Wind Point Sells Paragon to Wellspring

Wind Point Partners has agreed to sell Paragon Films, a maker of stretch films used in storage and transit applications, to Wellspring Capital Management.

Paragon is a manufacturer of cast stretch films that are used to unitize pallet loads while in storage and transit. The company sells its products in all 50 states, as well as Canada, Mexico, South America and a number of other international locations.

Paragon operates three manufacturing facilities: Broken Arrow, OK (opened at founding in 1988); Taylorsville, NC (opened in 2005); and Union Gap, WA (opened in 2013). The company was founded in 1988 and is headquartered southeast of Tulsa in Broken Arrow, OK (www.paragonfilms.com).

Wind Point, in partnership with industry executive Darin Tang, acquired Paragon Films from its founder Mike Baab in December 2016. During Wind Point’s term of ownership, Paragon invested over $10 million in capital for capacity expansion, and revenue and earnings grew at double-digit rates. According to Wind Point, the market for stretch film is experiencing significant growth driven by transportation and e-commerce trends that are increasing points of distribution and warehousing.

“Paragon is a case study in Wind Point’s investment strategy of assisting family-owned companies to affect a successful leadership transition and unlock additional areas for equity value creation,” said Alex Washington, a managing director at Wind Point. “We thank Darin and the management team for their partnership in delivering an outstanding outcome.”

“I want to thank Wind Point and our board for their tremendous support over the last two-plus years,” said Mr. Tang. “The Paragon team has delivered strong results over this time period and are proud of our successes. We very much look forward to continuing our momentum with our new Wellspring partnership.”

Wellspring invests in companies with $20 million to $100 million of EBITDA and $100 million to $1 billion of enterprise value. Sectors of interest include general industrial, business services, healthcare services, packaging, distribution, consumer, and restaurants. In January 2018, Wellspring closed its latest fund, Wellspring Capital Partners VI LP, at its hard cap of $1.4 billion. Wellspring was founded in 1995 and is based in New York (www.wellspringcapital.com).

“We look forward to building upon the success that Wind Point and the company have achieved and are particularly excited to do so with the team that is currently in place. Darin and his team have built an excellent culture at Paragon that fits very well with our approach,” said John Morningstar, a managing partner at Wellspring.

Wind Point invests from $50 million to $100 million in companies with EBITDAs of at least $10 million. Industries of interest include business services, consumer products and industrial products. In June 2017, Wind Point held a final closing of its eighth fund, Wind Point Partners VIII LP, with $985 million of capital commitments. The fund exceeded its initial hard cap of $750 million and marks the largest fund closing in Wind Point’s history. The firm was founded in 1984 and is based in Chicago (www.wppartners.com).

Antares (www.antares.com), NXT Capital (www.nxtcapital.com), Newstone Capital (www.newstone.com), and Blackrock Kelso (www.blackrockbkcc.com) will provide financing for this transaction which is expected to close by the end of April 2019.

Rothschild & Co. and Robert W. Baird were the financial advisors to Paragon.

© 2019 Private Equity Professional | March 6, 2019

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