After EBITDA Triple, L Squared Exits Virtium

L Squared Capital Partners has sold Virtium, a provider of industrial grade memory storage products, to Court Square Capital Partners. L Squared invested in Virtium in July 2015.

Virtium is a provider of customized, ruggedized, and highly engineered industrial grade solid state drive (SSD) and other memory products used by OEMs in the communications, energy, industrial automation, medical, networking, transportation, video and signage sectors.

Virtium’s customers include Alcatel-Lucent, Boeing, DRS Technologies, Emerson, General Electric, IBM, Medtronics and Nokia. The company was founded in 1997 and is headquartered near Los Angeles in Rancho Santa Margarita, CA (www.virtium.com).

“We are very happy with our partnership with L Squared over the last four years,” said Phu Hoang, co-founder and CEO of Virtium.  “The L Squared team supported our vision to grow the company through both access to capital and strategic resources.  Additionally, they helped us recruit top-level management talent and assemble a highly productive board of directors.  The Virtium team looks forward to continued growth with our new partners at Court Square.”

During L Squared’s ownership term the company expanded its sale organization, developed new products, and built its software development and application engineering teams. As a result, organic revenue more than doubled and EBITDA nearly tripled. This strong financial performance allowed the company to complete two dividend recaps in November 2016 and March 2019 returning an amount greater than all invested capital.

“From our first meeting with Phu we understood that he was a unique and highly skilled leader,” said Sean Barrette, a partner at L Squared. “Phu and his business partner Chinh each have inspiring personal stories dating back to their humble roots in their native Vietnam and have proven to be outstanding business leaders.  Both have overcome incredible obstacles at each phase of life on their way to founding Virtium and building it into the successful company it is today. Partnering with world-class operators like Phu and Chinh proved to be a winning formula for all stakeholders.  We look forward to watching the company’s continued success and believe Court Square will be an excellent partner for Virtium.”

Court Square invests from $75 million to $350 million of equity in middle market companies that have valuations from $150 million to $1.5 billion. Sectors of interest include business services, general industrials, healthcare, and technology & telecommunications sectors. The firm is based in New York (www.courtsquare.com).

L Squared invests from $20 million to $100 million of equity in companies that have revenues of $10 million to $100 million and EBITDA of $3 million to $25 million. Sectors of interest include tech-enabled services and software; industrial technology and services; and education technology. L Squared was founded in 2014 and is headquartered in Newport Beach, CA (www.lsquaredcap.com).

L Squared and Virtium were advised on the transaction by Moelis & Company (www.moelis.com), Vedder Price (www.vedderprice.com) and BDO USA (www.BDO.com).

© 2019 Private Equity Professional | May 14, 2019

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