Graycliff Partners has completed the sale of Talon Innovations to publicly-traded Ichor Holdings for $130 million.
Talon Innovations is a designer and manufacturer of machined products used in the semiconductor, medical device, and aerospace industries. Products include gas delivery systems, face seal fittings, stainless steel weld fittings, diaphragm valves and custom weldments. Services provided by Talon include machining, ultra-high purity welding, CNC tube bending, and finishing processes including electropolishing, anodizing, heat treating, cleaning and passivation (the use of a light coat of a protective material, such as metal oxide, to create a shell against corrosion), and clean room assembly and packaging.
Talon is headquartered near St. Cloud in Sauk Rapids, MN (www.taloneng.com) and also has a Minneapolis-based state-of-the-art CNC machine shop and a class 100 clean room. Talon has three other locations: Talon Innovations Florida (based in Tampa) was established in December 2015 through the add-on acquisition of Vulcan Machine; Talon Innovations Korea (based in Seoul) serves the company’s Korean semiconductor customer base and provides support to customers in China, Japan, and other countries in Southeast Asia; Talon Innovations Osakis, established in June 2017 through the add-on acquisition of Lind-Rite Precision, has over 30 years of precision machining experience with a 22,000 square foot facility in Osakis, MN (55 miles northwest of St. Cloud).
Since acquiring Talon in September 2013, Graycliff has worked with management to generate substantial growth through investment in facilities and capital equipment. Under Graycliff’s ownership, Talon has more than tripled its employee count, adding over 350 jobs and grown annual revenue by 4x. As a result of these efforts, Graycliff realized a 10x equity return on its investment in Talon.
“It has been an honor to collaborate with Talon’s entire team over the last four years. We greatly enjoyed partnering with the company to scale the business and wish them a successful future,” said Duke Punhong, a Managing Director at Graycliff.
Graycliff invests from $5 million to $40 million of equity and mezzanine capital in companies with revenues of at least $10 million and EBITDA margins of 10% or higher. Sectors of interest include manufacturing, services and distribution. Both control and minority investments are considered. The firm was formed in December 2011 by the former investment team of HSBC Capital. Graycliff is headquartered in New York with an additional office in São Paulo (www.graycliffpartners.com).
“Graycliff has been integral in enabling us to achieve extraordinary growth over the course of our strategic partnership,” said Greg Olson, CEO of Talon. “We appreciate the support, expertise, and resources provided by Graycliff. I am proud of the company we have built and look forward to continued success under the Ichor umbrella.”
Ichor (NASDAQ: ICHR) is a designer and manufacturer of fluid delivery subsystems that are key elements of the process tools used in the manufacturing of semiconductor devices. Revenues for Ichor in 2016 were $405 million. Ichor is headquartered near San Francisco in Fremont, CA (www.ichorsystems.com).
“Talon brings to Ichor the capability to deliver complex precision components to mission-critical areas of semiconductor manufacturing. It will enable Ichor to extend our fluid delivery product portfolio and deepen our collaboration with our customer’s design teams,” said Tom Rohrs, Chairman and Chief Executive Officer of Ichor. “This acquisition augments Ichor’s state of the art manufacturing facilities, highly skilled workforce and long history of improving semiconductor equipment performance.”
Ichor estimates that Talon will add from $70 million to $90 million of annual revenue to the company in 2018. The company is financing the acquisition of Talon with approximately $10 million of cash on hand and $120 million of incremental borrowing from Bank of America, SunTrust and Societe Generale.
© 2017 Private Equity Professional | December 15, 2017
