Archives for 2020

Periscope Beats Fund II Target

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Periscope Equity has held a final, above target, and oversubscribed closing of its second institutional fund, Periscope Equity II LP, with $225 million of capital commitments.

Limited partners in the new fund include university endowments, pension funds, charitable foundations, funds-of-funds and family offices.

“The durability and growth of our existing portfolio during the pandemic demonstrates the benefits of our consistent investment strategy, as we have never wavered from targeting companies with mission-critical offerings, a history of sustainable profitability, and a stable base of recurring revenue,” said Steve Jarmel, the founder and a partner at Periscope.

Chicago-based Periscope makes control buyouts of founder-owned technology-enabled services and software companies that have revenues from $10 million to $50 million and EBITDAs from $2 million to $8 million.  Sectors of specific interest include digital marketing, business process automation, security services, and healthcare technology.

Since its founding in 2013, Periscope has completed 7 platform investments – 3 of which have been successfully exited – and closed 17 add-on acquisitions. ​​​​​​​Periscope’s first fund closed in 2018 with $104 million of capital commitments.

Periscope’s current portfolio includes Mobile Solutions, a Denver-based SaaS provider of managed mobility services – spend, security and device lifecycles – to small and medium sized businesses and mid-size enterprise markets (acquired in October 2019); Power Digital Marketing, a San Diego-based provider of tech-enabled business-to-consumer and business-to-business marketing campaigns (January 2019); Sentrics, a Dallas-based provider of physical, medical, and social data on residents living in senior communities (acquired in August 2018); and Integrated Behavioral Health, a Costa Mesa-based provider of health management services to self–insured employers, medical and disability carriers, and health plans (acquired in May 2018).

“With Fund I nearly deployed in less than three years, we are thrilled to continue on our growth path and to execute our strategy of partnering with innovative, entrepreneurial companies on a larger scale,” said John Findlay, a partner at Periscope.

M20 Private Fund Advisors was the placement agent for this fundraise and Kirkland & Ellis provided legal services.

Private Equity Professional | December 16, 2020

New Harbor Exits Wedgewood Pharmacy

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New Harbor Capital has agreed to sell Wedgewood Pharmacy, one of the largest veterinary drug compounders in the United States, to Partners Group.

Compound medications are prescriptions and medication orders that are written by physicians, veterinarians and other authorized prescribers when there is no commercially available alternative. The prescriptions are prepared by specially trained pharmacists and pharmacy technicians.

Wedgewood has commercial relationships with over 66,000 veterinarians and directly serves hundreds of thousands of animal patients throughout the US every year including dogs, cats, birds, horses and some less-common animals such as amphibians, hippopotamus and reptiles. Wedgewood was founded in 1980 and employs over 700 people in New Jersey, California, Colorado, and Arizona. The company, led by CEO Marcy Bliss, is headquartered near Philadelphia in Swedesboro, New Jersey.

“I will be forever grateful to New Harbor for their passion for our mission to improve the lives of animals and those who love them,” said Ms. Bliss. “They understood from the beginning the importance of quality, care, and our people, and their investment worked to improve every aspect of what we are able to deliver to our patients, caregivers, and team.”

During New Harbor’s ownership term, the revenues of Wedgewood tripled through growth in the animal health market – due in part to the continued trend to humanize the treatment of pets – and through three add-on acquisitions including Arizona-based competitor Diamondback Drugs (July 2018); Colorado-based Wildlife Pharmaceuticals and its Wyoming-based ZooPharm subsidiary (August 2020).

Both Wildlife and ZooPharm are compounding pharmacies that provide veterinary-anesthesia and pain-management medications for non-domestic animal species, wildlife, captive exotic breeds, and companion animals; and the buy of a 22,000 square-foot, FDA-registered 503B facility from San Jose-based Leiters Enterprises (May 2020).

“We sincerely enjoyed working with Marcy and the entire Wedgewood team over the last five years,” said Jocelyn Stanley, a partner at New Harbor. “We greatly value their partnership and shared commitment to growth, excellence, and collaboration. It has been a privilege supporting the company during this exciting growth phase and we wish them great success moving forward.”

New Harbor invests from $10 million to $40 million of equity in companies that have from $3 million to $15 million of EBITDA. Sectors of interest include growth-oriented business services companies with an emphasis on the healthcare and education industries. New Harbor was co-founded in February 2013 by Tom Formolo and Ed Lhee, long-time partners at CHS Capital, and is based in Chicago.

“Partners Group takes a thematic approach to investing, and Wedgewood Pharmacy’s model of caring for animal patients through the provision of specialty healthcare fits well within this framework,” said Chris Russell, a managing director at Partners Group. “We pursue resilient, growing businesses benefiting from transformative trends, including the elevated importance of pets in our families. We look forward to working with Wedgewood Pharmacy on building further value in the business on behalf of all its stakeholders.”

Partners Group (SIX: PGHN) is a global investment management firm with over $96 billion of assets under management in private equity, private real estate, private infrastructure and private debt. The firm is headquartered in Zug, Switzerland, and has over 1,500 employees across 20 offices around the globe.

This transaction is expected to close in the first quarter of 2021.

© 2020 Private Equity Professional | December 15, 2020

Enhanced Healthcare Invests in Hallmark

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Enhanced Healthcare Partners (EHP) has made an investment in Hallmark Health Care Solutions.

Hallmark is a cloud-based provider of physician compensation and workforce management services used by health systems, academic medical centers, and physician groups with many of the largest health delivery networks and medical groups in the nation as customers. The company’s product portfolio includes artificial intelligence-based software platforms sold under the brands Heisenberg II (physician compensation) and Einstein II (workforce management).

Hallmark is led by CEO and co-founder Isaac Ullatil and is headquartered on Long Island in Hauppauge, New York with additional offices in New Jersey, Michigan, and India.

“It was clear early on that EHP’s expertise in growing healthcare companies would align well with our company vision, product development and expansion efforts,” said Mr. Ullatil. “We are thrilled with the partnership and believe together we will continue to build raving fans of our solutions.”

“COVID-19 has put immense clinical and logistical pressure on health systems in effectively identify, sourcing, deploying and delivering scarce resources across healthcare systems,” said Matthew Thompson, a general partner at EHP.  “Hallmark solves these fundamental complexities leveraging state-of-the-art software to aid hospitals and provider groups that ultimately provide the front-line care that benefits the entire U.S. healthcare system.”

EHP makes minority and majority investments in founder and entrepreneur-led lower middle-market healthcare businesses with specific interest in physician services, pharma services, payor services, and healthcare technology sectors. Typical targets will be based in North American and have from $50 million to $250 million in enterprise value.

New York-headquartered EHP is investing from its first fund, Enhanced Healthcare Partners LP, which closed in September 2019 with $300 million of capital.

© 2020 Private Equity Professional | December 15, 2020

First Atlantic and TPG Add Another Label Maker

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Resource Label Group, a portfolio company of First Atlantic Capital and TPG Growth, has acquired Labels West.

Labels West provides flexographic and digital printing for labels, paper, film, and tags in more than 8,000 custom and standard shapes and sizes, and up to 12 colors.

The customers of Label West have included Microsoft, Starbucks, Nintendo, Kroger, Proactiv and Stila Cosmetics among many others. Labels West, led by President John Shanley, was founded in 1978 and is headquartered near Seattle in Woodinville, Washington.

Resource Label Group (RLG) is a manufacturer of pressure-sensitive labels, shrink sleeves, radio-frequency identification (RFID) and near field communication (NFC) products. The company’s labeling products are used in the food, beverage, chemical, household products, personal care, nutraceutical, pharmaceutical, medical device, and technology industries.

RLG has eighteen locations and more than 1,300 employees in the US and Canada. The company, led by CEO Mike Apperson, is headquartered in Franklin, Tennessee. RLG was acquired by First Atlantic in April 2011 and TPG invested in the company in May 2018.

“The talented team at Labels West has been extremely successful in building top-level customer relationships,” said Emilio Pedroni, a managing director at First Atlantic. “They represent another important addition to the Resource Label organization, and we look forward to continued growth.”

The buy of Labels West is RLG’s second add-on acquisition in the state of Washington and its eighteenth overall including Tennessee-based Mid-South RFID (September 2007); Illinois-based Pamco Label (July 2011); Rhode Island-based Fox Tag and Label (July 2011); Massachusetts-based Oxford Graphics (March 2014); California-based The Label Company (October 2014); Ontario-based A1 Label (December 2014); Oregon-based Taylor Made Labels (October 2015); Utah-based LithoFlexo Grafics (February 2016); Washington-based Advanced Labels NW (November 2016); Alabama-based RayPress Corporation (December 2016); California-based Cellotape/Landmark Label ( March 2017); New York and Texas-based Gintzler International (March 2017); Ontario-based Ingenious Packaging (July 2018); California-based Paragon Label (August 2018); California-based Spectrum Label (November 2018); Best Label (November 2018); and California-based Axiom Label & Packaging (February 2020).

“We are excited to expand our presence in the Northwest. Adding partners such as Labels West continues to support our growth strategy in key markets,” said Ransom Langford, a partner at TPG Growth.

First Atlantic invests in middle-market companies that are active in the plastics and packaging, food and beverage, consumer and industrial products, and business services sectors. Since its inception in 1989, First Atlantic has acquired more than 70 companies and consolidated them into 22 major platforms. The firm is based in New York.

TPG Growth is the middle market and growth equity investment platform of TPG and currently manages approximately $15 billion in assets across a variety of sectors including healthcare, consumer, media, technology, and business services. TPG invests in a wider range of asset classes, including private equity, growth equity, real estate, credit, and public equity. The firm, founded in 1992, has more than $84 billion of assets under management and is headquartered in San Francisco and Fort Worth.

© 2020 Private Equity Professional | December 15, 2020

Red Monkey Switches Sponsors

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San Francisco Equity Partners (SFEP) has sold Red Monkey Foods to Norwest Equity Partners. SFEP acquired Red Monkey in January 2017.

Red Monkey is a supplier of natural and organic, branded and store-branded spices, seasonings, salts and bath salts that are sold through the grocery, mass, specialty and e-commerce channels. The company is certified USDA organic and produces its products in an SQF (Safe Quality Food Institute) level III facility located in Springfield, Missouri.

In December 2017, Red Monkey acquired San Francisco Salt Company, a California-based provider of specialty sea salts including Himalayan salt, Epsom salt and Dead Sea salt products sold in both retail and bulk sizes under company-owned brand names including San Francisco Salt, Sherpa Pink, Minera, and Epsoak.

Red Monkey Foods was founded in 2002 and is led by CEO Scott Bolonda, a former senior executive at spice giant McCormick & Co., who joined Red Monkey as its CEO in May 2017.

“SFEP has been a great partner to the Red Monkey management team over the last four years,” said Mr. Bolonda. “Their experience building scalable businesses in the consumer space proved invaluable as we successfully executed on our strategy of becoming the premier supplier of premium organic flavor solutions. Our team greatly valued SFEP’s operational approach to partnership. We look forward to capitalizing on the tremendous momentum in the business with our new partners at Norwest Equity.”

Norwest Equity (NEP) makes equity investments of $30 million to $250 million in companies that have more than $10 million in EBITDA. Sectors of interest include agriculture, business services, consumer, distribution, industrials, energy, and healthcare. The firm is currently investing Norwest Equity Partners X LP, a $1.6 billion fund that closed in April 2015. NEP was founded in 1961 and is headquartered in Minneapolis with an additional office in Palm Beach.

“We have thoroughly enjoyed working with the talented team at Red Monkey as they have built an outstanding business,” said David Mannix, an SFEP Partner. “Over the course of our partnership, the company more than tripled revenue and EBITDA, completed a synergistic acquisition and significantly expanded its supply chain and manufacturing capabilities. Red Monkey is well-positioned for continued growth and we wish the management team and Norwest Equity success in their new partnership.”

San Francisco-headquartered San Francisco Equity Partners makes control and minority investments of $5 million to $25 million in consumer companies that have revenue of up to $100 million and EBITDA of up to $10 million. Consumer sectors of specific interest include apparel; beauty and personal care; food and beverage; health and wellness; household products; outdoor and recreation; pet care; and specialty retail.

Stifel was the financial advisor to Red Monkey on this transaction.

© 2020 Private Equity Professional | December 11, 2020

Paine Schwartz Exits FoodChain ID

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Paine Schwartz Partners has sold FoodChain ID, a provider of food safety and testing services, to Berkshire Partners.

FoodChain ID provides its more than 30,000 food, feed, and agricultural customers with food safety and food quality testing and accreditation services including non-GMO project verification, non-GMO ingredient supply chain compliance, and research and development formulation consulting.

FoodChain ID maintains a proprietary database of more than 100,000 products and ingredients, more than 100,000 regulatory references across 218 countries, and 2.5 million pages of regulatory notifications, scientific opinions and product recalls. The company was founded in 1996 as Genetic ID, then a pioneer of the GMO food identification industry, and serves more than 30,000 clients in over 100 countries. The company is headquartered in Fairfield, Iowa with additional offices in Belgium, Brazil, India, Italy, Mexico, Germany, Serbia, Thailand, and the UK.

During its ownership term, Paine Schwartz added to the firm’s senior management team and closed six add-on acquisitions that tripled the company’s revenues.

“It has been an absolute privilege to work with the Paine Schwartz team to elevate FoodChain ID and meet the growing demand for food safety services,” said Brad Riemenapp, the CEO of FoodChain ID. “Under Paine Schwartz’s ownership, we transformed the business into a global suite of services extending across supply chain compliance, regulatory compliance, risk assessment and predictive analytics. All of this is now underpinned by an amalgamation of customer data that forms a rich ecosystem of supply chain details.”

Paine Schwartz acquired FoodChain ID – then The Global ID Group – through its fourth fund in October 2016 from Inverness Graham.

“We are pleased to complete this sale of FoodChain ID,” said Kevin Schwartz, the CEO of Paine Schwartz. “During our ownership of the company, we worked closely with the management team to grow and transform the business, including through key acquisitions and substantial investments across the platform. We are confident that FoodChain ID will continue to thrive with Berkshire Partners. We wish Brad and the team the best as they move forward.”

Boston-based Berkshire Partners makes majority or minority equity investments of $50 million to $500 million in companies with enterprise values from $200 million to $2 billion. Typical targets will have revenues of more than $100 million and EBITDA greater than $25 million. Berkshire focuses primarily on North American companies however it will pursue select international opportunities as well. Sectors of interest include consumer, business services and technology, industrials, communications, and healthcare.

“FoodChain ID plays a critical role in the food economy, helping its customers manage complex supply chains and regulatory requirements so that consumers around the world can have confidence about the quality and safety of the food they eat every day,” said Blake Gottesman, a managing director of Berkshire Partners. “We’re thrilled to partner with Brad and his team to drive the next phase of FoodChain ID’s growth, including through strategic acquisitions.”

Berkshire is currently investing from Berkshire Fund IX LP, a $5.5 billion fund raised in 2016. In August 2020, the firm launched fundraising for Berkshire Fund X LP with a target of $6.5 billion.

Paine Schwartz Partners (previously Paine & Partners) provides equity for management buyouts, going-private transactions, and company expansion and growth programs. Sectors of interest include the food and agribusiness industries. The firm was founded in 2006 by Dexter Paine and Kevin Schwartz and has offices in New York City and San Mateo, California.

Houlihan Lokey was the financial advisor to FoodChain ID and Morrison & Foerster provided legal services.

© 2020 Private Equity Professional | December 11, 2020