Wellspring Capital Management has completed its acquisition of Paragon Films, a maker of stretch films used in storage and transit applications, from Wind Point Partners.
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 several 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, led by CEO Darin Tang, was founded in 1988 and is headquartered southeast of Tulsa in Broken Arrow, OK (www.paragonfilms.com).
“Our partnership with Paragon represents an exciting opportunity to build on Wellspring’s track record in the packaging space,” said John Morningstar, a managing partner at Wellspring who leads the firm’s investment effort in the packaging sector. “The company has an impressive reputation as one of North America’s premier stretch film manufacturers by offering customers a superior product coupled with tangible cost savings. We are very excited to partner with the management team, led by Darin Tang, to support Paragon through its next phase of growth.”
Wind Point, in partnership with Mr. 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.
The market for stretch film is experiencing significant growth driven by transportation and e-commerce trends that are increasing points of distribution and warehousing. “There are strong tailwinds in the high-performance stretch film industry and Paragon is exceptionally well positioned to capitalize on these trends,” said Matthew Harrison, a partner at Wellspring. “We look forward to partnering with the Paragon team to pursue a range of growth opportunities, including internal initiatives and select acquisitions.”
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).
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).
Rothschild & Co. (www.rothschildandco.com) was the financial advisor to Paragon.
© 2019 Private Equity Professional | April 4, 2019