In its just-released February report, GF Data turned to an oceanographic term to describe the state of the middle market, noting that all of the action is in the “thermocline” – the layer in deep water subject to significant temperature change even when the surface temperature is changing hardly at all.
“Completed deal activity in the fourth quarter of 2019 reflected the same conditions that have been prevailing for the past several years,” said Andrew Greenberg, CEO of GF Data. “Valuations overall averaged 7.2x trailing twelve months adjusted EBITDA for the year – unchanged from a year ago. Average total debt edged up, from 3.8x to 4.0x.”
“While the headline numbers didn’t move much, they once again point to the central role debt providers have played in prolonging this seller’s market,” added Mr. Greenberg. “In 2018, buyers were making an unprecedented average equity contribution of about 54 percent. That number eased to 51 percent in 2019, a measure of relief that may well further sustain current conditions.”
The overall stability in valuations and debt loads does not mean every business is being valued and financed as it would have been 18 months ago. According to GF Data’s report, sub-surface complexities abound.
“Larger businesses and those in desirable sectors still are being acquired at lofty multiples with strong debt support,” said B. Graeme Frazier, IV, GF Data’s Co-Founder and Principal. “In the $100 million to $250 million valuation tier, valuations averaged 9.7x for the year.”
“At the same time,” added Mr. Frazier, “smaller, lower growth and more cyclical companies are being acquired by buyers choosing more conservative capital structures. The percentage of deals being completed with less than the maximum available leverage has risen steadily from 42.6 percent in 2016 to 49.8 percent last year.”
“We have been able to close two platform investments in the last few months and are finding it is more important than ever to differentiate ourselves in this crowded market,” said Lauren Mulholland, a partner at MiddleGround Capital. “We are seeing more targeted processes from bankers and are focused on increased flexibility with our lending partners given peak cycle concerns.”
GF Data provides reliable external information for use in valuing and assessing M&A transactions to private equity firms, investors, lenders and other users. The firm collects and publishes proprietary transaction information from private equity groups on a blind and confidential basis. The pool of active contributors comprises 204 private equity firms, mezzanine groups and other financial sponsors. Data contributors and other subscribers receive five products:
- A quarterly report containing high-level valuation, volume and leverage data;
- A quarterly supplement offering detailed information on debt and capital structure trends;
- A semi-annual supplement on indemnification cap, escrow and other details;
- Quarterly industry drill-down reports; and
- Continuous access, through GF Data’s secure website, to detailed valuation data organized by NAICS code.
For information on subscribing or on contributing data as a private equity participant, please contact Bob Wegbreit at bw@gfdata.comor 610-616-4607.
© 2020 Private Equity Professional | February 26, 2020
Race Winning Brands, a portfolio company of Kinderhook Industries, has acquired Manley Performance Products, a maker of pistons, connecting rods, crankshafts, and valvetrain components sold to the automotive aftermarket.
“Manley represents a premium automotive brand with high-performance products that fit well within the product categories RWB currently offers. We look forward to the future success of Manley and Race Winning Brands,” said Tom Tuttle, managing director of Kinderhook. The acquisition of Manley by RWB is Kinderhook’s 83rd automotive-related acquisition.
New York City-based 
Industrial Opportunity Partners has acquired the stock of PolyVision Corporation from publicly traded Steelcase. The buy of PolyVision is the sixth platform investment for IOP’s third fund and the second platform acquired in 2020.
With the sale to IOP, Norm Young, an operating principal of the firm, will assume the position of chairman of PolyVision. Mr. Young is a member of IOP’s board of operating principals which is comprised of experienced operating executives that work closely with IOP’s portfolio companies. “I am thrilled to be afforded the opportunity to work closely with Peter and the management team at PolyVision in growing their global business,” said Mr. Young. “We believe the team has built solid fundamentals, has a powerful strategy for growth and is poised for continued success.”
“The PolyVision opportunity is an example of IOP’s ability to work with corporate sellers to execute complex carve-out transactions,” said Christopher Willis, a director of IOP. “We believe the company has a strong position in its global markets and are excited to partner with Peter and the rest of the management team in continuing to develop new products and grow the company.”
Vyne, a portfolio company of The Jordan Company, has acquired Renaissance Electronic Services.
Vyne operates through two business units: NEA which serves dental providers and payers, and Vyne Medical which serves medical providers and payers. The company’s customers include over 35% of addressable US dental practices, over 400 hospitals and hospital systems, and over 1,500 health plans and payers nationwide.
Vyne is led by CEO Lindy Benton and is headquartered north of Atlanta in Dunwoody, Georgia. “Vyne’s investment in Renaissance enables us to expand offerings for our dental clients, partners and payers and enables us to serve more than 100,000 dental providers through an expanded product and service offering,” said Ms. Benton. “This growth opportunity represents a natural extension of our business following our 2019 acquisition by The Jordan Company.”
Gallant Capital Partners has made an investment in Cassavant Machining, a maker of precision machined components and assemblies.
“Cassavant’s strong dedication to partnering with and serving the world’s leading aerospace and defense customers make it a very attractive platform investment,” said Jon Gimbel, a partner at Gallant. “Its unmatched service, flexibility and technical capability provide a strong foundation to support its future growth. We are committed to supporting Cassavant with our operational resources and our flexible capital base to drive long term growth, both organically and through strategic acquisitions.”
Los Angeles-based 
Intermediate Capital Group (ICG) has expanded its mid-market private equity team, led by Senior Managing Director Alan Jones, with the hires of Uzair Dossani, Evan Eason and Kevin Gregory.
Mr. Dossani has 18 years of private equity experience and joined ICG in February after four years as a partner at Harvest Partners where he focused on transactions in the chemicals, diversified industrials, logistics and packaging sectors. Earlier in his career, he was a managing director at Warburg Pincus, and he also worked at Charlesbank Capital Partners and Onex Partners.
Mr. Eason joined ICG in February after 13 years at mid-market private equity firm Olympus Partners where he was a partner, leading buyouts in the financial services, business services, industrial, and consumer sectors. Earlier in his career, he was a vice president at American Capital.
Blue Sea Capital has acquired Innovative FlexPak in partnership with the company’s founder Travis Parry, Twin Bridge Capital Partners, and GoldPoint Partners.
“Travis Parry, Ryan Gifford, and the rest of the company’s management team have built IFP into an outstanding company and we’re proud to support them through this next stage of growth,” said Rick Wandoff, a managing partner of Blue Sea. “Blue Sea Capital has a long history in the contract manufacturing sector, and we recognized the company’s unique blend of best-in-class product formulating, manufacturing, and packaging capabilities, management’s tireless focus on customer service, and the culture of talented people that have gotten IFP to where it is today. We look forward to building on this history of success to continue the company’s impressive trajectory.”
“We have canvassed the contract manufacturing sector over many years and identified IFP as a unique and differentiated company with a blue-chip customer base and a compelling value proposition to those they serve,” said Lee Farber, a vice president at Blue Sea. “We are excited to be partnering with this customer-focused management team to drive growth, both organically and via acquisition.”
Parthenon Capital has sold ScentAir, a provider of scent marketing products and services, to CITIC Capital.
“Dan and his team did a phenomenal job establishing ScentAir as the global industry leader in a market with tremendous white space and opportunity for continued growth,” said Andrew Dodson, a managing partner at Parthenon. “We have thoroughly enjoyed working alongside Dan and his team. We are proud of what we have accomplished together and wish the team all the best going forward.”
Thompson Street Capital Partners (TSCP) has acquired Len the Plumber, a full-service residential plumbing contractor.
“LTP is an extremely attractive company that checks all of the boxes for us,” said Jim Cooper, managing partner of TSCP. “It is rare to find a business with such an impressive performance track record and robust management systems in place. We are excited to work with Len on the board of directors and support Jeff Cooper and his team to grow the business over the coming years.”
St. Louis-headquartered 
Subsea Global Solutions, a portfolio company of GenNx360 Capital Partners, has acquired the commercial diving division of T&T Salvage Asia (TTSA). GenNx360 acquired Subsea Global from Lariat Partners in March 2018.
“This transaction represents SGS’ fourth add-on acquisition,” said Matt Guenther, a managing partner of GenNx360 who led the transaction. “Since GenNx360’s investment in March 2018, SGS has pursued an aggressive expansion strategy both establishing new territories and improving density and operational efficiency in existing territories.” The three earlier add-on acquisitions were Long Beach, California-based Muldoon Marine Services in November 2018; Singapore-based Underwater Contractors (UWC) in November 2019; and Sydney, Australia-based Gray Diving Services also in November 2019.
New York City-based 
