Tinicum has acquired a controlling interest in KGM from Compass Group Equity Partners.
KGM is a distributor of natural gas products including gas meters, instruments, regulators, valves, and related equipment and parts to utilities and commercial and industrial customers.
In addition to its product offerings, KGM also provides a range of services including technical support, training, testing, calibration, and product repair and refurbishment. KGM, led by its founder and CEO Tim Wood, is headquartered in Tulsa, Oklahoma.
Compass Group acquired KGM through its second fund in January 2022 and its sale is Compass Group’s first exit from Fund II which closed in April 2022 at its hard cap of $255 million.
During Compass Group’s ownership term, KGM closed three add-on acquisitions with the buys of Alabama-based MarieCo (December 2022), South Carolina-based Bartlett Controls (August 2023), and Minnesota-based Nelson Technologies (February 2024). As a result of these acquisitions and organic growth, KGM’s revenues increased by 2.5 times and its geographic coverage doubled, enabling it to service customers in over 40 states.
“This marks an exciting new chapter for KGM. Tinicum’s family heritage and focus on long-term business building are an excellent fit for our company and industry,” said Mr. Wood. “We’ve been fortunate to have a great partner in Compass Group over the last few years who has worked with us to drive tremendous growth. Our partnership with Tinicum will enable further investments in our team, product offering, capabilities and facilities in order to continue delivering superior solutions that enable growth and efficiency gains for our customers.”
“Our partnership with KGM epitomizes what we’re all about at Compass Group – partnering with great companies in mid-America and driving growth in both their business and in their people,” said Chris Gibson, a managing partner at Compass Group. “Over the years, our partnership with KGM yielded numerous friendships and we look forward to seeing our friends have continued success with a great partner in Tinicum.”
Tinicum partnered with members of KGM’s senior management team on this acquisition and they have retained a significant equity interest in the company.
“We deeply respect the team and the business that Tim and his management group have developed, and it is an honor to partner with them,” said Trip Zedlitz, a partner at Tinicum. “KGM has valuable long-term partnerships with its OEM suppliers and customers and a differentiated ability to deliver individualized and comprehensive customer solutions with industry-leading product availability and technical expertise. We look forward to building on KGM’s strong foundation.”
Compass Group invests up to $50 million of equity in Midwestern-headquartered companies that have enterprise values of $20 million to $100 million and EBITDA of $2 million to $12 million. Sectors of interest include niche manufacturing and distribution, and business and consumer services. In April 2024, Compass held a first and final closing of its third fund, Compass Group Fund III LP, at its hard cap of $408 million. Compass Group was founded in 2014 and is headquartered in St. Louis.
Tinicum invests from $50 million to $500 million of equity per transaction in companies that are active in the manufacturing, distribution, industrial technology and specialty infrastructure sectors. The firm invests in both private control transactions and minority positions in private and public companies. Tinicum was founded in 1974 to manage the holdings of the Ruttenberg family and began managing outside capital in a traditional private equity fund structure in 1998. In 2012, the firm established Tinicum LP – a long-term investment vehicle with an indefinite life and multiple, successive commitment periods – and today manages more than $2.4 billion of committed capital from families and individuals. Tinicum is led by its managing partner Eric Ruttenberg and has offices in New York City, San Francisco, Houston and Frankfurt.
Piper Sandler was the financial advisor to KGM on this transaction, and Bank of Montreal and Citizens Bank provided debt financing.
© 2024 Private Equity Professional | May 29, 2024
