Archives for February 15, 2017

LFM Acquires Heartland Steel Products

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LFM Capital has added a fourth portfolio company to its first fund with the buy of Heartland Steel Products, a maker of material handling systems.

Heartland Steel designs, engineers and manufactures structural steel platforms and steel pallet racking systems and products that are sold to manufacturing, distribution and warehouse facilities throughout the country. The company’s products, sold under the SpaceRAK and Heartland Engineered Products brands, are used primarily for space utilization and conveyor systems support. Heartland, led by CEO Pat Peplowski, is headquartered in Oak Brook, IL with four manufacturing facilities in Marysville, MI; Marlette, MI; Harrison, OH; and Lodi, CA (www.heartlandsteel.com).

According to LFM Capital, Heartland’s products and services are integral to facility material handling management and stand to benefit from the increasing need for sophisticated fulfillment centers, much of which is attributable to the growth of e-commerce and consumer demand for next day delivery. “Heartland is a well-positioned company in an area of growing demand,” said LFM Executive Managing Director Steve Cook. “We look forward to working with the team at Heartland on investing in their manufacturing capabilities, optimizing workflow within their facilities, and recruiting additional engineering and leadership talent that will allow them to increase their capacity and capabilities.”

LFM Capital is based in Nashville and invests in US-based manufacturing and industrial services companies that have revenues from $10 million to $100 million and enterprise values from $15 million to $75 million.  LFM was formed in May 2014 by Steve Cook, Executive Managing Director; Rick Reisner, Managing Director; and Dan Shockley, Managing Director. The firm closed its first fund, LFM Capital Partners, LP, with $110 million in capital commitments in October 2014 (www.lfmcapital.com).

© 2017 Private Equity Professional | February 15, 2017

Kinderhook Begins New Aftermarket Build

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As part of its latest auto-aftermarket build-up, Kinderhook Industries has formed Race Winning Brands (RWB) and acquired Performance Motorsports International from publicly-traded Dover Corporation for total consideration of $150 million. As part of the transaction, Dover will have a minority ownership stake in RWB.

Performance Motorsports International (PMI) is a manufacturer of performance and racing pistons as well as connecting rods, crankshafts, electronics, and other engine related components. The company sells its products to the automotive and powersports performance markets under several brands including JE Pistons, Wiseco Performance Products, K1 Technologies, Innovate Motorsports, and ProX Racing Parts. Customers include professional and sportsman racers, engine builders, enthusiasts, street performance racers, OEM crate engine builders, and automotive and powersports wholesale distributors. The company is headquartered east of Cleveland in Mentor, OH (www.pmi-brands.com); (www.wiseco.com); (www.jepistons.com); (www.pro-x.com); (www.k1technologies.com); and (www.innovatemotorsports.com).

Brian Reese, a Kinderhook Operating Partner, former Vice President of COMP Performance Group and most recently a Divisional Vice President of Sears Holdings Corporation, will join Race Winning Brands as its Chief Executive Officer. “I have long admired PMI and considered their brands as preeminent leaders in the automotive and powersports performance markets. I am thrilled to have the opportunity to work with Kinderhook and the management team to lead Race Winning Brands in its next phase of growth.” said Mr. Reese.

“A fundamental tenet of Kinderhook’s investment philosophy is identifying unique investment opportunities where our experience, abilities and network of Operating Partners can help create value,” said Paul Cifelli, a Managing Director at Kinderhook. “Race Winning Brands aligns perfectly with this investment philosophy. We are confident that Kinderhook’s proven ‘buy-and-build’ strategy will allow us to expand RWB’s leadership position in the automotive and powersports performance markets.”

The buy of Performance Motorsports International is Kinderhook’s 40th automotive aftermarket acquisition since inception and the third public/private equity partnership completed in the past 24 months.

Kinderhook makes control investments in companies with transaction values of $25 million to $150 million in which the firm can achieve financial, operational and growth improvements. The firm makes investments in non-core divisions of public companies, management buyouts of entrepreneurial-owned businesses, troubled situations, and existing small capitalization companies lacking institutional support. Kinderhook was founded in 2003 and is based in New York (www.kinderhook.com).

Financing for the transaction was provided by a debt syndicate led by Antares Capital, Varagon Capital Partners, Madison Capital, and NewStar Financial. “Antares understands our investment thesis and financing needs given their experience supporting us on prior automotive aftermarket deals,” said Mr. Cifelli. “As in prior transactions, the Antares team was reliable and flexible throughout the process.”

Dover (NYSE:DOV), the seller of PMI, is a diversified global manufacturer with operations in energy, engineered systems, fluids, and refrigeration & food equipment. The company has annual revenue exceeding $7 billion and employs more than 29,000. Dover is headquartered in the Chicago suburb of Downers Grove (www.dovercorporation.com).

© 2017 Private Equity Professional | February 15, 2017

Dubin Clark Buys Supreme-Metro

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Powerhouse Holding Corp., a portfolio company of Dubin Clark, has completed its first add-on acquisition with the buy of Supreme-Metro Corp., a provider of asphalt, concrete, and drainage services. Powerhouse Holding Corp. is now comprised of two businesses: Powerhouse Maintenance, which was acquired in July 2016, and Supreme-Metro.

Supreme-Metro’s services include asphalt paving and milling, sealcoating, crack sealing, concrete installation and repairs, excavation and site work, drainage installation and repair, concrete leveling, and snow and ice management. The company’s customers include engineers, property managers, management companies, building owners, and developers of office parks, roadways, retail centers, and parking lots throughout New Jersey and into adjacent metro areas such as Pennsylvania and New York. Supreme-Metro was founded in 1988 by President Jason Ciavarro and is headquartered southwest of Newark in South Plainfield, NJ (www.suprememetro.com).

“I’m excited that we are expanding our company in providing additional locations and services beyond New Jersey,” said Mr. Ciavarro. “This strategic alliance with Powerhouse builds upon both companies’ core foundations, setting the stage for many years of growth and increased customer service throughout the Northeast.” According to Dubin Clark, Supreme-Metro is the market leader in New Jersey.

Powerhouse Maintenance is comprised of three businesses: Powerhouse Paving, PAM Sweeping, and Orange Sewer & Drain. Powerhouse specializes in the maintenance and repair of commercial parking lots and related areas for property managers and owners of predominantly commercial and industrial facilities, apartment complexes, strip malls and retail shopping centers. Services include asphalt paving, sealcoating, drain installation and repair, concrete installation and repair, sweeping and debris removal, floor scrubbing, power washing, and liquid waste management. Powerhouse services a variety of property owners on Long Island and the five boroughs of New York, plus Westchester County, northern New Jersey, and Connecticut. The business, led by CEO Jack O’Hayre, was founded in 1963 and is headquartered on Long Island in Islip, NY (www.powerhousepaving.com) (www.pamsweeping.com) (www.orangeindustries.com).

“We look forward to partnering with Jay and his team at Supreme-Metro,” said Mike Hompesch, a Partner of Dubin Clark. “The combined business is well-positioned to achieve substantial growth by providing high-quality services within an expanded geographic footprint.”

Dubin Clark invests in companies that have from $10 million to $100 million in sales and at least $2 million of EBITDA. Sectors of interest include manufacturing, value-added distribution, and services. The firm was founded in 1984 and has offices in Boston, MA; Ponte Vedra Beach, FL; and Greenwich, CT (www.dubinclark.com).

© 2017 Private Equity Professional | February 15, 2017

ORIX Acquires Hoffman Southwest from Sterling

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ORIX Capital Partners has acquired Hoffman Southwest Corp., a provider of water flow inspection, repair, and cleaning services from Sterling Partners which acquired the company in July 2015.

Hoffman Southwest (HSW) provides underground pipe inspection, trenchless pipe repair, excavation and cleaning services for municipal and utility customers under the Pro-Pipe brand; and plumbing, drain cleaning, trenchless pipe repair and water restoration services for commercial and residential customers as the largest franchisee of the Roto-Rooter brand. HSW operates 12 Roto-Rooter branches in five states: California, Arizona, Utah, Oregon and Texas. The company was founded in 1947 as a franchisee of Roto-Rooter and in 1992 the company established Pro-Pipe which now operates eight west coast branch locations. HSW is headquartered in Mission Viejo, CA (www.hswcorp.com) (www.pro-pipe.com).

HSW’s senior management team, including CEO Mark Burel and CFO Bruce Lux, will continue to lead the company and provide strategic direction under ORIX ownership. “We look forward to working with ORIX, as they provide a depth of capital and resources needed to achieve our vision for continued future growth,” said Mr. Burel. “Together we have the ability to focus on organic growth initiatives, geographic expansion and strategic acquisitions.”

ORIX Capital Partners (ORIX CP) invests from $50 million to $150 million of equity capital per transaction in North America based middle-market companies.  The group will invest across a range of industries and special situations. Areas of specific interest include business services, retail, consumer, industrials, telecommunications and technology. ORIX CP is led by President and CEO Yoshiteru “Terry” Suzuki, who previously served as Co-CEO of Cerberus Japan from June 2002 to March 2015. Click HERE for the ORIX CP website).

“Our country’s aging infrastructure will drive enormous demand for underground infrastructure risk mitigation as municipalities and utilities work to ensure our pipes are functioning safely and properly for the public,” said Mr. Suzuki. “We will seek strategic add-ons which will complement HSW’s historically strong organic growth and support Mark’s team in building a long-standing legacy, known for customer-focused service, safety, technology and industry leading insights and initiatives.”

ORIX CP is part of ORIX Corporation, a Tokyo-based, publicly traded financial services company with operations in 35 countries worldwide (www.orix.com).

Sterling Partners, the seller of Hoffman Southwest, 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 $4 billion in institutional capital. The firm was founded in 1983 and has offices in Chicago, Baltimore, and Miami (www.sterlingpartners.com).

© 2017 Private Equity Professional | February 15, 2017