LFM Closes First Exit from First Fund

After a three-year hold, LFM Capital has sold EDSCO Fasteners to MiddleGround Capital.

EDSCO is a supplier of foundation anchoring systems for power transmission poles and substation structures. The company’s anchoring systems – which range from specialty fabricated bolts to highly-engineered anchoring cages – are typically embedded in concrete foundations and are engineered to allow structures to be securely placed on top of the foundations.

EDSCO was founded in 1985 and is headquartered in Denton, Texas with additional facilities in Spanish Fork, Utah; McKenzie, Tennessee; Waterloo, Indiana; and Harrisburg, North Carolina.

LFM acquired EDSCO in January 2017 from Validor Capital. “We are pleased to have been a part of EDSCO’s growth and success,” said Dan Shockley, a managing director at LFM. “This sale is the culmination of the management team’s successful efforts to execute a collaboratively developed strategic plan. We worked closely with the team to significantly transform the business through strategic acquisitions, growth initiatives, and select management team additions.”

During LFM’s ownership of EDSCO, the company completed the add-on acquisitions of Tower Support Services, a McKenzie, Tennessee-based manufacturer and supplier of foundation systems used in the electrical transmission, substation, wind energy, lighting, and communication markets (acquired in February 2018); and Indiana Anchor Bolt, a Waterloo, Indiana-based manufacturer of structural steel products used in the utilities, construction, and transportation markets (acquired in December 2018). These two acquisitions expanded EDSCO’s geographical footprint and product capabilities.

“We are gratified by how far EDSCO has come during our three-year partnership with LFM Capital,” said Richard Butler, president and CEO of EDSCO. “We deeply value LFM’s unwavering support of the management team as we pursued growth and operational excellence. We are excited to have MiddleGround as a partner in helping us to achieve our next set of goals.”

MiddleGround Capital makes control equity investments from $25 million to $65 million in North American-based business-to-business companies in the industrial and specialty distribution sectors that have enterprise values of up to $200 million. The firm was formed in May of 2018 by former Monomoy Capital professionals John Stewart, Lauren Mulholland and Scot Duncan.

The buy of EDSCO is the fifth platform investment for MiddleGround’s inaugural private equity fund, MiddleGround Capital I LP, which had a final close in September 2019 with $459 million of capital. Earlier this month, MiddleGround acquired Banner Industries, a Carol Stream, Illinois-based processor and distributor of metal bar products, from Chicago-based High Street Capital.

The sale of EDSCO is the first exit by LFM’s inaugural fund which closed in October 2014 with $110 million in capital commitments. In October 2018, LFM closed its second fund, LFM Capital Partners II LP, with $184 million in capital commitments.

LFM invests in US-based manufacturing and industrial services companies with at least $3 million of EBITDA and enterprise values from $15 million to $125 million. LFM was formed in May 2014 by Steve Cook, Rick Reisner, and Dan Shockley and is headquartered in Nashville.

Houlihan Lokey was the financial adviser to EDSCO.

© 2020 Private Equity Professional | January 16, 2020

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