Archives for August 12, 2021

RoundTable Forms Medical Components Platform, Buys Two Companies

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RoundTable Healthcare Partners has formed Healthcare Components Group to acquire American Optics and Replacement Parts Industries (RPI).

Both American Optics and RPI are independent service organizations that provide contracted medical device repair services to acute care facilities, ambulatory surgical centers, and physician and dental offices.

American Optics is a manufacturer, assembler, and distributor of replacement components used in the repair of flexible and rigid endoscopes, and new components used by original equipment manufacturers in endoscope manufacturing.  American Optics, led by CEO Larry Hicks, is headquartered near Boston in Wellesley, Massachusetts with additional manufacturing and distribution facilities in Panagyurishte, Bulgaria.

RPI is a manufacturer and distributor of parts for medical, hospital, dental, and laboratory equipment. The company, led by CEO Ira Lapides, is headquartered in Simi Valley, California.

The newly formed Healthcare Components Group (HCG) will be led by Mr. Hicks with Mr. Lapides leading RPI’s day-to-day operations.

“We are thrilled to combine these businesses to form Healthcare Components Group,” said Mr. Hicks. “Our entire team is excited to partner with RoundTable and believe the firm’s unique operating and transaction expertise will be instrumental as we build a market-leading player in the niche replacement and repair parts space.”

“The creation of HCG through the acquisitions of American Optics and RPI establishes an excellent foundation for us to build upon,” said Tom Kapfer, a managing partner at RoundTable. “As a combined entity, HCG will provide a diverse and broad product offering to its customer base. We see a clear opportunity for growth driven by anticipated increases in procedure volumes and a focus on serving independent service organizations that represent the fastest-growing segment of the repair market. RoundTable looks forward to partnering with Larry Hicks and the entire management team at HCG as they embark on the company’s next phase of growth.”

RoundTable is an operating-oriented private equity firm focused exclusively on the healthcare industry.  The firm was founded in 2001 and is headquartered north of Chicago in Lake Forest, Illinois.

RoundTable’s equity investment in Healthcare Components Group is the third investment made through the firm’s $700 million fifth fund, RoundTable Healthcare Partners V LP, which closed in 2019. In addition to RoundTable’s equity, senior debt financing was provided by Capital One and CIBC Bank USA, and subordinated debt was provided by RoundTable Capital Partners III LP, RoundTable’s subordinated debt fund.

© 2021 Private Equity Professional | August 12, 2021

Sun Buys Remaining Piece of Select Interior Concepts

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Sun Capital Partners has agreed to acquire Select Interior Concepts, a distributor of interior building products for $411 million in cash.

Until June 30, 2021, Atlanta-headquartered Select Interior Concepts (NASDAQ: SIC) operated through two segments, Residential Design Services (RDS) and Architectural Surfaces Group (ASG). The RDS segment was sold in June to Interior Logic Group, a California-based provider of flooring and other interior finishes and a portfolio company of Blackstone since February 2021, for $215 million.

The company’s remaining ASG segment – headquartered in Austin, Texas – imports and distributes natural and engineered stone slabs, such as marble, granite, porcelain, and quartz for kitchen and bathroom countertops; and ceramic and porcelain tiles for flooring and backsplashes.

The ASG segment serves the new residential and commercial construction markets, and the repair and remodel market and sells its products through a network of 21 distribution centers and showrooms.

In FY 2020, the ASG segment had revenues of $221 million and an adjusted EBITDA of $23.5 million which equates to a 17.5x valuation multiple. As background, for FY 2020, the RDS segment had revenues of $332.5 million and an Adjusted EBITDA of $16.7 million. This equates to a 12.8x valuation multiple.

“After thorough and thoughtful deliberations in consultation with our financial advisors, we are pleased to enter into a definitive sale agreement with an affiliate of Sun Capital,” said Brett Wyard, the chairman of SIC. “In making this decision, the board considered the current state of the business and its outlook and opportunities. We believe this path is in the best interests of our shareholders, providing them with immediate and substantial value for their investment.”

“We have long been an active investor in the building materials sector, and have been impressed by SIC’s track record, ability to deliver for customers and overall industry vision,” said Jeremy Stone, a managing director at Sun Capital. “We are excited to support SIC’s strong management team in the next stage of growth, capitalize on new opportunities and drive success.”

RBC Capital Markets and Truist Securities were the financial advisors to SIC, and Raymond James was the financial advisor to Sun Capital.

Sun Capital invests in leveraged buyouts, equity, and debt in companies that can benefit from its in-house operating professionals and experience. The firm has invested in and managed more than 425 companies worldwide with combined sales of more than $50 billion since its inception in 1995. Sun Capital has offices in Boca Raton, Los Angeles and New York, and an affiliate office in London.

© 2021 Private Equity Professional | August 12, 2021

Wind Point and Ontario Teachers Sell Aurora to Nautic

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Wind Point Partners and Ontario Teachers’ Pension Plan Board (OTPP) have sold Aurora Plastics to Nautic Partners.

Aurora Plastics is a provider of flexible and rigid polyvinyl chloride (PVC), thermoplastic elastomers, and other engineered materials that are used in the building and construction, industrial and consumer end-markets. PVC is the third-most widely produced synthetic plastic polymer and is available in rigid (RPVC) and flexible formats.

Aurora’s custom RPVC powders, pellets, foams and alloys are sold to small and medium-sized manufacturers, primarily in the building products end markets.

In addition to its PVC products, Aurora’s other polymer products include thermoplastic elastomers (TPE), thermoplastic rubber (TPR), thermoplastic polyolefin elastomers (TPO), and thermoplastic chlorinated polyethylene elastomers (CPE), as well as other flame retardant plastic compounds. Aurora was founded in 1997 and has facilities in Streetsboro, Ohio (headquarters); Welcome, North Carolina; Marieville, Quebec; Lunenburg, Massachusetts, and Pasadena, Texas.

Wind Point and OTPP acquired Aurora Plastics from its founders in August 2016 in partnership with specialty materials executive Darrell Hughes, who joined the company as its chief executive officer.

“I want to thank Wind Point, Ontario Teachers’ and our board for their outstanding support over the last five years,” said Mr. Hughes. “Our partnership has successfully built a truly market-leading, scalable organization that continues to deliver on a proven playbook for serving our customers, employees, and all stakeholders. We very much look forward to continuing our exciting momentum with Nautic as a partner.”

“Aurora is a great example of how Wind Point’s focus on partnering with a top-caliber CEO and building a world-class management team can drive tremendous value for our investors,” said Nathan Brown, a managing director at Wind Point. “Aurora has built a powerful, differentiated business model, and the company’s success would not have been possible without the leadership of Darrell and his team, who executed on every aspect of our transformative value creation plan. We wish them continued success in their new partnership with Nautic.”

“Aurora is a market leader with an outstanding management team,” said Chris Pierce, a managing director at Nautic. “Their history of successfully completing acquisitions and commitment to continuous innovation position the business well for continued growth. We are delighted to partner with Darrell and his team for the next chapter of Aurora’s growth.”

Chicago-based Wind Point invests from $50 million to $100 million in companies with EBITDA of at least $10 million. Industries of interest include business services, consumer products and industrial products. Wind Point is currently investing out of Wind Point Partners IX LP which closed in February 2021 with $1.5 billion of capital. Fund IX is the largest fund ever raised by Wind Point.

“Today’s sale is the culmination of a highly successful partnership with Wind Point, which has seen Aurora establish itself as a leading North American provider of custom material solutions. We believe this transaction is a great outcome for all parties, and we look forward to continuing to watch Aurora thrive under its new owners,” said Karen Frank, a senior managing director at OTPP.

Toronto-headquartered Ontario Teachers’ Pension Plan is one of Canada’s largest and most active pension investors with C$221 billion in assets under management.

Nautic is a middle-market private equity firm that makes majority equity investments of $50 million to $250 million in companies that are active in the healthcare, industrial products, and outsourced services sectors. In March 2019, the Providence, Rhode Island-based firm held a final closing of Nautic Partners IX LP at its hard cap with $1.5 billion of limited partner commitments.

William Blair and Barclays were the financial advisors to Aurora Plastics on this transaction with Antares Capital and Carlyle Global Credit leading the debt financing.

© 2021 Private Equity Professional | August 12, 2021

Bessemer’s Buy Backed by Tree Line

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Bessemer Investors has acquired Legacy Restoration in partnership with the company’s founder and senior management team.

Legacy Restoration is a provider of exterior restoration and remodeling services, including roofing, windows, siding, and gutters to single-family homes and multi-family properties. The company was founded in 2011 by CEO Scott Mullins and is headquartered near Minneapolis in Plymouth, Minnesota with additional offices in Lombard, Illinois and Centennial, Colorado.

Proceeds from this transaction were used by Legacy Restoration to provide liquidity to certain selling shareholders and to provide capital to support the company’s future organic and acquisitive growth. Mr. Mullins and other members of Legacy’s senior management team will continue leading the company in partnership with Bessemer.

“We are pleased to have established this partnership with Bessemer and their team,” said Mr. Mullins. “Legacy Restoration has achieved remarkable growth in its 10-year history, and we feel confident the Bessemer/Legacy partnership will enable us to continue this trend.”

“We are excited to partner with Legacy and to continue building on their track record of growth,” said Andrew Mendelsohn, a principal at Bessemer. “Led by an experienced management team, Legacy is an industry leader with a reputation for high-quality service and conducting business with integrity. We see numerous growth avenues for Legacy, whether through geographic and end-market expansion, or through strategic M&A opportunities, and look forward to supporting Scott and the management team through the next phase of growth.”

Capstone Headwaters was the capital markets advisor on this transaction with Tree Line Capital Partners and Bridge Bank (part of the Western Alliance banking group) providing debt financing.

Tree Line provides first lien term loans, unitranche term loans, and equity co-investments to North America-based lower middle market companies that have EBITDA from $3 million to $30 million and transaction sizes up to $150 million. The Tree Line team has extensive direct lending experience across multiple economic cycles and has generated significant repeat investment opportunities from private equity sponsors. Tree Line is headquartered in San Francisco with additional offices in New York City, Los Angeles, and Austin.

New York City-based Bessemer Investors invests from $50 million to $150 million of equity in companies that have from $10 million to $50 million of EBITDA and enterprise values from $75 million to $500 million. Sectors of interest include industrials, business services, and consumer products and services.

Bessemer was formed in 2018 and is an investment vehicle of Bessemer Securities, a multi-family office led by the Phipps family whose wealth originated from the partnership between Henry Phipps and Andrew Carnegie, and the sale of Carnegie Steel to JP Morgan in 1901. Bessemer Securities is named after the Bessemer steel-making process – developed by Sir Henry Bessemer in 1855 and used by Carnegie Steel – that allowed for the low cost and efficient production of steel from iron.

Chicago-based Waller Helms was the financial advisor to Legacy on this transaction and Piper Sandler was the financial advisor to Bessemer.

© 2021 Private Equity Professional | August 12, 2021