Archives for May 10, 2019

Monomoy Buys Kauffman Engineering

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Monomoy Capital Partners has acquired Kauffman Engineering, a manufacturer of wire harnesses and cable assemblies.

Kauffman’s custom specified and industrial grade wire harnesses and cable assemblies are used in electrical systems in the HVAC, commercial equipment, specialty vehicle, lawn care, marine, and medical markets.

The company serves high-mix/low-volume and high-mix/medium-volume customer programs. Kauffman, led by CEO Mike Buis, operates multiple manufacturing facilities throughout the US and Mexico and is headquartered near Indianapolis in Lebanon, IN (www.kewire.com).

“We are excited to partner with Mike Buis and the Kauffman team,” said Jaime Forsyth, a managing director of Monomoy. “Kauffman is a proven, highly-regarded supplier to a diverse set of industrial manufacturers. Kauffman is also well-positioned to grow over the next several years with its nation-wide footprint. The Monomoy operating team is excited to collaborate with Kauffman to drive long-term value for all of its stakeholders.”

Monomoy makes control investments of debt and equity in companies with at least $150 million in sales, $15 million of EBITDA, and enterprise values of up to $500 million. Sectors of interest include manufacturing, industrial, distribution, and consumer products. The firm is headquartered in New York (www.mcpfunds.com).

Monomoy acquired Kauffman Engineering through its third fund, Monomoy Capital Partners III LP, which closed in June 2016 with $767 million of capital. “We are pleased to add Kauffman to our portfolio of leading industrial businesses,” said Justin Hillenbrand, Monomoy’s co-CEO and partner. “Kauffman has demonstrated an ability to grow throughout its history and has great potential for future growth in its marketplace.”

MidCap Financial, as sole lead arranger, sole bookrunner, and administrative agent, provided acquisition financing for this transaction. The MidCap deal team was led by Josh Rothenberg.

KPMG Corporate Finance was the financial advisor to Kauffman Engineering.

© 2019 Private Equity Professional | May 10, 2019

Compass Diversified Exits Clean Earth

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Compass Diversified Holdings has agreed to sell CEHI Acquisition Corporation, the parent company of Clean Earth, Inc., to Harsco Corporation (NYSE: HSC) for approximately $625 million in cash. Compass Diversified acquired Clean Earth in August 2014 from Littlejohn & Co.

Clean Earth is a provider of environmental services for a variety of contaminated materials including soils, dredged materials, and hazardous waste and drill cuttings. The company analyzes, treats, documents and recycles waste streams generated in a range of end-markets including power, construction, oil & gas, infrastructure, industrial and dredging.

Clean Earth’s treatment processes include thermal desorption, dredged material stabilization, bioremediation, physical treatment and screening, and chemical fixation. Before the company accepts contaminated materials from its customers, it identifies a third party “beneficial reuse” site such as commercial redevelopment or landfill capping, where the materials are sent after they are treated. Clean Earth, led by CEO Chris Dods, is headquartered in Hatboro, PA and operates 14 facilities in the Eastern US (www.cleanearthinc.com).

In 2018, Clean Earth had revenues of $267 million and Adjusted EBITDA of $42 million. In 2019, Clean Earth is projected to have $300 million of revenue and $65 million of Adjusted EBITDA. Based on these results, the exit multiple for this transaction is 14.9x 2018 Adjusted EBITDA and 9.6x 2019 projected Adjusted EBITDA.

“Compass has been an ideal partner, providing hands-on support, outstanding guidance and growth capital to enable Clean Earth to best take advantage of attractive opportunities,” said Mr. Dods. “I would like to thank Compass for their patient approach and commitment to invest in our business, driving growth and further strengthening Clean Earth’s brand, industry leadership and financial performance. The momentum that they helped create will provide us with a strong platform for the future.”

During Compass Diversified’s term of ownership, Clean Earth completed seven add-on acquisitions: Charlotte, NC-based Disposal and Recycling Technologies, a provider of wastewater treatment services with facilities in Detroit and Charlotte (September 2018);  ESMI Companies, located in Fort Edward, NY, and Loudon, NH, a provider of soil recycling and hazardous waste services (June 2018); Doraville, GA-based MKC Enterprises, a provider of hazardous and non-hazardous waste management services (March 2018); Allentown, PA-based AERC Recycling Solutions, an electronic and universal waste recycling company (March 2017); Glencoe, AL-based EWS Alabama, a provider of hazardous and non-hazardous waste management services (July 2016); Plainville, CT-based Phoenix Soil, a provider of thermal treatment services used to process non-hazardous petroleum-contaminated soils (May 2016); and Sewickley, PA-based American Environmental Services, a provider of hazardous and non-hazardous waste management services (April 2015).

“We began our partnership with Clean Earth over four years ago and worked closely with its strong management team to achieve significant growth,” said Elias Sabo, CEO of Compass Diversified. “Specifically, our success capitalizing on organic growth opportunities and completing a number of compelling add-on acquisitions enabled Clean Earth to meaningfully expand its geographic footprint, processing capabilities and extensive service offerings, allowing the company to achieve strong revenue and cash flow growth.”

Compass Diversified (NYSE: CODI) is a private equity firm specializing in acquisitions, buyouts, and middle market investments.  The firm invests between $75 million and $700 million in companies that have EBITDA of at least $10 million. Sectors of interest include niche industrial or branded consumer companies that are headquartered in North America. Compass went public in 2006 and is based in Westport, CT (www.compassequity.com).

Prior to its public offering in 2006, the Compass team, which was formed in 1998, invested solely on behalf of The Kattegat Trust.  A principal beneficiary of The Kattegat Trust is the TK Foundation, a philanthropic foundation of the late J. Torben Karlshoej, the founder of Teekay Corporation (NYSE: TK), an energy transportation (marine), storage and production company.  The Kattegat Trust is Compass’s largest shareholder.

Harsco Corporation (NYSE: HSC), the buyer of Clean Earth, is a diversified business serving the steel and metals production, construction, railways and energy industries. The company is based near Harrisburg in Camp Hill, PA (www.harsco.com).

Moelis & Company (www.moelis.com) and Houlihan Lokey (www.HL.com) were the financial advisors to Compass on this transaction which is expected to close within the next few months.

© 2019 Private Equity Professional | May 10, 2019

Crestview Adds to ATC Drivetrain

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ATC Drivetrain, a portfolio company of Crestview Partners, has acquired ATP Automotive Transmission Remanufacturing Specialists and its related companies from ATP’s founder Alan Smart.

ATP is an independent remanufacturer of automatic transmissions, including torque converters and automated manual transmissions, electronics and mechatronics, as well as a manufacturer of diagnostics systems and a provider of related services.

ATP’s client base includes various European and global OEMs, and suppliers in Europe and North America. ATP was founded in 1969 and is headquartered near Birmingham in Cannock, UK with additional facilities in Guangzhou, China and Farmington Hills, MI (www.atp-group.com).

“April 2019 marks ATP’s 50th year in business and I felt it was an appropriate time to secure the next phase of ATP’s continued growth,” said Mr. Smart. “The exciting combination of ATC and ATP will allow for ATP to increase how we can serve our customers and secures the future of ATP’s employees, many of whom have over 30 years of service. I am confident that ATC is the right permanent home for my life’s work.”

ATC Drivetrain (ATC) is a remanufacturer of transmissions, engines, battery packs and related components for light-, medium- and heavy-duty vehicles. The company’s services include process and salvage engineering; warranty root cause analysis and testing; machining for repair and salvage of components; and recycling of non-reclaimable material. ATC Drivetrain serves automotive original equipment manufacturers for both in-warranty and aftermarket products and services. The company’s customers include Ford, Honda, Chrysler, GM, Allison, Subaru, Saab and others. ATC Drivetrain is led by CEO Greg Heald and is headquartered in Oklahoma City, OK (www.atcdrivetrain.com).

The buy of ATP is ATC’s first add-on acquisition since being acquired by Crestview in February 2018. “Since our acquisition of ATC in February 2018, ATC’s leadership team and board have been focused on pursuing global expansion and technology diversification in support of ATC’s customers’ needs,” said Alex Rose, a partner and co-head of industrials at Crestview. “The combination of ATC and ATP creates a company with over 130 years of global automotive remanufacturing experience which will expand ATC’s ability to provide products and service to the company’s growing customer base around the world.”

“The teams at ATC and our private equity sponsor Crestview Partners have a great deal of respect for Alan Smart and for the decades of hard work he has committed to building ATP as its founder and chairman,” said Mr. Heald. “We are excited to bring together these two companies which not only complement each other in the areas of technology, footprint and customer base, but also share common core values focused on providing market leading service to our customers, team members and shareholders.”

Crestview invests from $100 million to $250 million in companies with enterprise values up to $3 billion. Sectors of specific interest include media, industrials, energy and financial services. The firm will invest in other industries where its relationship network and senior operating capabilities provide an advantage.  Crestview, founded in 2004 and headquartered in New York, manages funds with over $9 billion of aggregate capital commitments (www.crestview.com).

© 2019 Private Equity Professional | May 10, 2019

Mason Joins FTV Capital as Partner

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FTV Capital has added Alex Mason as a new partner. Mr. Mason will focus on enterprise technology and technology-enabled services investments from the firm’s San Francisco office.

Mr. Mason joins FTV Capital from Carrick Capital Partners, where he was active investing in enterprise technology, financial services and health care companies. As a managing director at Carrick, Mr. Mason led thesis development, deal sourcing, execution, monitoring and value creation as a board member, and exit planning for numerous Carrick portfolio companies.

Prior to Carrick, Mr. Mason was a vice president at Accel-KKR where he focused on control investments in middle-market enterprise software and technology-enabled service companies. Earlier in his career, he worked at TCV (formerly known as Technology Crossover Ventures), a private equity and public equity investment firm focused on growth investments.

“Alex brings a blue-chip pedigree and nearly two decades of proven growth equity investment experience and deep sector expertise in enterprise technology and financial services to FTV. His proactive, outbound sourcing DNA combined with his collaborative, team-oriented approach are highly consistent with the characteristics and culture that have driven FTV’s success since 1998,” said FTV Capital managing partner Brad Bernstein. “Alex has demonstrated a keen ability to identify innovative companies and management teams that are generating exceptional growth and building market-leading companies.”

Mr. Mason has an MBA from Harvard Business School and he earned his undergraduate degree in economics from the University of Washington.

FTV Capital invests from $10 million to $85 million in companies that have $10 million to $100 million of revenue, are growing 20 percent plus annually, and have blue chip customer relationships that often generate recurring revenue. Sectors of interest include enterprise technology & services, financial services, and payments & transaction processing. In September 2016, FTV held a final closing of its oversubscribed fifth fund, FTV V LP, at the hard cap of $850 million of limited partner commitments. The firm’s fourth fund closed in March 2014 with $700 million of commitments. FTV has offices in San Francisco and New York (www.ftvcapital.com).

© 2019 Private Equity Professional | May 10, 2019