Archives for October 17, 2019

GHK Buys Dura Supreme Cabinetry

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GHK Capital Partners has acquired Dura Supreme Cabinetry from the company’s second-generation founding family.

Dura Supreme is a vertically integrated manufacturer of semi-custom and custom, framed and frameless kitchen and bath cabinetry. The company’s products are sold through a nationwide dealer network.

Dura Supreme was founded in Minnesota by Donald Stotts in 1954 and today has more than 400 employees and a 220,000 sq. ft. manufacturing facility located west of Minneapolis in Howard Lake, MN.

As part of this transaction, Tony Sugalski, an operating executive with experience serving the residential end market and the dealer channel, has joined Dura Supreme as chief executive officer. In addition, Perry Fails has been named president, together with his current role as chief operating officer of the company. All other key senior executives are remaining with the company.

“We are extremely pleased to partner with the Dura Supreme team to build upon the company’s highly-regarded cabinetry brand and 60-year heritage serving designers and homeowners with premium cabinetry,” said Gil Klemann, managing partner of GHK. Mr. Klemann founded GHK in January 2018 after more than sixteen years at Goldman Sachs where he invested in control private equity transactions in the industrials, financial services, retail consumer and media sectors.

“GHK brings operational expertise and capital strength to this partnership, establishing a valuable strategic platform to accelerate our growth and our ability to create innovative and highly desired premium cabinetry for our customers,” said Mr. Fails. “We are excited about the potential this new business partnership fosters.”

GHK invests in companies with $15 million to $40 million of EBITDA that are active in the manufacturing, building products and services, business services, distribution and logistics, packaging, and general industrial sectors. The firm is headquartered in Greenwich, CT.

Harris Williams & Co. was the financial advisor to the Stotts family on this transaction.

© 2019 Private Equity Professional | October 17, 2019

SFW Exits DaySmart Software

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SFW Capital Partners has sold DaySmart Software to LLR Partners and Parthenon Capital.

DaySmart is a provider of business management software, including integrated payments functionality, for consumer-facing small-and-medium-sized businesses. The company’s desktop and cloud-based apps – including Salon Iris, Orchid, 123Pet and Inkbook – are purpose-built for the salon, spa, pet and tattoo industries.DaySmart was founded in 1999 by Christianna and Mark Jackson and is headquartered in Ann Arbor, MI.

SFW acquired DaySmart, in partnership with the company’s founders, in September 2016. In a planned transition, SFW brought in Jeff Dickerson, an experienced software industry CEO, to lead DaySmart and supported the company’s growth initiatives during its ownership period. These efforts included re-architecting DaySmart’s legacy software and upgrading the company’s legacy business systems. DaySmart also expanded its product portfolio and made investments in sales and marketing, doubling its sales team and establishing a best-in-class marketing function.

SFW also completed an add-on for DaySmart with the January 2019 buy of PupKeep, a pet services cloud-based software company. This add-on allowed DaySmart to expand its pet services software to include daycare, boarding, kenneling and training functionality.

“DaySmart’s deep vertical expertise and potential for organic growth represented a strong fit with SFW’s focus on supporting the growth and development of leading providers of high-value integrated software and information platforms,” said Omair Sarwar, a partner at SFW. “We are grateful for the opportunity to have worked with Jeff and his team and to have supported DaySmart through a period of such rapid transformation and growth.”

SFW invests from $15 million to $150 million of equity in information, software, industrial and healthcare technology companies that have revenues of $10 million to $500 million. The firm is headquartered in Rye, NY.

“We are incredibly proud of the transformational growth we’ve achieved at DaySmart in partnership with SFW,” said Mr. Dickerson. “SFW’s unique sector-focused experience and business building expertise proved to be incredibly valuable to DaySmart as we made substantial investments to pursue our strategy. We look forward to working with our new partners at LLR and Parthenon Capital to build upon our achievements and drive the next phase of growth for our employees, customers, and business partners.”

LLR invests from $15 million to $100 million in companies that have up to $100 million in annual revenue and are active in the education, financial, healthcare, security and software sectors.  The firm will invest in minority or majority equity positions through growth capital, recapitalizations, and buyout transactions. In June 2018, Philadelphia-based LLR held a final closing of its latest fund, LLR Equity Partners V LP, at $1.2 billion.

Parthenon invests in companies with enterprise values of $35 million to $500 million that are active in healthcare services, financial services, and business services. The firm, founded in 1998, has offices in Boston and San Francisco.

Raymond James as the financial advisor to DaySmart on this transaction and Kirkland & Ellis provided legal services.

© 2019 Private Equity Professional | October 17, 2019

RiverGlade Closes First Fund

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RiverGlade Capital has held a final above-target closing of its inaugural fund, RiverGlade Capital LP, with $325 million of capital commitments.

RiverGlade was founded by its managing partners Garrick Rice and Danny Rosenberg in February 2017. Prior to founding, both Mr. Rice and Mr. Rosenberg were managing directors at Sterling Partners where they co-led the firm’s healthcare services investing practice. Mr. Rice joined Sterling Partners in 2001 and Mr. Rosenberg joined the firm in 1999.

RiverGlade makes control and minority investments of $20 million to $80 million in growth-oriented healthcare services companies with enterprise values from $25 million to $150 million. Within healthcare services, areas of specific interest to RiverGlade include multi-unit care models, outsourced services, tech-enabled services and medical products.

RiverGlade currently has three portfolio companies:

  • CityVet, a Dallas-based provider of veterinary hospital services and pharmacy, boarding and grooming services with 14 offices in Texas and Colorado (acquired in April 2019);
  • Kids Care Dental & Orthodontics, a Rancho Cordova, CA-based (near Sacramento) provider of pediatric and orthodontic dental services through 15 offices located throughout Northern California (acquired in December 2018); and
  • US Oral Surgery Management, an Irving, TX-based management services company to the oral surgery sector with 17 partner practices across Texas, Colorado, Georgia, Tennessee and Minnesota that represent 69 oral surgeons at 51 locations (acquired in August 2018).

Other members of the RiverGlade team include three vice presidents – Natalie Greene (ex-Sterling), Marc Perez (ex-Sterling), and Dan Skowronski (ex-The Edgewater Funds); two associates – Alex Baran (ex-Brentwood Capital) and Colin McBride (ex-Piper Jaffray); Chief Financial Officer Mark Pridgeon (ex-GTCR), and Operating Partner Jim Hudak (the former chief executive officer of Paradigm Outcomes, a California-based healthcare services company).

RiverGlade is headquartered in Chicago.

© 2019 Private Equity Professional | October 17, 2019

What Worries Institutional Investors

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A new survey from Eaton Partners shows that institutional investors are growing concerned about anti-private equity rhetoric coming from some of the U.S. presidential candidates. Simultaneously, limited partners are also keeping a close eye on geopolitical events and starting to prepare for a possible U.S. economic pullback by taking a more defensive approach to investing.

Eaton Partners advises and raises institutional capital for investment managers across a range of alternative strategies – including private equity, private credit, real assets, real estate, and hedge funds – both in the primary and secondary markets.

These new survey results come from the quarterly “Eaton Partners LP Pulse Survey” which questioned more than 60 limited partners, many of whom expressed at least some level of concern about geopolitical and economic factors that could hinder investment strategies.

Views on U.S. Presidential Politics

  • An overwhelming majority (69%) say they are concerned about the anti-private equity rhetoric by some U.S. presidential candidates, even though most respondents admit any potential action remains unclear.
  • This could be especially problematic since more than half (55%) believe private equity will be the best performing private market fund class over the next six months, ahead of private credit (16%), real assets (16%), and hedge funds (13%).
  • Nearly two-thirds (65%) believe President Trump will be re-elected. Fifteen percent believe Elizabeth Warren will be the next president and another 15% think Joe Biden is headed to the Oval Office.

Economic and Market Views

  • Approximately 7 in 10 (69%) respondents note they are taking a more defensive approach to guard against a potential macroeconomic slowdown.
  • Exactly half (50%) believe signs are pointing to a recession sometime in 2020 up from 44% who felt this way in the July 2019 survey.
  • Forty-five percent predict the Federal Reserve will cut interest rates again this year. Sixteen percent believe the Fed is done for 2019. The rest are not sure.

Geopolitical Views:

  • More than four in ten (43%) are allocating less direct foreign investment to the U.K. because of uncertainty around Brexit, up significantly from 27% in the July 2019 survey.
  • Despite threats of potential escalation, 61% report the trade war is having no immediate impact on their investment into China versus 69% who felt the same way in July.

“Our latest survey clearly shows investors are expecting increased headwinds from several directions as we close out the year,” said Jeff Eaton, a partner at Eaton Partners. “Now more than ever, it is vital for general partners and fund managers to clearly articulate their investment visions and strategies with a view towards the projected macroeconomic environment, as we expect limited partners to become even more selective and disciplined when allocating investment dollars to the private capital markets.”

Rowayton, CT-headquartered Eaton Partners has helped investment managers raise more than $100 billion across more than 125 alternative investment funds and offerings since its founding in 1983. The firm is a subsidiary of Stifel Financial (NYSE: SF) and has offices throughout North America, Europe and Asia.

Eaton’s online survey of 62 institutional investors was conducted from September 19, 2019 through October 4, 2019.

© 2019 Private Equity Professional | October 17, 2019