Archives for December 7, 2016

M&A Glide Path Continues

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Middle-market M&A activity in the third quarter seemed to settle further into the glide path GF Data® has observed over the past couple of years – steady but not overpowering completed deal volume, record valuations and unwavering debt support – according to the data tracking firm’s November report.

The 206 private equity firms and other deal sponsors that are activity contributors reported on 30 transactions closed in 3Q and meeting GF Data’s parameters: total enterprise value (TEV) of $10 million to $250 million, and TEV/Adjusted EBITDA of 3x to 15x.  This brings completed deal volume for the year to 148, down slightly from 169 in the first nine months of last year.

Overall valuations for the year to date averaged 7.0x, up from 6.7x in 2014 and 2015. This continues the inexorable upward trend since the onset of the financial recovery over the period 2010 to 2011.

“High valuations combined with middling volume tends to support the general impression that the deals getting done in the current environment preponderantly involve better businesses,” said Andrew T. Greenberg, GF Data’s CEO, “But our data also shows the extent to which strong valuations are being applied to some sellers with good but not overpowering financial characteristics.”

Total Debt/EBITDA settled in at 4.0x Adjusted EBITDA in the first nine months of 2016.   According to B. Graeme Frazier, IV, GF Data’s Co-Founder and Principal, “We’ve been watching out for a tightening in debt availability over the past year or two, but in fact there are more signs of firming up than retrenchment.”

“We think high valuations are one factor contributing to the moderate levels of deal volume,” said John Brignola, Managing Partner of LBC Credit Partners, a Philadelphia-based provider of middle-market financing solutions.  “When valuations are stretched, minimal variance is tolerated between reported EBITDA and its confirmation through quality of earnings reports.  We have seen deals stall or collapse over minor EBITDA variances given elevated purchase multiples.”

GF Data provides reliable external information for use in valuing and assessing M&A transactions to private equity firms, investors, lenders and other users.  The firm collects and publishes proprietary transaction information from private equity groups on a blind and confidential basis.  The pool of active contributors comprises 206 private equity firms, mezzanine groups and other financial sponsors. Data contributors and other subscribers receive four products: (1) a quarterly report containing high-level valuation, volume and leverage data; (2) a quarterly supplement offering detailed information on debt and capital structure trends; (3) a semi-annual supplement on indemnification cap, escrow and other details; and (4) continuous access, through GF Data’s secure website, to detailed valuation data organized by NAICS code.

For information on subscribing or on contributing data as a private equity participant, please contact Bob Wegbreit at [email protected] or at 610-260-6263.

GF Data is based in West Conshohocken, PA (www.gfdataresources.com).

© 2016 Private Equity Professional | December 7, 2016

Silver Oak Sells Accent to Audax

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Silver Oak Services Partners has completed the sale of its equity interest in Accent Food Services to Audax Private Equity.

Accent is a route-based distributor of fresh food, snacks and break room refreshment services to customers throughout Texas. Products include coffee and tea; filtered water and ice; fresh foods, snacks, sodas, juices and meals; sandwiches, wraps, and salads; and an array of sodas, juices and waters. The company’s products are sold through both vending machine and self-checkout formats. Accent was founded by Tom and Rhonda Hawkins in 1994 and is headquartered in Austin (www.accentfoods.com).

Silver Oak first invested in Accent in December 2008.  During the term of Silver Oak’s ownership, Accent completed 16 acquisitions, built a best-in-class management team, invested in technology to improve operating efficiencies, expanded into three new geographies, and launched a new micro-market service line. Micro-markets are self-serve and give employees 24/7 access to fresh food and healthy beverages, along with traditional snacks. This line of business is seen by many as the future of retail convenience/vending services.

“We are extremely proud of our partnership with the Accent management team,” said Greg Barr, Managing Partner at Silver Oak.  “They have fundamentally transformed the business over the last eight years while driving significant top and bottom-line growth.  Accent is well positioned for the future and we wish them well as they continue to expand their geographic footprint.”

Silver Oak Services Partners makes control investments of $10 million to $30 million in companies with revenues from $15 million to $150 million and EBITDAs from $3 million to $20 million. As the firm name implies, sectors of interest include business, healthcare, and consumer services.  Silver Oak was founded in 2005 and is based in the Chicago suburb of Evanston (www.silveroaksp.com).

“Silver Oak has been an excellent partner,” said Josh Rosenberg, CEO of Accent. “With their active support and guidance, we experienced significant growth while enhancing the value we bring to our customers. We look forward to working with Audax in an effort to continue building upon this success.”

“Accent is a leader in the micro market, vending, and refreshment services industry. We look forward to working with Josh Rosenberg and the Accent team to continue building a leading platform through organic growth and add-on acquisitions,” said Geoffrey Rehnert, Co-CEO of Audax.

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. The firm was founded in 1999 and has offices in Boston, New York and Menlo Park (www.audaxgroup.com).

Accent and Silver Oak were advised by Lincoln International and Locke Lord. Ropes & Gray provided legal services to Audax.

© 2016 Private Equity Professional | December 7, 2016

Sentinel Buys SONNY’S

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Sentinel Capital Partners has acquired SONNY’S Enterprises, a supplier of parts and systems for conveyorized car washes.

SONNY’S is considered to be the largest manufacturer and distributor of conveyorized car wash equipment, parts and supplies in the world. The company has a 900 page car wash parts catalog with more than 12,000 SKUs. The company also offers an educational program known as CarWash College, an active learning experience where car wash operators, and investors come together to take courses in maintenance, repair, and management of car washes. SONNY’s was founded in 1949 by Sonny Fazio and has a 135,000 sq. ft. facility and headquarters near Ft. Lauderdale in Tamarac, FL (www.sonnysdirect.com).

“SONNY’S is a leading car care platform with strong development and design capabilities, a record of innovation, and unparalleled customer relationships,” said Scott Perry, a Partner at Sentinel. “SONNY’S offers an impressive breadth of products and has built longstanding sales relationships and distribution channels throughout North America. We are very excited about this investment and the opportunity to partner with SONNY’S outstanding management team. We see a bright future for SONNY’S, which has an exciting opportunity to grow organically and through acquisitions.”

Sentinel Capital Partners invests in management buyouts, recapitalizations, corporate divestitures, and going-private transactions of businesses with EBITDAs up to $65 million. Sentinel targets eight industry sectors: aerospace & defense, business services, consumer, distribution, food & restaurants, franchising, healthcare services, and industrials. The past 12 months have been busy for Sentinel. Besides SONNY’S, Sentinel has made four other new platform investments: Quick Weight Loss Centers, a multistate provider of weight loss management services; Revenew International, a provider of contract compliance and supplier payment review services; The Luminaires Group, a manufacturer of specification-grade lighting products; and Marketplace Events, a North America producer of consumer home and garden shows.

“SONNY’S will continue to execute on the vision and plan that my father set for the company – to be the premier provider of car care products to car wash professionals,” said CEO Paul Fazio. “Sentinel was very different from any other firm that contacted me in the past. From the first conversation, it was clear that a partnership with Sentinel will allow SONNY’S to accelerate its rapid growth record and to expand the number of world class products and services to our clients.”

Sentinel Capital Partners is headquartered in New York (www.sentinelpartners.com).

© 2016 Private Equity Professional | December 7, 2016

Southfield Invests in Ntiva

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Southfield Capital has made an investment in Ntiva, a provider of outsourced managed IT services to small and medium-sized businesses. Ntiva’s founder and CEO, Steven Freidkin, along with the Ntiva management team will be continuing in their current roles.

Ntiva’s services include onsite support, remote monitoring, cloud services, backup and disaster recovery, and strategic consulting. The company was founded in 2004 and is headquartered in McLean, VA with additional offices in Colorado Springs and Los Angeles (www.ntiva.com).

“Ntiva today is recognized as one of the fastest growing managed service providers in the nation mostly due to our continued focus on customer satisfaction and success,” said Mr. Freidkin. “As the industry grows, we want to remain one of the top players and we believe this requires a continued commitment to growing people. In order to achieve our goal, we needed to partner with a firm that can assist us with appropriately scaling our organization and executing complementary acquisition opportunities. The partner also needed to share our organizational values and focus on growing people. After an exhaustive search, we chose to partner with Southfield Capital, a firm that has experience in guiding companies like Ntiva through the next phase of growth and shares our people first approach.”

“The managed IT services industry should benefit from the continued transition of small and medium-sized businesses to outsourced IT management and cloud-based services and from the growing focus on improving data security,” said Southfield Partner Heb James. “Significant opportunity exists for a mid-market focused managed service provider that understands the sector specific needs of its clients and has the infrastructure to deliver.”

Southfield Capital provides capital for majority recapitalizations and management-led buyouts of lower middle-market businesses. The firm makes control investments of $10 million to $40 million of equity in transactions with $20 million to $100 million of enterprise value. Typical target companies will have from $4 million to $12 million of EBITDA.  Sectors of interest include: business services; consumer products & services; distribution & fulfillment; energy; healthcare; media & entertainment; niche manufacturing; power & infrastructure; specialty finance; and specialty retail.  Southfield Capital was founded in 2005 as the successor company to the private investment firm Levison & Company and is headquartered in Greenwich, CT (www.southfieldcapital.com).

Crestline Investors (www.crestlineinvestors.com) provided debt financing for this transaction. Finn Dixon & Herling (www.fdh.com) provided legal counsel to Southfield Capital.

© 2016 Private Equity Professional | December 7, 2016

Grey Mountain Adds On to Consolidated Glass

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Consolidated Glass Holdings, a portfolio company of Grey Mountain Partners, has acquired J.E. Berkowitz, a maker of architectural glass for both exterior and interior projects. The company has been family-owned since its founding by Jacob E. Berkowitz in 1920.

J.E. Berkowitz’s (JEB) architectural glass fabrication capabilities include insulating glass, heat-treated glass, silk-screened and spandrel glass, laminated glass, all-glass doors and entrances, and point-supported glass systems and canopies. JEB’s products are used in many architectural glass applications including office buildings, hotels, condominiums, casinos, restaurants, hospitals, schools, libraries, museums, all-glass doors and entrances, swing doors, sliding doors, shower doors, canopies, handrails, skylights and shopping malls. Recent projects completed by JEB include: The Tower at PNC Plaza in Pittsburgh, the T-Mobile arena in Las Vegas, Google headquarters in New York City, and the Novartis Pharmaceuticals building in Boston.

JEB employs more than 200 people and operates out of a 253,000-square-foot manufacturing facility on 23 acres in Pedricktown, NJ (near Philadelphia) (www.jeberkowitz.com).

Consolidated Glass Holdings (CGH), led by President and CEO Paul Cody, is the managing entity for a group of companies operating in the architectural, security, and custom glass and metal fabrication businesses, which currently include Global Security Glazing, Columbia Commercial Building Products, Dlubak Specialty Glass, Solar Seal, North American Specialty Glass, and, with the closing of this transaction, JE Berkowitz. The combined group has eight fabrication facilities totaling 900,000 square feet of plant space and approximately 1,000 employees (www.cghinc.com).

Arthur Berkowitz, Executive Vice President of JEB, is the company’s third generation owner/manager, and has led the company for more than 40 years. “CGH and Grey Mountain were the correct fit for me and my employees,” said Mr. Berkowitz. “As part of my succession planning, this step permitted me to keep an ownership position and retain the real estate. I will remain energized and committed to managing the operations at JEB for years to come.”

Grey Mountain has approximately $700 million of assets under management and was founded in 2003 by managing partners Rob Wright and Jeff Kuo. The firm invests up to $75 million in control acquisitions of companies with enterprise values between $30 million and $150 million. Sectors of interest include aerospace and defense; building products and materials; business process outsourcing; diversified manufacturing; energy and power; financial services; food and beverage; healthcare services and technology; industrial services; packaging; professional services; specialty chemicals; technology; transportation and logistics; and wholesale distribution. Grey Mountain is based in Boulder with additional offices in Minneapolis and Pittsburgh (www.greymountain.com).

© 2016 Private Equity Professional | December 7, 2016