners Matthew Dickman and Kelly Ryan. The team also included tax partners Steven Butler and Bruce Gelman; employee benefits partner Laura Bader; and investment funds partner Kevin Bettsteller and associates Lily Anne Rasel and Caleb Hanlon. Since the beginning of 2015, Kirkland has advised nearly 300 private investment fund sponsors, raising more than 400 funds representing in excess of $315 billion of capital commitments (www.kirkland.com).

Homestead Capital has offices in San Francisco, CA and Council Bluffs, IA (www.homesteadcapital.com).

© 2016 Private Equity Professional
November 17, 2016

Corridor Expands Operations Team

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Corridor Capital has hired Thomas Mokulehua as Director of Finance on the firm’s operations team.

Mr. Mokulehua will be active in providing finance and accounting support to Corridor’s portfolio companies and he will also be involved in financial underwriting related to new investment opportunities.

Corridor Capital makes control investments of $3 million to $12 million in mid-market companies with EBITDAs of $2 million to $5 million. Corridor focuses on complex situations, particularly those requiring growth support or operational or financial engagement. Sectors of interest include specialty manufacturing, business services, and environmental services.

Prior to joining Corridor, Mr. Mokulehua was a member of DaVita HealthCare Partners’ corporate development and mergers & acquisitions team. Before joining DaVita, he was a senior manager in Deloitte Advisory’s Mergers, Acquisitions & Divestitures group where he focused on buy-side and sell-side financial diligence. He also worked at KPMG as an auditor and consultant. Mr. Mokulehua is a Certified Public Accountant and has degrees in accounting and finance from Loyola Marymount.

Corridor’s investor base includes approximately 150 executives across an array of industries and disciplines that the firm uses as an active resource for its portfolio companies and their teams. The firm is based in Los Angeles (www.corridorcap.com).

© 2016 Private Equity Professional • 11-17-16

LNC Partners Buys OutSolve

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LNC Partners has acquired OutSolve, a provider of affirmative action planning and compliance services to federal contractors. Five Points Capital co-invested alongside LNC Partners.

OutSolve’s services are used by government contractors to meet the requirements of Executive Order 11246, the Vietnam Era Veteran Readjustment Assistance Act (VEVRAA), and Section 503 of the Rehabilitation Act of 1973, among other regulations. Services include developing Office of Federal Contract Compliance Programs (OFCCP) compliant affirmative action plans, offering OFCCP audit support, and creating EEO-1 reports that comply with the requirements of the US Equal Employment Opportunity Commission. OutSolve was founded in 1998 and is based near New Orleans in Metairie, LA (www.outsolve.com).

LNC Partners invests from $4 million to $20 million in companies that have at least $10 million of revenue and at least $2 million of cash flow. Sectors of interest include business and information services; financial and insurance services; healthcare services; and niche manufacturing. LNC is a licensed Small Business Investment Company and has over $235 million of capital under management. The firm is based in Reston, VA (www.lnc-partners.com).

Five Points Capital invests equity and subordinated debt in lower middle market buyout, acquisition, growth, and recapitalization transactions as a control investor on a standalone basis or as a co-investor with other financial sponsors.  Sectors of interest include business, healthcare and industrial services; niche manufacturing; value-added distribution; and education and training. The firm is headquartered in Winston-Salem, NC (www.fivepointscapital.com).

© 2016 Private Equity Professional • 11-17-16

Woodlawn Exits Dynamatic

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Woodlawn Partners has sold Dynamatic, a maker of variable speed drives used in industrial and environmental applications, to TGP Capital Partners.

Dynamatic, acquired by Woodlawn in July 2010, is a designer and manufacturer of eddy current variable speed drives, brakes, and controls. The company’s products are used in the water and wastewater industry, as well as in materials processing, chemicals processing, and a number of other industrial markets. Dynamatic was founded in 1931 and is headquartered south of Milwaukee in Sturtevant, WI (www.dynamatic.com).

Eddy current variable speed drives have three elements: a constant speed AC induction motor, an electromagnetic clutch, and a digital controller. These elements combine to create a magnetic flux field that can be used to vary the output torque and speed of an industrial device. The stronger the magnetic field, the more of the input torque from the induction motor is translated to the output torque which then varies the speed of the machinery. Many industrial processes – such as assembly lines – must operate at different speeds for different products. Where process conditions demand adjustment of flow from a pump or fan, varying the speed of the drive may save energy compared with other techniques for flow control. When the output speed can be changed without steps over a range, the drive is referred to as variable speed.

“We partnered with the management team of Dynamatic to build the business by expanding distribution and growing in key end markets,” said Greg Bregstone, a Partner at Woodlawn. “We feel that Dynamatic is well positioned to continue its success and growth with TGP.”

Woodlawn Partners invests in companies that have revenues of more than $5 million and EBITDA of $1 million to $6 million. Sectors of interest include manufacturing, property and facility services, information technology, niche financial services, distribution, and transportation and logistics. The firm was founded in 2010 by Partners Greg Bregstone and Evan Gobdel and is based in Chicago (www.woodlawnpartners.com).

TGP Capital Partners invests from $3 million to $10 million in companies with revenues between $15 million and $50 million and EBITDA in excess of $2 million. Sectors of interest include general manufacturing and business services companies. The firm, based in Kansas City, was founded in 2005 and today is led by Managing Directors Eric Graham and Shane Parr (www.tgpinvestments.com).

© 2016 Private Equity Professional • 11-17-16

Riverside Acquires Window Genie

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The Dwyer Group, a franchising platform company of The Riverside Company, has completed the add-on acquisition of Window Genie.

The buy of Window Genie adds more than 100 franchise units to the company and grows Dwyer Group to $1.4 billion in system-wide sales. This is the eighth acquisition for Dwyer Group in the last 27 months and Riverside continues to seek other franchising companies to join Dwyer’s portfolio of service brands.

Window Genie offers residential and light commercial window cleaning, window tinting, pressure washing and other services. The company was founded in 1994 by CEO Rik Nonelle and has more than 100 franchise units operating in 29 states. Mr. Nonelle will assume the role of brand president for Window Genie within the Dwyer Group organization. Window Genie is based in Cincinnati (www.windowgenie.com).

“Joining the Dwyer Group will allow our franchisees to take part in the organization’s collective buying power, provide us with deeper support resources and enable us to rapidly expand our footprint,” said Mr. Nonelle.

The Dwyer Group, acquired by Riverside in August 2014, is now the owner of 14 service-based franchise organizations: Aire Serv, Glass Doctor, The Ground Guys, Mr. Appliance, Mr. Electric, Mr. Rooter, Mr. Handyman, Portland Glass, Rainbow International, Five Star Painting, Molly Maid, ProTect Painters, Locatec, and Window Genie. These brands collectively have more than 2,600 franchises in ten countries.  The Dwyer Group was founded in 1981 and is headquartered in Waco, TX (www.dwyergroup.com).

“The buy of Window Genie delivers both a compelling business opportunity for future franchise prospects as well as a complementary trade that fits our overall portfolio of service brands,” said Mike Bidwell, President and CEO of Dwyer Group.

The Riverside Company is a global private equity firm focused on investing in and acquiring growing businesses valued at up to $400 million. Since its founding in 1988, Riverside has invested in more than 440 transactions. The firm’s international portfolio includes more than 80 companies. The firm is headquartered in New York with additional offices in Atlanta, Chicago, Cleveland, Dallas, Los Angeles, San Francisco, and London (www.riversidecompany.com).

© 2016 Private Equity Professional • 11-17-16