Archives for November 2022

Abacus Backs Another LongueVue Platform

by

Abacus Finance Group has provided senior secured debt to support the acquisition of Summit Clinical Research by LongueVue Capital. Abacus also made an equity co-investment.

Summit Clinical Research (SCR) is an integrated research organization that specializes in Hepatology, a branch of medicine concerned with the study, prevention, diagnosis, and management of diseases that affect the liver, gallbladder, and pancreas. Within Hepatology, SCR specializes in non-alcoholic steatohepatitis (NASH), liver inflammation and damage caused by a buildup of fat in the liver. Three-quarters of Summit’s studies are dedicated to NASH therapeutics, while the remaining 25% are focused on non-alcoholic fatty liver disease, liver extension, and liver cirrhosis.

Source: Getty Images

SCR operates a network of more than 95 research sites across the United States, Puerto Rico, France, Germany, Argentina, Italy, and Mexico. Through its site network, SCR works alongside providers and patients – both in-person and remotely – to increase participation in clinical trials and reduce administrative costs. SCR’s customers include pharmaceutical, biotech, and drug development companies. SCR was founded in 2018 and is headquartered in San Antonio, Texas.

Abacus funded the senior secured debt for LongVue’s buy of SCR as both Senior Secured Credit Facilities Administrative Agent and Sole Lender. “Once again, great work by the Abacus team,” said LongueVue Partner Ryan Nagim. “They know the sector well, and the result was a smoothly executed transaction, which is their hallmark.”

“This is our seventh transaction with LongueVue with whom we have built a terrific relationship over the years,” said Tim Clifford, the president and CEO of Abacus. “As in earlier transactions for them, our success was a function of our speed, cash-flow flexibility, and certainty of close – key aspects of what we call our Total Partnership Approach™.”

Abacus provides cash flow-based senior financing to private equity and family office-sponsored, lower-middle market companies that have EBITDA between $3 million and $15 million. Debt facilities can be as large as $50 million. Since Abacus’s inception in June 2011, it has closed over $2 billion in financings. Abacus is headquartered in New York City and is an affiliate of New York Private Bank & Trust which was founded in 1850.

The Abacus transaction team included Eric Petersen, Joseph Lee, and Greg Scanlon. “LongueVue has consistently brought us attractive opportunities like Summit that align well with our investment strategy,” said Mr. Petersen.

LongueVue makes equity and debt investments of $10 million to $50 million in companies that have over $3 million of EBITDA and up to $150 million of annual revenue. The firm is typically the first institutional investor in its founder-owned target companies. Sectors of interest include healthcare, transportation and logistics, specialty manufacturing, industrial services, consumer, food and beverage, and specialty packaging.

In October 2022, LongueVue held an oversubscribed and hard cap final closing of LongueVue Capital Partners IV LP with $360 million of capital. The firm’s earlier fund closed in March 2017 at its hard cap of $252 million.

LongueVue was founded in 2001 and is based in New Orleans with an additional office in Park City, Utah.

© 2022 Private Equity Professional | November 29, 2022

O2 Backs West Edge’s Buy of Dakotaland Autoglass

by

O2 Sponsor Finance, a division of Old Second National Bank, has provided senior secured credit facilities to back the buy of Dakotaland Autoglass by West Edge Partners.

Dakotaland Autoglass (DAG) is a distributor of aftermarket automotive replacement glass, and paint & body equipment to autobody shops and glass installation businesses. The company’s inventory includes over 50,000 auto glass parts. In addition to its distribution activities, DAG also provides a range of services including windshield replacement, back and side window replacement, and minor chip repair.

Source: Getty Images

DAG operates 12 locations across North Dakota, South Dakota, Minnesota and Iowa, with its main distribution center and headquarters (68,000 sq. ft.) in Sioux Falls, South Dakota. DAG was founded by Daryl Anderson in 1978. McGowan Capital, a private equity firm also based in Sioux Falls, invested in DAG in 2012.

O2 Sponsor Finance provided just more than $13 million to back West Edge’s acquisition of DAG. “We are excited that West Edge selected O2 Sponsor Finance as senior lender to support their acquisition of Dakotaland Autoglass. We look forward to supporting DAG’s ongoing growth,” said Thom Karle, a senior vice president at O2 Sponsor Finance.

O2 Sponsor Finance is a national provider of cash flow-based loans to lower middle market businesses with $10 million to $100 million in revenue and $2 million to $10 million in EBITDA. Typical investment sizes range from $5 million to $25 million with syndication capabilities up to $60 million. The firm focuses on supporting private equity sponsors, independent sponsors and family offices in their acquisition or recapitalization of lower middle market companies.

O2 Sponsor Finance was formed by Old Second Bancorp in January 2022 and is led by President Joe Gaffigan, the former president and co-founder of TCF Capital Funding. Mr. Gaffigan led TCF Capital Funding from 2012 to 2021 until TCF Bank was acquired by Huntington National Bank in June 2021. He remained with Huntington as the president of its sponsor finance unit until spinning out to join Old Second to form O2 Sponsor Finance.

Old Second Bancorp has more than $6  billion in assets and is headquartered near Chicago in Aurora, Illinois. O2 Sponsor Finance is headquartered in Chicago. Mr. Gaffigan can be reached via email at [email protected] and Mr. Karle can be reached at [email protected].

In addition to the support from O2 Sponsor Finance, Omaha-based First Capital Partners provided subordinated debt financing and an equity co-investment.

West Edge Partners invests in companies that have more than $5 million in revenue and less than $15 million in EBITDA. Sectors of interest include business and consumer services, distribution, and light manufacturing businesses. West Edge is headquartered in Los Angeles with an additional office in Philadelphia.

© 2022 Private Equity Professional | November 29, 2022

KLH Continues Infrastructure Services Strategy

by

Jackson Infrastructure Services, a provider of utility and infrastructure services, has acquired Victory Equity Construction.

In December 2020, KLH Capital and J2 Partners formed Jackson Infrastructure Services (JIS) to acquire the company (then B Jackson Construction and Engineering) in partnership with founder and CEO Bart Jackson.

Today, JIS is a utility and infrastructure services provider to the telecommunications, power, gas, milling, and other infrastructure markets across the West and Southwest regions of the United States.

Source: Jackson Infrastructure Services

The company provides dry utility services (power, telecom and natural gas utility installation); wet utility services (water line, sewer and storm drain projects); electrical services (street lighting, traffic signals, ATMS (advanced traffic management systems) and commercial light retrofit projects); heavy civil services (roadway and site construction work); and specialty services (cold milling, rumble strip installation, vacuum excavation, and subsurface potholing).

JIS was founded in February 1997 by Bart Jackson and is headquartered near Salt Lake City in West Jordan, Utah.

Victory Equity Construction (VECI) provides underground telecommunications infrastructure services to rural fiber optic cooperatives in Montana, Wyoming, Idaho and Colorado. VECI, led by CEO Jared Hanson, was founded in 1998 and is headquartered in Missoula, Montana.

With the combination of JIS and VECI, the company now has more than 215 employees including 190 field personnel with four branches operating across the Mountain West.

“We are extremely excited to welcome Jared and the VECI team to Jackson Infrastructure Services. VECI’s service capabilities, reputation for safety, and knowledgeable tenured staff align perfectly with our business, and we are excited to welcome their team to the Jackson family,” said Mr. Jackson. “We have a deep respect for their operation and the 25+ year history and experience in the underground utility infrastructure field. This strategic acquisition will create a meaningful growth and expansion opportunity in a key market for us.”

“VECI is a natural strategic fit for JIS. The acquisition allows for meaningful expansion into a market where its customers are currently asking it to enter,” said Will Dowden, a managing partner at KLH Capital. “We couldn’t be happier for Bart, Jared and his family, and our team as we continue to support the expanding footprint of the company.”

KLH makes majority and minority investments in family- and founder-owned distribution, specialty services, and niche manufacturing companies that have EBITDA from $4 million to $20 million. KLH was founded in 2005 and is headquartered in Tampa, Florida.

© 2022 Private Equity Professional | November 29, 2022

Private Equity Allocations Surge

by

Montana Capital Partners has published its 10th annual Investor Survey which reports on current investment strategies and preferences of private equity investors, including institutional investors, family offices, and foundations. The title of this year’s report is “The role of private equity in volatile times — how leading investors respond to the new market environment.”

According to Montana Capital Partners (MCP) allocations to private equity have surged in 2022 in an environment of decreasing public market valuations, rising inflation, and geopolitical conflicts. The survey finds that 71% of family offices and foundations and 33% of institutional investors now allocate 15% or more of their portfolio to private equity, a significant increase compared to 49% and 21%, respectively, in 2021.

Increased allocations are a result of the strong performance of the asset class and a fundraising environment that has seen general partners come back to market faster than ever and forced investors to accelerate their capital deployment. Meanwhile, the “denominator effect” has meant that for 8 out of 10 respondents, private equity portfolios have maintained their value or increased during the first half of the year, while stock markets declined.

To navigate the current market environment and mitigate the impact of a potential recession, investors have turned to resilient industries such as healthcare and business services, and investment strategies, including mid-market buyouts and secondaries, which are expected to be less impacted in a downturn.

MCP reports that secondaries are the second long-term strategic preference of investors behind mid-market buyouts and ahead of growth capital, venture capital and private debt. Specifically, investors prefer complex secondaries and acquisitions of fund portfolios.

“While it is currently more difficult to identify and create value and there are elevated market uncertainties, we also see heightened interest in and attractive opportunities for secondaries,” said Marco Wulff, a managing partner, and CEO at MCP. “We believe that we will be able to generate alpha by partnering with the right general partners and by taking advantage of the market correction to invest in assets with strong fundamentals at lower valuations.”

“Secondaries are expected to perform well in the current market environment, as some limited partners may be willing to accept a higher discount in exchange for immediate liquidity, which will create attractive buying opportunities,” added Eduard Lemle, a managing partner at MCP. “Secondaries are also an attractive complement to regular primary and direct private equity allocations, due to their high level of diversification, reduced blind pool risk, and earlier repayment of capital.”

Montana Capital Partners focuses on secondaries transactions in small- and mid-cap markets, with investors in Europe, Asia, and the United States. MCP has raised five secondary funds – all were oversubscribed and closed at their hard caps – with total assets under management of more than $3.5 billion. In the third quarter of 2021, MCP was acquired by Prudential Financial (NYSE: PRU). MCP is headquartered near Zurich in Zug, Switzerland.

Click HERE to access MCP’s 10th annual Investor Survey.

© 2022 Private Equity Professional | November 29, 2022

Palm Beach Hits Bullseye on Cadre Sale

by

Palm Beach Capital has completed its exit from Cadre, a manufacturer and distributor of safety and survivability products.

Cadre’s core products – sold under numerous brands including SafariLand and Med-Eng – include body armor, explosive ordnance disposal equipment, and duty gear equipment. Typically, duty gear is designed to attach to a standard duty belt for rapid access in case of an emergency.

Source: Cadre Holdings

The company’s customers include federal, state, and local law enforcement, fire and rescue professionals, explosive ordnance disposal teams, emergency medical technicians, and outdoor enthusiasts. Cadre is headquartered in Jacksonville, Florida.

Cadre was founded in 1964 as SafariLand, a custom gun holster manufacturer based in Sierra Madre, California. In 1999, SafariLand was purchased by Armor Holdings, a company controlled by investor Warren Kanders.

In 2007, after completing more than 20 add-on acquisitions, Armor Holdings was sold to BAE Systems for more than $4 billion and was renamed BAE Systems Mobility & Protection Systems (BAE MP). In 2012, Palm Beach Capital, through its third fund, partnered with Mr. Kanders to reacquire the law enforcement products business of BAE MP for $124 million. Since 2012, Cadre has completed 13 add-on acquisitions and went public (NYSE: CDRE) in November of 2021.

With its exit of Cadre now completed, Palm Beach Capital reports that it has realized proceeds equal to 9.3x its invested capital.

“We would like to sincerely thank the entire leadership team at Cadre for their vision and attention to detail in building the company into a scalable global platform protecting and serving our first responders,” said Nate Ward, a co-founder and managing partner of Palm Beach Capital. “We are proud of the company’s growth during our investment period, which is a testament to the strength and quality of the people, products, and brands at Cadre. We wish this exceptional company and management team continued success in the years to come.”

Palm Beach Capital makes control and non-control investments in United States-based companies with enterprise values from $20 million to $300 million that have at least $20 million of revenue and a minimum EBITDA of $5 million. Sectors of interest include business services, business process outsourcing, transportation and logistics, infrastructure and healthcare. Palm Beach Capital was founded in 2001 and is headquartered in West Palm Beach, Florida.

© 2022 Private Equity Professional | November 23, 2022

HarbourVest Closes Sixth Co-Investment Fund

by

HarbourVest has held a final close of its sixth co-investment fund, HarbourVest Partners Co-Investment Fund VI LP (HPCI VI), with $4.2 billion in capital. The new fund had an initial target of $3.5 billion.

The new fund has more than 115 limited partners – from across Europe, the Middle East, North America, South America, and the Asia Pacific region – and includes private and public pensions, corporations, endowments, foundations, family offices, and high net worth individuals.

Like its predecessor fund, HPCI VI will make direct co-investments in buyout, growth equity, and other private transactions in partnership with private equity firms. HarbourVest has been investing directly in companies since 1983 and its co-investment funds benefit from the general partner relationships it has formed over the years that provide a consistent pipeline of co-investment opportunities.

“The continuation of our flagship co-investment program enables us to remain the partner of choice for general partners on a global level,” said Craig MacDonald, a managing director at HarbourVest. “In addition to being a provider of capital at scale, we continue to provide general partners with solutions that provide an access point for investors to gain exposure to market leading, private equity backed companies across industries and geographies.”

HarbourVest’s earlier co-investment fund, HPCI V, closed in November 2019 with $3 billion of commitments; and HPCI IV closed in July 2017 with $1.75 billion in commitments.

“Our four decades of experience have shown that macro dislocations often present an opportune time to deploy capital in private markets, and the current volatile environment provides another chance to source and invest in compelling opportunities,” said Ian Lane, a managing director at HarbourVest. “The current co-investment market demands a dedicated focus with expertise providing solutions to general partners as they pursue fast-moving, complex transactions. We are proud of the team and infrastructure we have built to support private equity managers globally in their most challenging and sensitive investment opportunities.”

Boston-headquartered HarbourVest has more than 1,000 employees, including more than 190 investment professionals across Asia, Europe, and the Americas. As of June 2022, the firm had $101 billion in assets under management across a range of strategies including venture capital, buyout, mezzanine debt, credit, and real estate.

© 2022 Private Equity Professional | November 23, 2022

GP Investor Constellation Completes $1.5 Billion Fundraise

by

Wafra has held a final close of Constellation Generation IV LP (CG IV) at its target of $1.5 billion. Wafra’s new fund is the latest in its Constellation series that makes minority investments in alternative asset managers.

The Constellation series of funds were formed by The Alaska Permanent Fund, the Public Institution for Social Security of Kuwait, RPMI Railpen, and Wafra to invest in next-generation private equity and alternatives managers. To date, Constellation funds have made investments in nine firms, including Avista Capital (January 2021), Post Road Group (March 2022) and Broad Sky Partners (January 2022).

“For over a decade, Wafra has pursued a strategy of providing catalytic capital to the next generation of alternative investment managers,” said Lauren Rich, a managing director at Wafra. “Through the Constellation platform, Wafra has continued this strategy and partnered with some of the world’s most highly respected institutional investors. CG IV is the most recent iteration of this innovative partnership.”

With the close of CG IV, Wafra has now raised approximately $2.5 billion for its Constellation funds. Constellation’s third fund, Constellation Generation III LP, closed in January 2020 with $890 million in capital commitments.

“We continue to be energized by the investment opportunity set and meeting CG IV’s target size reflects limited partner demand to build long-term, aligned partnerships with the next generation of investors,” said Gustavo Cardenas, a managing director at Wafra. “We believe our disciplined approach and partner alignment creates real value for asset managers and allows us to serve as a true strategic partner rather than a transactional counterparty.”

With the closing of CG IV, the Constellation network expanded with the addition of four new partners. Its twelve-member group now includes AP3, Canada Pension Plan Investment Board, Hartford Investment Management Company, Kuwait Investment Authority, Mubadala Capital, New York State Common Retirement Fund, Orange County Employees Retirement System, RPMI Railpen, and The Alaska Permanent Fund.

“Constellation’s thesis of aligning talented management teams with preeminent institutional investors continues to be borne out in the track record of investment performance and caliber of partners within the Constellation network,” said Daniel Adamson, a senior managing director at Wafra and the president of Capital Constellation. “With the successful conclusion of CG IV’s fundraise, we have made real strides toward realizing the vision laid out by Constellation’s founding members.”

Wafra has $32 billion of assets under management and is headquartered in New York with additional offices in London, Kuwait and Bermuda.

© 2022 Private Equity Professional | November 23, 2022

DGS Retail Switches Sponsors

by

San Francisco Equity Partners (SFEP) has acquired DGS Retail, a provider of retail décor, signage, fixtures, and displays, from Rock Island Capital.

Rock Island Capital and Isleworth Capital first invested in DGS in September 2017.

DGS’ four operating divisions – with a combined 400,000 square feet across five facilities in Massachusetts, Florida, Illinois, Wisconsin and California – provide design, procurement, manufacturing and installation services across multiple product categories including shelving, store fixtures, sign holders, aisle signs and decorations. The company’s products are used by national and large regional customers in the grocery, retail, foodservice, and consumer brand end markets.

Source: DGS Retail

DGS, led by CEO Peter Stevens, was founded in 1979 and is headquartered 25 miles south of Boston in Mansfield, Massachusetts.

“SFEP’s experience working with both consumer brands and business-to-business companies serving consumer end markets makes this an ideal partnership for us,” said Mr. Stevens. “Partnering with SFEP will give DGS greater access to operational resources and capital to drive growth.”

“DGS has an impressive track record of growth built on strong, long-term relationships with a large and diverse base of national and regional customers,” said David Mannix, a partner at SFEP. “The DGS team has built a broad set of capabilities through both organic growth and synergistic acquisitions, which enable the company to compete and win in a large and extremely fragmented market.”

“Through a unique combination of consumer industry experience and our operationally intensive investment approach, we are able to deliver compelling outcomes for our stakeholders,” said Scott Potter, a managing partner at SFEP. “We believe DGS has tremendous growth potential and we’re excited to partner with Peter and his exceptional team.”

San Francisco Equity Partners makes control and minority investments of $5 million to $25 million in consumer companies that have revenue up to $100 million and EBITDA 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.

Rock Island Capital makes majority or minority investments in United States-based manufacturing, distribution or service companies with enterprise values from $10 million to $150 million. Rock Island Capital was founded in 2005 and is headquartered near Chicago in Oak Brook, Illinois.

© 2022 Private Equity Professional | November 23, 2022

Dominus Sells L2 Brands to Sentinel

by

Dominus Capital has sold L2 Brands, a designer and manufacturer of apparel and headwear, to Sentinel Capital Partners.

Dominus formed L2 Brands in April 2018 to acquire and merge Legacy Athletica, a designer and supplier of vintage-inspired collegiate, resort and corporate headwear, apparel and home décor; and League Collegiate, a manufacturer of collegiate apparel and accessories.

Legacy Athletica was founded in 1992 by Mark Landgren and Paige Wingert, and League Collegiate was founded in 1991 by Drew Wolf and Larry Klebanoff.

Today, L2 Brands products – t-shirts, bottoms, headwear, wall signage, blankets, and pillows – are sold to collegiate, destination and leisure, and corporate markets under the League and Legacy brand names. The company has longstanding licensing arrangements with the majority of four-year colleges and customer relationships with bookstores, independent retailers, resorts and corporations.

Source: L2 Brands

L2 Brands, led by CEO Paige Wingert and President Pete Waldron, operates facilities in Pennsylvania and El Salvador and is headquartered 50 miles northwest of Baltimore in Hanover, Pennsylvania.

During its ownership term, Dominus assisted L2 Brands in expanding its product portfolio and sales channels and improved its nearshore manufacturing capabilities in El Salvador.

“We are grateful for partnering with Paige and his talented management team as they successfully executed on several important growth initiatives,” said Ashish Rughwani, a co-founder and partner at Dominus Capital. “After completing the merger of League Collegiate and Legacy Athletica in 2018, we collectively worked on cementing the company’s market leadership in licensed apparel and headwear. A third acquisition of One Coast enhanced the company’s sales infrastructure, and L2 Brands today is a leader in the college and resort market segments poised for tremendous, continued growth.”

“L2 has a three-decade reputation for offering leading brands, excellent customer service, and high-quality products,” said John Van Sickle, a  partner at Sentinel. “Sentinel is excited to partner with L2 and its talented management team for its next chapter of growth.”

Sentinel has prior investment experience in the consumer products and specialty apparel sector with the acquisitions of RefrigiWear, a provider of industrial workwear for low-temperature environments (2021); GSM Outdoors, a provider of branded hunting and sport shooting products (2018 to 2020); Holley Performance Products, a provider of automotive aftermarket products (2015 to 2021), and Careismatic Brands, a provider of scrubs and medical uniforms (2006 to 2010).

New York City-based Sentinel invests in management buyouts, recapitalizations, corporate divestitures, and going-private transactions of businesses with EBITDAs up to $80 million. The firm targets eight industry sectors: aerospace and defense, business services, consumer, distribution, food and restaurants, franchising, healthcare, and industrials.

“The L2 Brands story is very similar to many other Dominus investments where both organic and acquisition growth are part of the strategy,” said Gary Binning, a co-founder of Dominus and the firm’s managing partner. “The resources we brought to L2 Brands enabled it to more than triple its size during our ownership period.”

Founded in 2008, New York-based Dominus Capital makes control equity investments in North American-based middle market companies that have EBITDA from $5 million to $30 million. Sectors of interest include business services, consumer products and services, and light industrial.

“Dominus helped us achieve significant scale to become one of the top collegiate licensees, diversify across end markets, and build a flexible, vertically integrated supply chain,” said Mr. Wingert. “The entire management team is thankful for Dominus’ support.”

Robert W. Baird & Co. was the financial advisor to L2 Brands and BMO Capital Markets was the financial advisor to Sentinel.

© 2022 Private Equity Professional | November 18, 2022

MFG Enters Infrastructure Services Sector with Latest Buy

by

MFG Partners has acquired Chuck’s Septic Tank and Drain Cleaning, and its sister companies CST Utilities and I-Bore (together “CST Utilities”).

CST Utilities is a provider of infrastructure and underground services including excavation, boring, drain cleaning, inspection, and pumping to public utilities and telecom providers. The company was founded in 1969 to provide septic pumping services to customers in central Ohio and today is headquartered near Columbus in Grove City, Ohio.

Source: CST Utilities

“We are extremely excited about our partnership with the CST Utilities team,” said Jonathan Schilowitz, a partner at MFG. “The company has grown consistently over its 50-year history by providing its customers with a variety of underground infrastructure services customized for their specific needs.”

MFG Partners is an independent sponsor that makes control investments in North American-based industrial, manufacturing, distribution and business-to-business services companies that have enterprise values from $25 million to $100 million. The firm was founded in May 2016 by Jeff Mizrahi and Jonathan Schilowitz and is headquartered in New York City.

“We are excited to partner with management on a deal that exemplifies MFG’s investment philosophy: Acquiring high-quality founder or management-owned businesses to help them grow over the long term,” said Mr. Mizrahi.

PNC Mezzanine Capital and Centerfield Capital Partners co-invested in the buy of CST Utilities in partnership with MFG Partners.

© 2022 Private Equity Professional | November 18, 2022

It’s Hammer Time at Arlington’s Forged Solutions Group

by

Forged Solutions Group, a portfolio company of Arlington Capital, has acquired Steel Industries.

Arlington Capital formed Forged Solutions Group (FSG) in November 2019 as a platform in the aerospace components sector to acquire the UK-based Blaenavon forging business of Doncasters Group. In December 2019, FSG quickly add-on with the buy of UK-based Firth Rixson Forgings from Arconic (formerly Alcoa).

Source: Forged Solutions Group

Today, FSG manufactures shafts, rings, discs, asymmetric forgings, and extruded cylinders in a range of titanium, nickel, and steel alloys. Customers of FSG include original equipment manufacturers and Tier 1 suppliers in the aerospace and defense sectors. The company, led by President Ben McIvor, is headquartered near Birmingham in Derbyshire, UK.

Steel Industries is a manufacturer of open die forgings and seamless rolled rings used in the aerospace and defense, nuclear, space, industrial, and transportation markets. The company’s material capabilities include stainless steel, aluminum, nickel-based alloys, carbon, and alloy steel. Steel Industries also provides heat treating, rough and finish machining, and testing services. Steel Industries was founded in 1913 and is headquartered near Detroit in Redford, Michigan.

Post-closing, Steel Industries will be led locally by Frank Witte and his existing management team. “I am excited to partner with FSG and the Arlington team to build on the storied legacy we have at Steel Industries,” said Mr. Witte. “With access to additional corporate resources and capital for investment, I believe the company is well positioned to continue on its growth trajectory.”

“We are excited to begin our partnership with the Steel Industries management team and welcome them into the FSG platform,” said Peter Manos, a managing partner at Arlington Capital. “We have been highly impressed by the company’s differentiated ring-forging capabilities, strong customer relationships across a variety of end markets, and exciting growth prospects on rapidly scaling space programs. We look forward to supporting their continued strong growth as part of FSG.”

“Steel Industries is a highly complementary acquisition for FSG, broadening its product portfolio, metals expertise, and customer relationships,” said Henry Albers, a vice president at Arlington Capital. “We look forward to the growth opportunities this transaction will create for FSG and its customers and employees.”

Chevy Chase, Maryland-based Arlington Capital invests in government-regulated industries and adjacent markets including aerospace and defense; government services; and technology, healthcare, and business services. Arlington is currently investing out of Arlington Capital Partners V LP, a $1.7 billion fund that closed in June 2019. In February 2021, Goldman Sachs Asset Management made a non-voting minority equity investment in the firm.

© 2022 Private Equity Professional | November 18, 2022

Risk Off

by

“Risk Off” is the name of the game for mid-market private equity professionals, according to GF Data’s November report. The third quarter saw a marked surge in valuations accompanied by substantial increases in equity contributions and cost of capital due to a slowing economy and successive interest-rate increases.

GF Data’s 266 active private equity contributors reported on 66 transactions in the third quarter meeting our parameters—Total Enterprise Value (TEV) from $10 million to $250 million and TEV/Trailing Twelve Months (TTM) Adjusted EBITDA from 3x to 18x. Completed volume was about 28% off the 78 deals closed in the year-ago third quarter.

Valuations on transactions completed in the third quarter averaged 8.1x Trailing Twelve Months (TTM) Adjusted EBITDA. When looking only at the buyout cohort year-over-year, GF Data found valuations rose to 7.5x in 2022 year to date, against 7.4x for all of 2021.

“While the spike is directionally correct, we believe it is overstated,” said Andrew Greenberg, the founder of GF Data. “The random fall of highly valued deals by quarter and a preponderance of non-buyout transactions – such as growth capital investments and recapitalizations – completed at lofty multiples in the period pushed up the average.

“Over the balance of the year, we expect the market to be characterized less by a small cohort of highly valued deals and more by sellers absorbing the effects of more challenging economic and capital market conditions,” added Mr. Greenberg.

Average equity contributions surged across the entire data set – to 51.4 percent in the first nine months of the year versus an average of 48.2 percent for all of 2021—while the average for platform buyout transactions jumped 2.5 percentage points, to 57 percent versus 54.5 percent. Initial pricing on senior debt averaged 6.5 percent in the third quarter, up nearly 200 basis points from the first half of the year. Mezzanine pricing has so far resisted a similar move.

Despite this trend, GF Data’s November report found average debt loads essentially unchanged. “We hear the reports of a risk-off market for cash flow-based leveraged finance,” said Bob Dunn, the managing director of GF Data. “But through the summer quarter, this was not yet reflected in the numbers.”

“We are seeing a decline in both valuations and leverage for those companies considered cyclical and vulnerable during an economic downturn,” said Michael Carter, a managing partner of Carter, Morse & Goodrich, a Connecticut-headquartered investment bank. “On the supply side, we expect transactions to shift from private equity sellers to founder-led and family-held companies that are more driven by personal and strategic objectives rather than valuations.”

Founded in 2006, GF Data provides data on private equity-sponsored M&A transactions with enterprise values between $10 million and $500 million. The firm’s benchmark reports comprise proprietary transactional information provided by an established pool of private equity groups on a blind and confidential basis. GF Data’s subscribers utilize its accurate and up-to-date reports to value and assess middle-market businesses.

© 2022 Private Equity Professional | November 18, 2022

Pfingsten Sells Lab Equipment Services Platform to CBRE

by

Pfingsten Partners has sold Full Spectrum Group to publicly traded CBRE Group for a total consideration of $110 million.

Full Spectrum (FSG) is a provider of repair, maintenance, and validation services for laboratory instrumentation. Validation ensures that a product, service, or system meets requirements and specifications and is a required component of ISO 9000 certification. FSG offers service contracts, preventative maintenance programs, instrument qualification and repair services, replacement parts, and reconditioned instruments.

Source: Full Spectrum Group

Many of FSG’s customers are active in the biotechnology, pharmaceutical, forensics, environmental, petroleum, food and flavor, cannabis, and government sectors. FSG, led by CEO Bob McLeese, has more than 150 employees, including more than 100 engineers, in 20 locations throughout the United States with a headquarters near Los Angeles in Laguna Hills, California.

Dallas-headquartered CBRE Group (NYSE:CBRE) is one of the largest commercial real estate services and investment firms. The company has more than 105,000 employees and approximately 450 offices worldwide. CBRE services include facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; consulting; property sales; mortgage services and development services.

The buy of FSG adds to CBRE’s existing laboratory services capabilities which it provides to occupier clients in the research and laboratory equipment sector. Specifically, CBRE will now be able to directly provide specialized maintenance and repair services for laboratory equipment, including liquid and gas chromatography, mass spectroscopy and thermal equipment.

“Full Spectrum’s highly specialized capabilities and coverage in the key US life sciences hubs further differentiates our Integrated Laboratory Solutions group and positions CBRE to self-deliver an impressive range of scientific laboratory maintenance and repair services,” said John Dunstan, the CEO of CBRE’s Global Workplace Solutions group. “This acquisition is consistent with our strategy to deliver reliable, sustainable, operationally excellent and cost-efficient technical service offerings executed by the best talent, across our clients’ facilities.”

Pfingsten acquired FSG in February 2019 through its $382 million fifth fund which closed in March 2016. During the firm’s ownership term, FSG closed four add-on acquisitions with the buys of the North Carolina-based Lab Services Division of Sequence (March 2022); Florida-based Analytical Maintenance Services (April 2021); California-based Cascade Thermal Solutions (March 2021); and the North Carolina-based Field Service Division of Pion (June 2020).

Chicago-based Pfingsten invests in middle-market manufacturing, distribution, and business services companies that have transaction values ranging from $15 million to $100 million, revenues from $20 million to $150 million, and EBITDA between $3 million and $12 million. Since completing its first investment in 1991, Pfingsten has acquired 160 such companies through five funds with total commitments of $1.3 billion.

© 2022 Private Equity Professional | November 15, 2022

Artemis Acquires McDanel Advanced Ceramic Technologies

by

Artemis Capital Partners has acquired McDanel Advanced Ceramic Technologies, a developer and manufacturer of tubular ceramics and components.

McDanel’s products are designed to operate in high-temperature, aggressively corrosive, and severe shock environments and are made from multiple base materials including alumina (aluminium oxide), mullite (a silicate mineral), zirconia (zirconium dioxide), and sialon (a ceramic alloy).

Source: McDanel Advanced Ceramic Technologies

McDanel’s products include single and multi-bore tubes, rods, industrial crucibles and ladles, and labware items including trays, dishes, discs and crucibles. Customers of McDanel are active in the semiconductor, aerospace and defense, medical, energy, and industrial sectors specifically in aluminum, glass, and steel manufacturing. McDanel is headquartered 40 miles northwest of Pittsburgh in Beaver Falls, Pennsylvania.

McDanel was founded in 1918 and three generations of the McDanel family owned and operated the business until 1989 when the company was sold to Vesuvius, a UK-headquartered refractory company. In 2005, Vesuvius sold McDanel to Italian businessman Roberto Grosso, the former CEO of Vesuvius who had left the company in 1994.

“We are honored to be entrusted by Roberto Grosso and the senior leadership team with leading the next growth phase for McDanel,” said Olly Forrer, a principal at Artemis. “As a leader in the middle market for technical ceramics, McDanel has a solid foundation from which to grow and invest in people, capabilities, and capacity, to better serve the needs of our customers in their demanding applications. We could not be more excited about the future of McDanel.”

“Leveraging Artemis’ experience and track record within advanced materials, McDanel represents a highly defensible platform whose mission is to serve its customers with a unique portfolio of high-purity products and excellent service, while providing a stable and high-quality environment for employees,” said Rudi Coetzee, an operating partner at Artemis.

Boston-based Artemis invests in companies with revenues of $5 million to $50 million and EBITDA of $1 million to $10 million. Target companies include manufacturers of differentiated industrial technologies in the aerospace, automotive, defense, energy, industrial automation, scientific and research, and medical sectors.

© 2022 Private Equity Professional | November 15, 2022

Aurora Applies the Pressure

by

Aurora Capital Partners has acquired Universal Pure, an outsourced provider of high-pressure processing, food safety, and supply chain services to the food industry.

High-pressure processing (HPP) utilizes water and pressure to inactivate food-borne pathogens without the use of chemicals or other additives to ensure the safety and shelf life of food and beverage products without compromising nutritional value, taste, or texture. According to Universal Pure, it is the largest independent provider of HPP services in North America.

Universal Pure operates 20 HPP machines at 7 facilities (with a combined 1.1 million sq. ft.) in California, Connecticut, Georgia, Nebraska, Ohio, Pennsylvania, and Texas. The company’s facilities footprint is located within a truck-day of all major food production hubs in the United States.

Source: Universal Pure

Universal Pure’s supply chain services include refrigerated and frozen storage, beverage bottling, kitting and assembly, and bulk defrosting services (tempering). Universal Pure, led by CEO Jeff Williams, was founded in 2001 and is headquartered in Lincoln, Nebraska.

“Aurora has a well-deserved reputation of partnering with management teams to help accelerate growth,” said Mr. Williams. “We are confident they are the right partner for Universal Pure at this stage of its development, and with their partnership, we are excited to continue adding to the solutions we offer our customers and to execute on our many growth initiatives.”

“Universal Pure has an exceptional track record of growth built around a culture of customer service,” said Randy Moser, a partner at Aurora. “Best-in-class service and a long-tenured track record combined with the largest footprint in North America uniquely positions Universal Pure in a rapidly growing industry. We see significant opportunity to build on that position and the company’s success and look forward to accelerating growth through organic expansion and its experienced acquisition program.”

Aurora Capital makes control investments of $50 million to $300 million in industrial, manufacturing, and service-oriented businesses that are valued between $100 million and $500 million. Specific sectors of interest include industrial services and distribution, engineered products, and technology-enabled services. Aurora Capital was founded in 1991 and is headquartered in Los Angeles.

This acquisition of Universal Pure is the eighth investment made by Aurora Equity Partners VI LP, which began investing in September 2020. “Universal Pure is an ideal match for the Aurora program,” said Mark Rosenbaum, a partner at Aurora. “Jeff and his team have built an impressive platform, and we are excited to capitalize on the significant runway that the business has through new and existing relationships with blue chip customers. We are thrilled to be chosen as Universal Pure’s partner at an exciting time in its evolution.”

Twin Brook Capital Partners, as administrative agent, led the debt financing for Aurora’s acquisition of Universal Pure. Chicago-based Twin Brook focuses on loans to private equity-owned companies with EBITDA between $3 million and $50 million, with an emphasis on companies with $25 million of EBITDA and below. The firm targets senior financing opportunities up to $200 million, with hold sizes across the platform ranging from $25 million up to $150 million. Twin Brook’s products include opportunistic investments in second lien, mezzanine, and equity co-investments.

William Blair and Houlihan Lokey were the financial advisors to Universal Pure on this transaction and Harris Williams advised Aurora.

© 2022 Private Equity Professional | November 15, 2022

Salt Creek Puts Metal to Metal with Buy of Gerber

by

All Metals Industries (AMI), a portfolio company of Salt Creek Capital, has acquired Gerber Metal Supply Company. Salt Creek acquired AMI in January 2022.

Gerber is a regional distributor and processor of carbon steel products, including sheets, strips, blanks, and edge-processed material.

Source: Gerber Metal Supply Company

The company was founded in 1963 and is headquartered 33 miles west of Newark in Somerville, New Jersey.

AMI is a finisher and distributor of carbon, aluminum, stainless, and coated products including sheets, blanks, coils, and plates. The company, led by CEO Heidi Paiva, was founded in 1986 and serves customers throughout the Northeast. AMI is headquartered in Belmont, New Hampshire.

According to AMI, the buy of Gerber provides the business with complementary geographic coverage and cross-sourcing benefits.

“AMI has a long and proven history of providing high-quality steel products with timely delivery to its customers. Gerber is a natural addition for us, as we will now offer similar services to our customers across a broader geographic range,” said Ms. Paiva. “The team at Gerber, led by Charlie Calabrese, have utilized their deep industry understanding to build an amazing company, and we are very pleased to add their outstanding team members as part of the combined company.”

“Gerber is an exciting add-on opportunity, with a long track record of success,” said Bobby Sheth, a managing director of Salt Creek. “We are excited to combine businesses and build upon AMI’s already incredible business. The Salt Creek team looks forward to supporting AMI’s management team through the company’s next phase of profitable growth.”

Salt Creek invests in North American-headquartered companies that have EBITDA from $750,000 to $20 million. Sectors of interest include manufacturing, logistics, value-added distribution, B2B and B2C services, food and beverage, healthcare, retail, and hospitality.

© 2022 Private Equity Professional | November 15, 2022

Sentinel Sells Nekoosa to Wynnchurch

by

Sentinel Capital Partners has sold Nekoosa Coated Products, a manufacturer of specialty paper and film products used in the graphics and commercial print markets, to Appvion, a portfolio company of Wynnchurch Capital.

Nekoosa’s products include application and pressure-sensitive tapes used to protect and transfer graphics onto surfaces such as store windows and commercial vehicles; synthetic papers that offer a digitally printable tear-and-water-proof alternative to lamination; sheeted digital and offset grade carbonless paper; and extruded film products used in wall panel, credit card, and lighting applications.

Source: Nekoosa Coated Products

Nekoosa’s products are sold through a network of more than 1,000 global distributors to more than 70,000 commercial print and graphics shops in 65 countries. The company is led by CEO Paul Charapata and is headquartered 125 southwest of Green Bay in Nekoosa, Wisconsin.

“I am extremely proud of what Nekoosa has achieved during our partnership with Sentinel,” said Mr. Charapata. “We successfully navigated the pandemic, integrated accretive add-ons, expanded the product portfolio, and positioned the brand for continued growth. Sentinel was a tremendous partner.”

Sentinel acquired Nekoosa in October 2017 from Wingate Partners which had acquired the business in October 2012 from Wisconsin-based Dunsirn Partners.

“Nekoosa is the leading brand in the application tapes and carbonless paper categories and has an outstanding management team and culture that puts its customers and employees first,” said Scott Perry, a partner at Sentinel. “We were truly fortunate to partner with Paul Charapata, Bob Beckwith, and the rest of the Nekoosa team, and we wish them continued success.”

Appvion is a provider of specialty and high-performance thermal coatings for label and film applications, and also provides renewable, and fiber-based consumer and industrial packaging products. Appvion was founded in 1907 and is headquartered 35 miles southwest of Green Bay in Appleton, Wisconsin. Wynnchurch acquired Appvion in December 2021 through its buy of the thermal coating business assets of Appvion Holding Corp.

“We are bringing together two great companies with complementary businesses and capabilities to accelerate growth and create additional value for our customers,” said Laurie Andriate, the CEO of Appvion. “I’m excited to welcome the Nekoosa team to Appvion.”

“We are excited to add Nekoosa to the platform as we create an engineered coating specialist with market-leading products, scale and diversification across customers and end markets,” said Greg Gleason, a managing partner at Wynnchurch. “We look forward to supporting management’s growth plans as we continue to expand the platform.”

Wynnchurch makes investments in middle-market companies that have revenues of $50 million to $1 billion. In January 2020, Wynnchurch closed its fifth private equity fund, Wynnchurch Capital Partners V LP, with $2.3 billion of committed capital. The new fund, which began its marketing in September 2019 with a target of $1.6 billion, was oversubscribed and closed at its hard cap. Wynnchurch was founded in 1999 and is headquartered in the Chicago suburb of Rosemont with additional offices in Los Angeles (El Segundo) and New York City.

New York City-based Sentinel invests in management buyouts, recapitalizations, corporate divestitures, and going-private transactions of businesses with EBITDAs up to $80 million. The firm targets eight industry sectors: aerospace and defense, business services, consumer, distribution, food and restaurants, franchising, healthcare, and industrials.

© 2022 Private Equity Professional | November 8, 2022

Gallant’s Pro-Vac Platform Buys Vac-One

by

Pro-Vac, a provider of subsurface infrastructure services and a portfolio company of Gallant Capital Partners, has acquired Vac-One.

Vac-One is a provider of subsurface infrastructure services including hydro excavation, air vacuum excavation, and cathodic protection. Vac-One’s customers include contractors, municipalities, industrial, energy and utility companies located in Texas, Oklahoma, Colorado and New Mexico.

Source: Vac-One

Vac-One was founded in 2014 and is headquartered near Houston in Deer Park, Texas.

Pro-Vac’s services include hydro excavation; stormwater and sewer systems maintenance; pipeline inspection, jetting, repair and grouting; vacuum sweeping and other specialty services. Pro-Vac’s customers include contractors, municipalities, and utilities. Pro-Vac, led by CEO Graham Gill, was founded in 2002 and is headquartered near Tacoma in Puyallup, Washington.

“We are incredibly excited to further grow Pro-Vac in combination with Vac-One,” said Mr. Gill. “Enhancing Vac-One’s current service offerings with Pro-Vac’s platform of diversified subsurface infrastructure services will immediately benefit Vac-One’s existing customer base. The ability to leverage the combined platform’s capabilities will provide our customers with the most comprehensive set of infrastructure services in the market.”

According to Pro-Vac, the buy of Vac-One significantly enhances and expands the company’s scale and geographic reach and Gallant continues to seek add-on acquisitions to expand the business. “Vac-One represents an opportunity to acquire a scaled foothold in a high-growth region. We look forward to expanding its service offerings and accelerating growth within the infrastructure end market,” said Anthony Guagliano, a partner at Gallant.

Gallant acquired Pro-Vac from RLJ Equity Partners in October 2022. In turn, RLJ Equity acquired the business in December 2018 from Peninsula Capital Partners and Silver Peak Partners.

Los Angeles-headquartered Gallant Capital makes control investments in technology, industrial and business services companies that have from $5 million to $25 million of EBITDA. The firm was founded in January 2018 by ex-Gores Group professionals Jon Gimbel and Anthony Guagliano and ex-OpenGate professional Desmond Nugent.

In July 2020, Gallant Capital held a final closing of its inaugural fund, Gallant Capital Partners I LP, with $378 million in capital commitments. The firm’s first fund closed at its hard cap and was substantially oversubscribed, exceeding its original target of $300 million.

© 2022 Private Equity Professional | November 8, 2022