Graham Partners has acquired Gatekeeper Systems, a provider of retail loss prevention products, from Hammond, Kennedy, Whitney & Company (HKW).
Gatekeeper provides technology-enabled shopping cart products that are used to minimize merchandise loss and reduce asset and labor expenditures. The company’s products use radio frequency and locking wheel technology to reduce asset shrinkage from both cart-based shoplifting and shopping cart loss.
Eighteen of the top 20 global retailers use shopping carts that incorporate Gatekeeper products. The company, led by CEO Robert Harling, is headquartered near Los Angeles in Foothill Ranch, CA.
HKW acquired Gatekeeper in partnership with the company’s founders in September 2016. “Given Gatekeeper’s industry expertise, their emphasis on advanced technologies, and the potential for both organic and strategic expansion, this opportunity fit well with HKW’s focus on supporting the growth and development of strong management teams in the business services space,” said Mike Foisy, HKW’s Lead Operations Partner. “We are extremely proud of the strategic partnership we developed with the Gatekeeper team and wish them well as they move forward with their next phase of growth.”
“HKW played a critical role in understanding, supporting, and helping to shape our long-term vision,” said Mr. Harling. “They provided the resources that allowed us to invest in the development of cutting-edge technologies and the capital to support our growth and acquisition strategies, both in the US and internationally.” Mr. Harling was the CEO of Carttronics, a primary competitor to Gatekeeper before Carttronics was acquired by the company in February 2017. In August 2017, Gatekeeper completed a second add-on acquisition with the buy of Carttec, an Eislingen, Germany-based distributor of shopping cart containment and other loss prevention products.
“Gatekeeper is a great platform for add-ons, and we were pleased to provide the resources and capital required to complete these acquisitions,” said Chris Eline, a principal at HKW. “This strategy helped us develop new technologies and quickly push Gatekeeper solutions to new markets, especially internationally.”
HKW invests in companies with revenues between $20 million and $200 million and EBITDAs between $5 million and $30 million. Sectors of interest include business services, health and wellness, and infrastructure services and products. Earlier this month, HKW held a final close of its $365 million fifth fund, HKW Capital Partners V LP. The firm was founded in 1903 and is headquartered in Indianapolis with an additional office in New York.
Graham Partners has prior experience in the retail loss prevention sector and the Internet of Things through its investments in Tidel Engineering and OptConnect. Tidel Engineering is a Dallas-based provider of smart safes that are used by customers to secure and automate their cash handling operations including validating, reconciling, storing, and dispensing cash. Graham acquired Tidel in February 2015 and sold the company to Littlejohn & Co. in March 2017. OptConnect, based near Salt Lake City in Kaysville, UT, uses cellular wireless technology to provide connectivity for ATMs, self-service kiosks, micro-markets, smart safes, and digital signage. OptConnect was acquired by Graham in December 2017 and remains a portfolio company.
Philadelphia-based Graham Partners acquires companies with EBITDA between $5 million and $50 million and will invest in smaller companies as add-on acquisitions to existing portfolio companies. The firm is sponsored by the Graham Group, an industrial and investment concern with interests in plastics, packaging, machinery, building products, and outsourced manufacturing.
“We are excited to partner with the Gatekeeper team as they continue to provide innovative solutions to the growing problem of retail shrinkage,” said Steven Graham, CEO of Graham Partners.
“Gatekeeper has been experiencing high growth, and its superior technology, commercially-minded engineering team, and strong customer service should drive continued growth going forward,” said Rob Newbold, a managing principal at Graham Partners.
Cowen (NASDAQ: COWN) was the financial advisor to Gatekeeper and HKW on this transaction.
© 2019 Private Equity Professional | October 31, 2019
