Archives for July 2020

Riverside Building Flavors Platform

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National Flavors, a portfolio company of The Riverside Company, has acquired GSB & Associates. The buy of GSB is the first add-on for National Flavors since being acquired by Riverside in March 2020.

GSB specializes in custom flavors used in the food, beverage (alcoholic and non-alcoholic), baking, confectionery, nutraceutical, and aromatherapy markets. The company’s flavor products – available in liquid and powdered form – is expansive and includes mesquite smoke, watermelon, coconut, lime, peppermint, cherry, marshmallow, and tiramisu, among many others. GSB is led by President Corinne Baskin and is headquartered near Atlanta in Kennesaw, Georgia.

National Flavors is a developer and supplier of custom and stock flavors used in the beverages, frozen desserts, baked goods, confections, and processed fruits sectors. The company has specific flavor expertise in fruits (such as apple, blackberry and banana), citrus (lemon, lime, and orange), nut (almond, hazelnut, and peanut), mint (peppermint and spearmint), and sweet brown (butterscotch, chocolate, and vanilla).

National Flavors has more than 300 stock flavors, can develop custom flavors within a five-day time frame, and provides on-demand pricing and documentation with samples shipped within 24 hours. The company, led by CEO Brian Briggs, was founded in 1941 and is headquartered in Kalamazoo, Michigan.

“National Flavors and GSB share a common vision, culture and customer-centric approach. We believe this acquisition will allow us to deliver superior flavor solutions and a customer experience that will allow both National Flavors and GSB customers to achieve their business goals,” said Mr. Briggs.  “We are proud to be a part of the fantastic foundation that the GSB team has built.”

“Combining National Flavors and GSB will broaden both companies’ product portfolios, providing customers with access to additional flavor development capabilities,” said Loren Schlachet, a managing partner at Riverside. “During our hold period, we want to become small- and mid-sized food and beverage companies’ number one choice for flavor development and production. Our platform’s commitment to quality, customer service and innovative development creates a strong foundation from which to continue building.”

Riverside is seeking additional add-on acquisitions for National Flavors and works with its Flavor & Specialty Ingredient Advisory Board – comprised of nine flavor industry experts – to identify opportunities to acquire mid-sized and smaller flavor companies, provide advice and guidance to Riverside’s flavor platform, and to evaluate trends in the overall flavor industry.

“The Flavor & Specialty Ingredient Advisory Board has been a great strategic partner,” said Alan Peyrat, a partner at Riverside. “Having access to such an experienced bench of industry experts has been, and will continue to be, extremely valuable as we continue executing an aggressive inorganic growth strategy to build out the platform further and invest in businesses with differentiated product portfolios, unique R&D capabilities and diverse end-market expertise.”

Working with Mr. Schlachet and Mr. Peyrat on this transaction were Senior Associate Liz Burke, Associate David Myers, Analyst Erin Reger, Operating Partner Brad Mundt and Finance Director Doug Guess. Director of Research Matthew Delly sourced the deal for Riverside.

The Riverside Company is a global private equity firm focused on investing in and acquiring growing businesses valued at up to $400 million. Since its founding in 1988, Riverside has invested in more than 650 transactions and its portfolio includes more than 100 companies. The firm is headquartered in New York City.

Private Equity Professional | July 30, 2020

HKW Adds Deal Generation Pro

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Indianapolis-based HKW has added Lilly Green to its team as Vice President of Deal Generation. Ms. Green will be based in HKW’s New York City office.

At HKW, Ms. Green will be active sourcing new transactions in the business services, health & wellness, and technology sectors. Before joining HKW, Ms. Green was with Welsh, Carson, Anderson & Stowe for three years as the firm’s business development manager for its technology group.

“The time and effort we put into our sourcing infrastructure has always been at the core of our business,” said Ted Kramer, president and CEO of HKW. “Lilly’s experience in originating deals and managing relationships in conjunction with understanding the strategic priorities of our business development effort we feel will be a tremendous asset to the team, and we’re excited to have her on our side.”

Ms. Green’s areas of expertise include buy-side deal origination, business development, B2B technology, and relationship/network development. She earned her undergraduate degree in International Relations from the University of Southern California.

HKW (formerly Hammond, Kennedy, Whitney & Company) invests in companies in the business services and health & wellness sectors that have EBITDAs between $5 million and $30 million. In the software and technology sector, the firm invests both control and minority investments in companies that have more than $10 million of annual revenue. In October 2019, the firm announced a final above-target close of HKW Capital Partners V LP with total commitments of $365 million.

“We are excited to have Lilly join the team as we launch our technology and software focus, as well as continue to strengthen our efforts to find opportunities within the business services and health & wellness sectors,” said Ryan Grand, a principal at HKW overseeing deal generation. “Most importantly, we believe Lilly embodies the cultural values here at HKW and look forward to her contributing to the team from day one.”

Since 1982, HKW has acquired 63 North America-based lower middle-market platform companies and closed 69 add-on acquisitions. The firm was founded in 1903 and is headquartered in Indianapolis with an additional office in New York City.

Private Equity Professional | July 30, 2020

Madison Dearborn Buys IPL Plastics

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Madison Dearborn Partners has partnered with Caisse de dépôt et placement du Québec (CDPQ) to acquire publicly traded IPL Plastics at an enterprise value of $736 million.

IPL Plastics (TSX: IPLP) is a maker of packaging used in the food, consumer, agricultural, logistics and environmental end-markets.

The company’s products include large format packaging (pails, containers, crates, and wheeled bins); consumer packaging (injection-molded containers and lids); and returnable packaging (bulk containers, and reusable and collapsible containers). IPL was founded in 1939 and is based in Montreal, Canada with additional offices in Dublin, Ireland.

In 2019, IPL had revenues of $605 million, gross profit of $119 million (a 19.7% GPM), and EBITDA of $83 million (a 13.7% EBITDA margin). This yields an EBITDA valuation multiple of 8.9x.

IPL was founded in 1939 and went public on the Montreal Stock Exchange in 1985. The company was taken private by Novacap and Fonds de solidarité FTQ in 2010, and the two investors exited in 2015 through a sale of a majority interest in IPL to One51, an Ireland-based maker of plastic containers. The combined companies went public on the Toronto Stock exchange in 2018.

Madison Dearborn invests in privately held or publicly traded companies in the following sectors: basic industries; business and government software and services; financial and transaction services; health care; and telecom, media, and technology services. In August 2016, the firm closed its seventh buyout fund at $4.4 billion. Madison Dearborn was founded in 1992 and is based in Chicago.

Caisse de dépôt et placement du Québec is an institutional investor that manages funds primarily for public and para-public pension and insurance plans. As of December 2019, it held C$340 billion in net assets.

Committed financing for this transaction has been provided by Bank of America, BMO Capital Markets, Barclays, and Deutsche Bank. BMO Capital Markets is the financial advisor to the IPL Plastics and Evercore is advising Madison Dearborn.

Private Equity Professional | July 31, 2020

CORE Launches New Metals Services Platform

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CORE Industrial Partners has formed Incodema Holdings to acquire sister-companies Incodema, a sheet metal services provider, and Newchem, a provider of photochemical etching services.

Incodema provides sheet metal cutting and forming services including laser, micro waterjet, stamping, and welding.

The company has capabilities with aluminum, steel and stainless steel, copper, brass, bronze, and other exotic metals. Incodema was founded in 2001 and is headquartered in Ithaca, New York.

Newchem (DBA Newcut) is a provider of photochemical etching services on a range of metals including aluminum, copper, beryllium, steel and stainless steel, and other exotic metals such as Inconel 625 (a nickel-chromium-based alloy). The company’s services are used in the manufacturing of encoders, EMI/RFI shields, screens and filters, shims and washers, and metal signage that are used in the aerospace, automotive, architectural, decorative, electronics, medical, dental, and military sectors. Newcut was founded in 1970 and is headquartered near Rochester in Newark, New York.

“On behalf of employees at both Incodema and Newcut, we’re excited to begin this new chapter,” said Sean Whittaker, the CEO and founder of both Incodema and Newcut. “For decades, Incodema and Newcut have successfully married industry-leading capabilities with a customer-centric orientation that allows us to devote attention to every one of our valued clients. Now, with CORE’s support, we’ll be able to expedite our exciting growth initiatives while preserving our outstanding customer service.”

“Our investments in Incodema and Newcut underscore CORE’s continued desire to not only invest in advanced digital manufacturing firms that align with Industry 4.0 fundamentals, but also to do so in partnership with founders and family owners,” said John May, managing partner of CORE. “We believe access to CORE’s network and resources will prove highly impactful in both augmenting the company’s existing operations and adding new capabilities and geographic reach.”

CORE makes control investments in companies that have revenues of up to $200 million, EBITDA of up to $20 million, and enterprise values up to $150 million. Sectors of interest include a range of specialty verticals within the manufacturing and industrial technology sectors. In February 2019, the firm held a final close of CORE Industrial Partners Fund I LP with total commitments of $230 million. The new fund was significantly oversubscribed with demand in excess of the initial target of $200 million and initial hard cap of $225 million. CORE was founded in 2017 and is headquartered in Chicago.

“The company’s differentiated technical capabilities and demonstrated track record of effectively transitioning from prototype to production with a leading customer base are especially compelling drivers of our investment,” said Matthew Puglisi, a partner at CORE. “We are looking forward to working with the Company’s talented management team to execute on a variety of near-term, transformational growth opportunities.”

Stifel’s technology group was the financial advisor to Incodema and Newcut.

Private Equity Professional | July 31, 2020

Lakeview Banks Big Multiple on UAS Sale

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Lakeview Equity Partners has sold its portfolio company, UAS Laboratories, to Chr. Hansen at an enterprise value of $530 million. Lakeview acquired UAS Laboratories in April 2013.

United Agricultural Services Laboratories (DBA UAS Laboratories) is a biotechnology company that formulates and markets probiotics for both domestic and international markets. The company’s probiotic fermentation is conducted at its facility in Madison, Wisconsin, and its formulation, manufacturing and distribution functions are done at their headquarters facility in Wausau, Wisconsin.

Chr. Hansen’s buy of UAS Labs expands its microbial platform and human health business by moving into the multi-species sector; broadening its product offering and customer base; and expanding its manufacturing footprint with two GMP facilities in the United States.

UAS Labs has 230 employees and is expected to generate revenues of around $85 million and EBITDA above $30 million before synergies in 2020. This EBITDA yields a purchase price multiple of more than 17x.

“With closing of the UAS Labs acquisition, we look forward to building upon the strengths of both companies,” said Mauricio Graber, chief executive officer of Chr. Hansen. “We will expand our probiotic offerings from strain to solution, gain access to new customer groups and move into new indication areas whilst staying true to our commitment to science and R&D.”

Chr. Hansen is a biosciences company that develops ingredient products – cultures, enzymes, probiotics, and natural colors – that are used in the food, nutritional, pharmaceutical, and agricultural industries. Annual revenues for the company exceed €1 billion. Chr. Hansen was founded in 1874 by Danish chemist Christian Hansen and is headquartered north of Copenhagen in Hørsholm, Denmark.

Milwaukee-based Lakeview Equity makes control and minority investments in Midwest-based, middle market companies that have enterprise values from $5 million to $50 million. Sectors of interest include niche manufacturing, business services, food processing and packaging, specialty distribution and financial services.

Private Equity Professional | July 29, 2020

Pets a Good Bet

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According to a new study by Katten, pet owners’ love for their animals, along with the impact of COVID-19, are among the reasons decision-makers feel bullish about the future of private equity and animal care.

Katten’s new study – 2020 Private Equity in Animal Care Survey – polled more than 100 animal care operators and private equity professionals who have participated in a private equity animal care transaction over the past two years or expect to soon. The survey reveals that what made animal care tempting for private equity before COVID-19 — low risk, good returns, and relatively light regulation — began to resonate even more amid stay-at-home orders and perhaps a reevaluation of household priorities.

“Pet ownership jumped in recent months as more people have been stuck at home,” said Kimberly Smith, a partner and co-chair of Katten’s global mergers and acquisitions/private equity practice. “Simultaneously, the tried-and-true factors that have historically attracted private equity to animal care remain intact, and there’s plenty of unallocated capital still on the sidelines. While we found the bullishness on animal care investments somewhat surprising in light of the uncertainty swirling around the deal market right now, the survey shows that the fundamentals still make sense.”

Other survey findings include:

  • Despite its broad economic damage, the pandemic at least somewhat positively impacted 68 percent of private equity respondents’ outlook when it comes to animal care, while 61 percent of animal care respondents have become more open to private equity since COVID-19 swept through the United States in March 2020.
  • Additionally, 90 percent of private equity respondents agreed that animal care is an attractive target, and 71 percent expect private equity transactions in the sector to increase over the next year — with more than one quarter saying the increase would exceed 10 percent.
  • For all survey respondents, therapeutics and diagnostics were the greatest investment opportunity over the next two years. Technological advances in animal care are expected to accelerate as a result of COVID-19 — which is likely why survey respondents point to technology products for pet owners as an area ripe for investment.

Katten’s 2020 Private Equity in Animal Care Survey was conducted online in May 2020. For more information and to download a PDF of the 18-page survey results, please click on the image on the right.

Katten’s mergers and acquisitions/private equity practice has decades of experience in a range of transactions, including leveraged buyouts and other acquisitions, dispositions, equity and debt financings, restructurings, and recapitalizations. Each year, the firm’s deal teams advise private equity firms, strategic acquirers, family offices, and independent sponsors on transactions with billions of dollars in value.

Chicago-headquartered Katten has nearly 700 attorneys with locations across the United States and in London and Shanghai. The firm’s core areas of practice include commercial finance, corporate, financial markets and funds, insolvency and restructuring, intellectual property, litigation, real estate, structured finance and securitization, transactional tax planning, and trusts and estates.

Private Equity Professional | July 29, 2020