Archives for August 28, 2018

Riverside Closes at Hard Cap

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The Riverside Company has held a final hard cap close of Riverside Micro-Cap Fund V (RMCF V) with capital commitments of $1.2 billion. This fundraise was completed in less than four months and demand exceeded the hard cap by more than 50%.

Riverside’s micro-cap funds (RMCF) were launched in 2005 and have acquired over 55 platform companies and 75 add-ons and have exited more than 30 platforms, including Tate’s Bake Shop (sold to publicly-traded Mondelēz International in June 2018) and Alchemy Systems (sold to publicly-traded Intertek earlier this month). Similar to prior funds, RMCF V invests in North American companies with up to $10 million of EBITDA.  Riverside’s earlier fund, Riverside Micro-Cap Fund IV, held a final close in September 2016 at the hard cap of $650 million.

“This level of investor support is the direct result of the quality of work done by the RMCF team. The RMCF platform investments have grown sales at a CAGR of 23% since the fund’s inception and equally impressive, have organically grown employee headcount by 27% at the portfolio company level,” said Riverside’s Co-CEO Stewart Kohl. “This is a remarkable body of work, and it has been most gratifying to see how well these companies have flourished.”

“We’re delighted to announce the first and final closing of our fifth fund and equally as grateful for the overwhelming response from both new and existing investors,” said RMCF Managing Partner Loren Schlachet. “We’re proud to have built such a strong team over the last fourteen years that is committed to finding, investing and growing businesses.”

“Our approach to the middle market has been consistent for the past 30 years, and RMCF V is a perfect example of that,” said Riverside’s Co-CEO Bèla Szigethy. “Our investments are built on growth, and we strive to continually make companies bigger and better.”

The Riverside Company is a global private equity firm focused on investing in and acquiring growing businesses valued at up to $400 million. The firm is headquartered in New York with 16 additional US and international offices (www.riversidecompany.com).

© 2018 Private Equity Professional | August 28, 2018

Yellow Wood Adds to Freeman Beauty

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Freeman Beauty, a portfolio company of Yellow Wood Partners, has agreed to acquire Paris Presents, a provider of branded cosmetic and bath accessories and a portfolio company of EagleTree Capital.

Paris Presents creates and distributes beauty products and personal care accessories to mass merchants, drug stores, specialty beauty stores, and online retailers. The company’s product portfolio includes Real Techniques, cosmetic sponges; EcoTools, cosmetics and bath accessories; and Body Benefits, bath accessories. Paris Presents, led by CEO Patrick O’Brien, was founded in 1947 and is headquartered north of Chicago in Gurnee, IL (www.parispresents.com).

“For over 70 years Paris Presents has been utilizing consumer insights, innovative product development, and supply chain expertise to develop winning consumer-focused products,” said Mr. O’Brien. “While we have enjoyed considerable growth and success over the past years with EagleTree, partnering with Yellow Wood provides us with access to additional resources and an increased level of industry and operating expertise to build on our success and accelerate our business priorities as an innovative market leader.”

New York-based EagleTree (www.eagletree.com), formerly Wasserstein Partners, acquired Paris Presents in December 2014 from Mason Wells. “We and our co-investors have been delighted to work with Patrick O’Brien and the entire Paris Presents management team over the last several years,” said George Majoros, Co-Managing Partner of EagleTree. “We’re very pleased with the strong growth the company has achieved under our ownership, and are confident Paris will continue its strong international and domestic growth under Yellow Wood’s leadership.”

Yellow Wood acquired Freeman Beauty, a specialty beauty company with a portfolio of brands across the skin care, hair care, foot care and specialty bath and body categories, from Champlain Capital in August 2017. Freeman Beauty’s brand names include Feeling Beautiful (facial masks), Beauty Infusion (facial masks), Feeling Legendary (facial masks for men), Bare Foot (foot care), Psssst! (dry shampoo), and c.Booth (bath and body care). Freeman’s products are sold through the food, mass, drug and specialty retail channels. The company, led by CEO Bill George, was founded in 1976 and is headquartered in Los Angeles (www.freemanbeauty.com).

“This transformational acquisition creates an industry leading beauty platform focused in two of the fastest growing segments in the personal care and beauty segments,” said Dana Schmaltz, Founding Partner of Yellow Wood. “Paris Presents’ superior quality branded beauty accessory products dovetail well with Freeman Beauty’s industry-leading face masks as both companies share the same millennial, Gen Z, and multicultural consumers.  The combined organization will enhance the strong partnerships that both Paris Presents and Freeman have with their retail and e-commerce partners leading to future growth.”

Yellow Wood invests in consumer brands and companies that operate in the mass, drug, food, specialty, value, club and e-commerce channels and have revenues between $30 million and $200 million. In July 2017, the firm completed fundraising for Yellow Wood Capital Partners II LP at an oversubscribed $370 million of committed capital. Yellow Wood was founded in 2011 and is based in Boston (www.yellowwoodpartners.com).

This transaction is expected to close before the end of September 2018.

© 2018 Private Equity Professional | August 28, 2018

HKW Buys Urban Armor Gear

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Hammond, Kennedy, Whitney & Company (HKW) has acquired Urban Armor Gear (UAG), a designer and manufacturer of branded, patented, and protective cases for mobile phones, laptops, and tablets.

UAG is led by its Co-CEOs Samuel Siu and Steve Armstrong and is headquartered in Laguna Niguel, CA (www.urbanarmorgear.com). “On behalf of the UAG management team, we are excited about this partnership with HKW,” said Mr. Siu. “We are positioning ourselves for the next phase of future growth and expansion with this new structure. Partnering with HKW, we have full confidence in the future of UAG.”

“We are very excited to make the investment in UAG and to partner with this management team,” said Luke Phenicie, Lead Transaction Partner at HKW. “The company has grown tremendously since inception and has significant opportunities on the horizon, and we are excited the team chose and trusted HKW as their investment partner.”

Hammond, Kennedy, Whitney & Company invests in companies with revenues between $20 million and $200 million and EBITDAs between $2 million and $20 million. Since 1982, HKW has completed 59 platform management buyouts of small middle-market companies throughout North America as well as 62 add-on acquisitions. The firm was founded in 1903 and is headquartered in Indianapolis with an additional office in New York (www.hkwinc.com).

“UAG fits squarely into HKW’s sweet spot of finding management owners who will retain significant equity ownership going forward.  Additionally, the business generates exceptional free cash flow while also having non-cyclical consumer demand for its products,” said Chris Eline, a Principal at HKW.

“This is an exciting and pivotal moment for UAG,” said Steve Armstrong, Co-CEO at UAG. “Our unique partnership with HKW provides the means to fuel our continued growth while our management team focuses on building the brand, innovating new products, and expanding our global supply chain.”

D.A. Davidson & Co. (www.dadavidson.com) was the financial advisor to UAG.

© 2018 Private Equity Professional | August 28, 2018

Arlington Acquires Black Box Division

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Arlington Capital Partners has completed its acquisition of the Government Solutions division of publicly-traded Black Box for a cash purchase price of $75 million. With the transaction now completed, the division has been renamed Tyto Athene.

Tyto Athene is a systems integrator and managed services provider of communications systems to the US Department of Defense and other civilian agency enterprise operations worldwide. The company is headquartered in Herndon, VA (www.gotyto.com).

Tyto Athene’s products include the Acuity Micro Data Center, a 30-pound ruggedized, carry-on micro data center that can provide immediate communications, applications, and information to deployed personnel anywhere in the world. The product is used in the event of an emergency, caused by natural disaster or act of war, where it can take weeks or even months to set up reliable communications. Tyto Athene will continue to be led by its existing management team, including Jeff Murray, the current Senior Vice President of the Government Solutions division, as the company’s new chief executive officer.

“We have been very impressed with the management team and the differentiated solutions that the company provides to their government clients as well as the company’s ability to develop new technologies such as the Acuity Micro Data Center; we believe that this technology will successfully address a strategic gap at the edge of the information infrastructure of Tyto Athene’s clients,” said Michael Lustbader, a Managing Partner at Arlington. “Additionally, we believe that the company will benefit from a number of secular tailwinds that will allow it to continue its strong performance as the US government modernizes its legacy IT infrastructure.”

Tyto Athene’s name originates from “Tyto”, the scientific name for owl, and “Athena”, the Greek goddess of wisdom and war. In mythology, when soldiers saw Tyto flying above the battlefield, it was a symbol that victory was near.

“We are impressed with the company’s proven past performance on highly-recurring managed services contracts, which provide the business with significant revenue visibility, as well as successful execution on large, multifaceted projects,” said Gordon Auduong, a Vice President of Arlington. “We believe that Arlington can provide the strategic support and necessary investments to accelerate this exciting platform.”

Arlington invests in buyouts and recapitalizations of companies valued from $50 million to $500 million. Sectors of interest include government services and technology; aerospace and defense; healthcare; and business services and software. Arlington is investing out of its fourth fund which closed in July 2016 with $700 million of capital. The firm is based in Chevy Chase, MD (www.arlingtoncap.com).

Black Box (NASDAQ: BBOX) is a provider of IT infrastructure, specialty networking, multimedia, and keyboard/video/mouse switching products. The company was founded in 1976 and is headquartered in Lawrence, PA (www.blackbox.com).

Raymond James & Associates (www.raymondjames.com) was the financial advisor to Black Box on this transaction. With the assistance of Raymond James, Black Box is continuing to explore strategic alternatives to address its liquidity needs which include refinancing, restructuring and the sale of other assets.

© 2018 Private Equity Professional | August 28, 2018