Archives for March 5, 2019

Thermal Solutions Switches Sponsors

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Altus Capital Partners has acquired Thermal Solutions Manufacturing from Resilience Capital Partners.

Thermal Solutions Manufacturing (TSM) is a manufacturer and distributor of heavy duty and light truck heat exchange and temperature control products – radiators, condensers, air coolers and evaporators – for the aftermarket and OEM off-road, on-highway and industrial end markets.

The company’s customers include installers, commercial distributors, specialty retailers, OEMS and jobbers. TSM, led by CEO Ken Robinson, has five manufacturing facilities across the United States and Mexico and is headquartered in Nashville, TN (www.thermalsolutionsmfg.com).

TSM’s senior management team is investing in this transaction alongside Altus Capital Partners. “Altus is very pleased to partner with the TSM management team in acquiring a nationally recognized manufacturer and distributor of heat exchange and temperature control products for the North American heavy-duty on-highway and off-highway truck aftermarket,” said Russell Greenberg, managing partner of Altus. “We recognize and value management’s capabilities in our partnership to grow and to continue the company’s industry position.”

Altus invests in corporate divestitures, management-led buyouts, and privately-held or family-owned businesses with manufacturing operations based primarily in the Midwest and Eastern regions of the United States. Target companies will have at least $5 million of EBITDA and an enterprise value from $30 million to $100 million. Altus is headquartered in Wilton, CT with an additional office near Chicago in Lincolnshire, IL (www.altuscapitalpartners.com).

Resilience Capital Partners acquired TSM, formerly the heavy-duty division of Vista Pro Automotive, in February 2012 through its third fund, The Resilience Fund III LP.

“At Thermal Solutions Manufacturing, we executed a long-term strategy for the business to become a dominant player in the after-market for heat exchange and related products,” said Bassem Mansour, co-chief executive officer of Resilience Capital Partners. “We enhanced it from a heavy-duty manufacturer of radiators into a company that develops and distributes a broad range of solutions in the heat exchange world.”

According to Mr. Mansour, TSM is now at a natural point to transition to new ownership. “Our job is to take a company, reposition it, improve its operations and get it to an attractive level of profitability. We have done that, and the next phase for Thermal Solutions Manufacturing is to build for long-term, continued growth,” said Mr. Mansour.

Resilience Capital Partners invests from $10 million to $40 million in middle market companies with $25 million to $250 million in revenues and EBITDA typically under $20 million. Sectors of interest include industrial manufacturing, distribution, business services, aviation & aerospace, minerals & mining, consumer goods, transportation logistics, building products, metals, and capital equipment. The firm was founded in 2001 and is based in Cleveland (www.resiliencecapital.com).

© 2019 Private Equity Professional | March 5, 2019

Cerberus Finalizes Sparton Buy

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Cerberus Capital Management has completed its acquisition of publicly-traded Sparton Corporation for $182 million in cash.

Sparton Corporation (NYSE: SPA) is a contract manufacturer of electromechanical devices that are used in medical, biotechnology, military, aerospace, industrial and commercial applications.

The company’s products include sonobuoys (sonar systems for transmitting submarine activity); inertial sensors (used for to measure navigation, acceleration, and velocity); and ruggedized LCD panel displays for use in harsh environments. Sparton has deployed over 6 million sonobuoys to the United States and foreign customers over the past 60 years.

Sparton’s services include concept development, design, engineering, production, distribution, field service, and refurbishment.  Founded in 1899, the company has eleven manufacturing facilities in the US, one in Canada, and one in Vietnam with a headquarters in the Chicago suburb of Schaumburg (www.sparton.com).

Sparton’s TTM revenue is $389 million with an EBITDA of $28 million resulting in an EBITDA purchase price multiple of 6.5x. Sparton has been actively marketing itself for more than a year and an earlier agreement to be acquired for $234 million by British defense company Ultra Electronics was canceled in March 2018 due to US Justice Department antitrust concerns.

“This transaction represents an important milestone for our company,” said Joseph Hartnett, interim president and chief executive officer of Sparton. “Cerberus is an exceptional financial and operating partner that will help drive Sparton’s long-term growth and continue our track record of delivering industry-leading solutions to our customers around the world.”

“We are excited to partner with Sparton as it looks to the future,” said Dev Kapadia, senior managing director of Cerberus. “Building on the company’s foundation of market-leading capabilities and strong customer relationships, we look forward to supporting the Sparton team as they drive new innovations and capitalize on dynamic global opportunities.”

Cerberus has approximately $35 billion of capital under management and invests in three strategies: global credit opportunities (which includes non-performing loans, corporate credit & distressed debt, mortgage securities & assets, and direct lending); private equity; and real estate. The firm was founded in 1992 and is headquartered in New York (www.cerberuscapital.com).

© 2019 Private Equity Professional | March 5, 2019

Sterling Closes Its First Add-On for ADG

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Artisan Design Group, a portfolio company of The Sterling Group, has acquired Builders Wholesale Flooring, a dealer of flooring products and services.

Builders Wholesale is a provider of design, procurement, and installation of flooring and complimentary products to residential and multifamily home builders. The company’s products include carpet, hardwood, tile, laminate, stone, cork and bamboo flooring as well as kitchen countertops.

Builders Wholesale has ten facilities in North and South Carolina with a headquarters in Columbia, SC (www.builderswholesale.com). Builders Wholesale, led by President Wayne Martin, considers itself to be the largest flooring provider in the Carolinas region.

Artisan Design Group (ADG) is a dealer of flooring products and services, providing design, procurement, and installation of flooring and other complementary products for homebuilders. The company operates 39 distribution, design and service facilities and coordinates installation through over 800 independent contractors across 13 states. ADG is led by co-CEOs Larry Barr and Wayne Joseph and is headquartered in Southlake, TX (www.artisandesigngroup.us).

ADG was formed by Dunes Point Capital in 2016 through the combination of Floors Inc. and Malibu Floors. At that time, the combined companies had annual revenues of $120 million. Within two years and after eight add-on acquisitions annual revenues had increased to $410 million. The Sterling Group acquired ADG from Dunes Point through its fourth fund in December 2018. The buy of Builders Wholesale is ADG’s first add-on acquisition under Sterling ownership.

“In a short period of time, Larry Barr and Wayne Joseph have built an industry-leading flooring specialist with significant scale,” said Kent Wallace, a partner at The Sterling Group. “We look forward to supporting their continued expansion both organically and through further acquisitions.”

The Sterling Group invests in manufacturing, industrial services and distribution companies that have enterprise values from $100 million to $750 million.  The firm emphasizes an operational approach in partnership with management teams to grow and improve the companies it acquires.  Sterling was founded in 1982 and is headquartered in Houston (www.sterling-group.com).

© 2019 Private Equity Professional | March 5, 2019

Shoreline Equity Launches

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Shoreline Equity Partners, a lower middle market private equity firm, has been launched in Jacksonville, FL.

The new firm was founded by Michael Hand, managing partner, and Peter Franz, partner, who have spent a substantial portion of their careers investing in lower middle market companies.

Mr. Hand has over 15 years of experience originating, analyzing, negotiating, monitoring, and exiting private equity investments. Prior to founding Shoreline, he co-founded and co-led PNC Riverarch Capital, the PNC Financial Services Group’s on-balance sheet private equity strategy.

Mr. Franz has over 20 years of partner-level private equity experience. Prior to founding Shoreline, he worked at Florida Capital Partners as a co-managing partner. Although they worked at different firms, the two founder’s past investment experience has overlapped and they invested and managed several lower middle market portfolio companies alongside one another.

Shoreline Equity will pursue equity investments of up to $100 million per transaction in support of buyouts, recapitalizations, and corporate divestitures. Typical target companies will have enterprise values from $25 million to $250 million and EBITDA of $5 million to $25 million. Areas of interest include non-capital-intensive businesses within the specialized manufacturing, value-added distribution, and business and industrial services sectors (www.shorelineequitypartners.com).

Also joining Shoreline Equity as Vice Presidents are Ian Garland and Zachary Mittelmark, both of whom previously worked with Mr. Hand at PNC Riverarch Capital.

© 2019 Private Equity Professional | March 5, 2019