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Cyprium Exits Alpha Sintered Metals

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ASM Nf1Cyprium Partners has sold its investment in Alpha Sintered Metals to the management of the company and O2 Investment Partners. Key Principal Partners, the predecessor to Cyprium Partners, first invested in Alpha Sintered Metals in 2004.

Alpha Sintered Metals (ASM) is a designer and manufacturer of powdered metal components, such as spur, bevel, and helical gears; sprockets, cams, and flanges. These components are used primarily in small engines, transmissions and mechanical drive applications for the outdoor power equipment (including lawn and garden), automotive, and general industrial markets. The company is headquartered in Ridgway, PA (www.alphasintered.com).

“ASM has been a prime example of the type of initiatives we pursue with our portfolio companies,” said Leland Lewis, a Managing Partner at Cyprium. “We team with management to assist with organic growth, acquisitions and operational improvements in order to position our companies to withstand a changing marketplace and to take advantage of growth opportunities. We wish the ASM team much success as they start the next chapter in the company’s history.”

In addition to its original subordinated debt and equity position, Cyprium invested additional capital in ASM to allow the company to establish off-shore manufacturing operations as well as to facilitate the acquisition of a competitor in the stainless steel exhaust and turbocharger components market.

Cyprium Partners provides capital for acquisitions, growth, shareholder or partnership buyouts, refinancings and personal dividend distributions, without requiring majority control. The firm invests subordinated debt, preferred stock and/or common stock of $10 million to $60 million per transaction in privately-held companies based in the US and Canada that have more than $10 million of EBITDA. Cyprium will also selectively invest in control (majority ownership) positions. In June 2011, as a result of the Dodd–Frank Wall Street Reform and Consumer Protection Act, the investment and finance teams at Key Principal Partners resigned to form Cyprium Partners. The firm has offices in Cleveland, New York, and Chicago (www.cyprium.com).

Stout Risius Ross (www.srr.com) led the sale process for Cyprium.

© 2014 PEPD • Private Equity’s Leading News Magazine • 1-27-14

Blackthorne Acquires Goeman’s Wood Products

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goemans nfPallet USA, a portfolio company of Blackthorne Partners, has acquired the assets of Goeman’s Wood Products, a manufacturer of wood pallets.

Goeman’s Wood Products is a designer and manufacturer of wood, plastic and corrugated pallets and other shipping materials. The company’s manufacturing capabilities range from high-volume, fully automated wood pallet and skid assemblies to small quantity orders and custom designed wood packaging and crating. Goeman’s was founded in 1973 and is based near Milwaukee in Hartford, WI (www.gwp-inc.com).

Pallet USA was formed in 2011 when Blackthorne Partners acquired JPRS New Way, a wood pallet reconditioner based near Milwaukee in Lannon, WI (www.palletusa.com).

Through Pallet USA, Blackthorne is actively seeking additional Wisconsin pallet operations to acquire. “We believe we can bring significant efficiencies to the pallet industry – efficiencies that will benefit the many market sectors that rely on pallets and crates for shipping and material handling,” said Steve Balistreri of Blackthorne Partners.

Blackthorne Partners invests in small private companies in the upper Midwest with $4 million to $15 million in revenues and EBITDA of at least $1 million. Sectors of interest include outsourced business services, light manufacturing, and value-added distribution. Blackthorne Partners is headquartered in Brookfield, WI (www.blackthornepartners.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 1-24-14

Topspin Acquires HCOA Fitness

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hcoa nfTopspin Partners LBO has acquired an equity interest in HCOA Fitness, an operator of fitness clubs and personal training services, from TG Capital which first invested in the company in October 2009.

“After evaluating many health and wellness opportunities in recent years, we are delighted to have found this outstanding company,” said Topspin Managing Director Leigh Randall. “HCOA’s management team and employees have impressed us since our early conversations, and we look forward to supporting them as the company continues to build upon its strong foundation as the leading fitness company in Puerto Rico.”

HCOA Fitness is an operator of fitness clubs and personal training services in Puerto Rico. The company’s co-ed family fitness centers are full-service and offer members a complete array of cardiovascular equipment, strength training machines, aerobic classes and other amenities. The company is headquartered in Miami (www.hcoafitness.com).

Topspin LBO makes control investments in profitable and established lower middle-market businesses. Sectors of interest include consumer products and services, business and information services, health and wellness, food and beverage, retail, and security. The firm is based near New York City in Roslyn Heights, NY (www.topspinlbo.com).

“Topspin’s acquisition of HCOA is very exciting for our team as it affords us a unique opportunity to further grow our brand and expand our market presence. Topspin’s strategic insight will play a key role in our quest to redefine fitness within the modern health club,” said Juan Ortega, CEO of HCOA.

TG Capital will remain as an equity holder and will be an active partner in the business. “We have enjoyed our association with HCOA over the past four years and are thrilled to partner with Topspin to support HCOA’s future growth,” said Johnathan Robertson, President and Managing Director of TG Capital Corp.

Topspin completed the acquisition of HCOA with debt financing from Brookside Mezzanine Partners, which also invested equity alongside Topspin in the transaction. Brookside provides subordinated debt and minority equity to small and mid-sized companies for buyouts, leveraged recapitalizations, acquisitions, dividends and growth capital. Target companies generally have revenues of at least $15 million and EBITDA of at least $3 million. Brookside manages $500 million through three mezzanine funds. The firm was founded in 2001 and has offices in Stamford, CT and Boston, MA (www.brooksidemezzanine.com).

TG Capital invests in established companies with strong market positions across a spectrum of industries. Generally, the firm focuses on companies at a pivotal point in their development when they are in need of either capital or management. TG Capital is based in Miami (www.tgcapitalcorp.com).

© 2014 PEPD • Private Equity’s Leading News Magazine • 1-9-14

Pepperdine: It’s a Seller’s Market in the Mid-Market

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pepperdine nfAccording to the third quarter’s Market Pulse Quarterly Survey, 79 percent of M&A advisors representing deals of $5 million to $50 million categorized the current climate as a seller’s market. This is the strongest seller’s market sentiment reported in the lower middle market since the survey started in the second quarter 2012. On the other hand, 72 percent of Main Street brokers (values from $0 million to $2 million) representing deals of $500,000 or less reported a buyer’s market.

The Market Pulse Quarterly Survey Third Quarter 2013 Report, released today by the Pepperdine Private Capital Markets Project at Pepperdine University’s Graziadio School of Business and Management, International Business Brokers Association (IBBA) and M&A Source, evaluates market conditions for businesses being sold in Main Street (values from $0 million to $2 million) and lower middle market (values from $2 million to $50 million).

This quarter, private equity firms have tied existing companies as the number one buyer for businesses over $5 million in value. Private equity acquisitions were divided equally as 50 percent platform deals and 50 percent add-ons. As in second quarter 2013, individual buyers dominated Main Street.

“One explanation for why private equity firms are targeting deals that are valued over $5 million is that they have a lot of money to expend and funding larger deals allows them to be more efficient,” says IBBA director Scott Bushkie, president of Cornerstone Business Services. “That’s opening opportunities for smaller companies in the $2 million to $5 million sector—companies that might not be as competitive bidding against a private equity firm.”

In every segment, retirement was the number one reason sellers put their business on the market, indicating that Baby Boomers are continuing to move into the market in larger numbers. In every market segment, more than half of all advisors predict deal volume will grow in the next three months.

In the lower middle market, “better ROI than other investments” ranked first or tied for first as the number one reason buyers are active in the M&A market. For Main Street buyers, the number one motivating factor was to buy a job and control their own destiny.

“Buyers in the lower middle market continue to gain confidence in the economy and in their ability to grow a business,” says Dr. Craig Everett, an assistant professor of finance at the Graziadio School of Business and Management and director of the Pepperdine Private Capital Markets Project. “They believe that buying a business is the best way to put their money to work, versus starting an operation from the ground-up or investing in other areas. Despite the higher rate of retirement across every sector, demand remains high and sellers still have the advantage for higher value deals.”

Other key findings of the Market Pulse Survey Report

  • Most advisors think valuations will stay the same or grow in the next three months. In the lower middle market, less than two percent of advisors believe valuations are going to decline. The majority believe they will stay the same, with 20 to 25 percent expecting they will continue to grow from current peak. As the deals get larger there is greater confidence that values will continue to increase.
  • In three out of five sectors, median multiples were at a high, or tied for high, over the previous year. Multiples are markedly stronger in the lower middle market, correlating to a strong seller’s market sentiment because of the strong presence of private equity and existing companies poised for growth through acquisition.
  • The Q3 2013 study continues to confirm earlier findings that larger businesses take longer to close. In the smallest Main Street sector (businesses valued at $500,000 or less), the median time to close was four months. In the lower middle market, for businesses valued over $5 million the median time to close was 10 months.
  • In Q3 2013, 75 percent of the buyers for deals valued over $5 million came from outside a 100 mile radius of the seller’s location. For Main Street deals, 40 percent of buyers came from within a 20 mile radius.
  • Personal services, restaurants, business services, and consumer goods/retail ranked among the most active industries for the Main Street market. In the lower middle market, for businesses valued between $2 million to $5 million, healthcare-related businesses led at 25 percent of completed deals over the last three months, followed by manufacturing and wholesale/distribution at 19 percent each. Manufacturing led the $5 million to $50 million sector at 31 percent.

The Market Pulse Quarterly Survey Third Quarter 2013 Report is available at bschool.pepperdine.edu/privatecapital

© 2013 PEPD • Private Equity’s Leading News Magazine • 12-12-13

Abacus Backs Latest Bunker Hill Acquisition

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abacus NFAbacus Finance Group served as Administrative Agent and Sole Lead Arranger for $25 million in senior secured credit facilities to support the acquisition of Hubbardton Forge by Bunker Hill Capital.

Abacus was joined in the senior financing by Crescent Capital. Mezzanine financing for the transaction was provided by The Hartford and The Brookside Group.

Hubbardton Forge is a designer and manufacturer of hand-forged residential and commercial lighting products. The company is based in Castleton, VT (www.hubbardtonforge.com).

“Abacus Finance was able to meet the unusually tight deadlines that were essential to closing this transaction,” said Rufus Clark, Managing Partner and Co-Founder of Bunker Hill. “We have known the Abacus team members for years, and they lived up to their reputation for delivering on what they promise. Their due diligence was extensive and quickly completed, and the transaction terms they proposed were in line with what we were seeking with respect to both amortization and the cost of capital.”

Abacus targets debt financing opportunities of up to $50 million with a typical hold size ranging from $10 million to $25 million. The companies that Abacus finances generally have EBITDAs between $3 million and $15 million. Abacus was formed in June 2011 and is an affiliate of New York Private Bank & Trust, the holding company for Emigrant Bank, founded in 1850, the largest privately held bank in America with approximately $10 billion in assets. Abacus is based in New York (www.abacusfinance.com).

Abacus team members involved in the transaction included Sean McKeever, Eric Petersen, and Tim Wong.

Bunker Hill makes control investments in lower middle market companies with revenues up to $300 million, EBITDAs between $5 million and $35 million and enterprise values typically between $30 million and $150 million. Sectors of interest include industrial products, business services, specialty retail, and consumer products. The firm has offices in Boston and San Diego (www.bunkerhillcapital.com).

“This was a great match for us for a number of reasons,” said Tim Clifford, President and CEO of Abacus. “Like us, Bunker Hill’s focus is on lower-middle market companies. We know the firm’s senior partners well and have a great deal of respect for their knowledge of and experience in consumer products and the other sectors in which they invest. As in other transactions, success was a function of our speed, flexibility and ability to provide certainty of close – all important aspects of what we call our Total Partnership Approach.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-12-13

Pharos Capital Adds New Senior Financial Analyst

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joshua Brown nfPharos Capital Group has hired Joshua Brown as a Senior Financial Analyst in the firm’s Dallas office. Mr. Brown will be responsible for deal review, financial due diligence and financial modeling.

“We are excited to welcome Josh and we look forward to the energy and ideas he will bring to his role. We continually look for talented young people to be part of our growing Pharos team,” said Kneeland Youngblood, Co-founder and Partner at Pharos Capital.

Prior to joining Pharos, Mr. Brown was an Investment Banking Analyst in the Healthcare group at William Blair & Company. Before that, he completed internships at J.P. Morgan and Goldman Sachs. Mr. Brown graduated from Morehouse College with a BA in Economics.

Pharos Capital Group invests $10 million to $30 million in companies seeking later stage funding for internal growth, acquisitions, management buyouts or recapitalizations. The firm invests across many sectors but has a particular interest in healthcare and business services. Pharos Capital Group has offices in Dallas and Nashville (www.pharosfunds.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-12-13

PEGCC: Private Equity Returns Continue to Outpace S&P 500

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pegcc non featureThe Private Equity Growth Capital Council released its latest quarterly performance update today, which shows private equity returns (net of fees) outperformed the S&P 500 (including dividends) for 3-year, 5-year and 10-year horizons by 2.6, 2.2 and 6.1 percentage points, respectively.

judge nf“Private equity continues to play a critical role in the US economy by growing and creating more valuable businesses across the country, said PEGCC President and CEO Steve Judge. “At its core, private equity is about strengthening companies to generate profits for limited partners, including pensions endowments and foundations. This report highlights the superior returns that attract limited partners to the private equity and growth capital asset class,” said Mr. Judge.

The PEGCC research team also analyzed returns from 13 of the largest US public pension funds with available financials and found that the pensions’ median private equity returns (net of fees) outperformed the S&P 500 on 3-year and 10-year horizons by 0.2 and 5.5 percentage points, respectively.

bronwyn bailey nf“This private equity performance analysis supplements our recent annual study showing that private equity returns to large public pension funds outperform all other asset classes over a 10-year time horizon,” said Bronwyn Bailey, PEGCC vice president of research. ”Private equity is an essential asset class for pensions, foundations and endowments looking for superior investment performance from patient capital,” concluded Ms. Bailey.

The Private Equity Growth Capital Council is an advocacy, communications and research organization, and resource center established to develop, analyze and distribute information about the private equity and growth capital investment industry and its contributions to the national and global economy. Established in 2007, the PEGCC is based in Washington, DC (www.pegcc.org).

For a FREE copy of the Private Equity Performance Update click HERE.

© 2013 PEPD • Private Equity’s Leading News Magazine • 11-8-13

Leeds Novamark Capital Raises $130 Million for Debut Fund

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leeds nova nfLeeds Novamark Capital has held a close of its debut SBIC fund, Leeds Novamark Capital I, LP, with $130 million of capital including SBIC leverage. The firm is continuing to fundraise and expects to have a final close of the debut fund in 2014.

Leeds Novamark will invest directly and as a co-investor from $5 million to $25 million in support of buyouts, recapitalizations, refinancings, acquisitions, and growth financings in companies with at least $2 million of EBITDA. The firm invests across a range of industries. Leeds Novamark is headquartered in Tysons, VA (www.leedsnovamark.com).

Leeds Novamark was formed by a team of middle market private debt and equity professionals, in association with Leeds Equity Partners, to create a fund focused on lower middle market opportunities. The Managing Partners and co-founders of Leeds Novamark are Matt Kelty, Robert Monk, and Mark Raterman. These three individuals have worked together for over a decade and share more than 60 years of combined experience, investing over $1.3 billion in debt and equity. Leeds Equity Partners invests in the education, training and business services industries. The firm was founded in 1993 and is located in New York (www.leedsequity.com).

kelty nfPrior to Leeds Novamark, Mr. Kelty was a Principal at Allied Capital Corporation, where he was involved in originating, evaluating, executing and monitoring mezzanine debt, secured debt and control investments across a range of industries. Before joining Allied Capital in 2004, Mr. Kelty spent three years at Blue Point Capital Partners focused on control equity investments in lower middle market companies. He began his career in the Fixed Income Division at Lehman Brothers. Mr. Kelty received his BA with a major in Chemistry from Williams College.

monk nfPrior to Leeds Novamark, Mr. Monk was a Managing Director and Investment Committee member of Allied Capital Corporation, where he was involved in originating, evaluating, executing and monitoring mezzanine debt, secured debt and control investments across a range of industries. He has served as a director or board representative on the boards of 30 lower middle market companies. He began his career at First Union National Bank in Charlotte, NC after earning his bachelor’s degree in Business Administration from the University of Georgia.

raterman nfPrior to Leeds Novamark, Mr. Raterman was a Managing Director at Ares Management, where he was responsible for originating, evaluating and monitoring debt investments across a range of industries. He managed relationships with a multitude of financial sponsors and financial intermediaries and served as a director or observer on the Boards of Directors of his portfolio companies. Prior to joining Ares, Mr. Raterman was a Principal at Allied Capital Corporation beginning in 2002, where he executed numerous mezzanine debt, secured debt and control equity investments. Mr. Raterman graduated from the University of Virginia with a BA in Economics.

© 2013 PEPD • Private Equity’s Leading News Magazine • 10-2-13

CVC Signs Agreement to Acquire Campbell’s European Simple Meals Business

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campbells nfCVC Capital Partners has signed an agreement to acquire the European simple meals business of Campbell Soup Company.  CVC and Campbell entered into negotiations on this transaction in August 2013.

CVC will acquire Campbell’s national brands of soups, sauces and simple meals, including Liebig and Royco in France, Erasco in Germany, Blå Band in Sweden and Devos Lemmens and Royco in Belgium, for a purchase price of €400 million. The transaction also includes four plants in Puurs, Belgium; Le Pontet, France; Lubeck, Germany; and Karpalund, Sweden. In fiscal 2013, the Campbell businesses included in the proposed transaction generated annual net sales of approximately $530 million. The acquired brands are headquartered in Puurs, Belgium and employ approximately 1,300 people.

CVC is being advised by Leopold Capital Partners; Barclays, Cleary Gottlieb Steen & Hamilton; and Ernst & Young.

CVC invests in a range of industries with a specific interest in industrial and service businesses. To date, CVC has raised over $60 billion in capital completing over 300 investments with an aggregate transaction value of $150 billion. The firm, founded in 1981, is based in London and has a network of 21 offices and 280 employees throughout Europe, Asia and the United States (www.cvc.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 10-1-13

University of Michigan to Host Annual Private Equity Conference

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ross nfsThe Zell Lurie Institute for Entrepreneurial Studies and its Center for Venture Capital and Private Equity Finance at the University of Michigan’s Ross School of Business today unveiled details for its eighth annual Michigan Private Equity Conference, taking place October 3 and 4. The ’boutique’ conference will cover current and emerging topics in the nation’s credit markets that pose challenges and new opportunities for those in private equity and institutional investing. More than 200 private equity, investment banking and business professionals from around the United States and from the University of Michigan alumni community are expected to attend. The 8th annual conference will be headlined by Kevin Albert of Pantheon Ventures and John Diggins of Platinum Equity Partners.

“Today, the private equity sector is certainly healthy and well-funded, but it has shifted its sights away from strictly doing buyouts, to providing growth capital to younger, high-potential companies in the post-venture-capital stage of financing,” said David Brophy, director of the Center for Venture Capital and Private Equity Finance at the University of Michigan Ross School of Business. “Private equity shops are finding value in this middle market area, and that’s where they’re doing a lot of their investments. These are just a sampling of the kinds of deals that get done at the event and company owners who want to meet these types of investors should attend this conference, which is the best of its kind in the Midwest.”

A pre-conference golf outing at the University of Michigan golf course and dinner reception will be held on Thursday, October 3. The conference will kick off at 7:30AM on Friday, October 4 with a networking breakfast. The opening keynote address will be delivered by Kevin Albert, global head of business development at Pantheon Ventures, an international private equity fund-of-funds manager. Mr. Albert will shine a spotlight on new trends in fundraising by private equity shops. A second keynote address will be delivered later in the morning by John Diggins, a partner at Platinum Equity Partners. Mr. Diggins will share his insights into where the California-based private equity firm is placing its investment dollars and what attracted the firm to the state of Michigan. He will also speak about Platinum Equity’s stake in the Detroit Pistons and the firm’s experience with the NBA franchise.

In addition, a series of panel discussions and networking lunch will be held. Panelists include:

  • Eric Dykema, Lineage Capital LLC
  • Gerry Boylan , Long Point Capital
  • Frank Muller, Jr., Behringer Harvard Holdings, Inc.
  • Michael Oleshansky , PSP Capital Partners LLC
  • Joseph O’Connor , AlpInvest Partners
  • Bruce Engler, Faegre Baker Daniels LLP
  • Mike Vlasic , Vlasic Investments
  • Jeff Arnesen , Houlihan Lokey
  • Michael Faremouth , Linsalata Capital Partners
  • Sandra Bosela , OPTrust Private Markets Group
  • Brian Demkowicz , Huron Capital
  • Brendan Edmonds, Atlantic-Pacific Capital
  • Eric Wilcomes, DuPont Capital Management Corp.
  • Shawn Winnie, State of Michigan Department of Treasury

Post-conference, Mr. Brophy will host a ‘fireside chat’ on investment banking and the path to private equity, which is open to the public. The panel starts at 3:00PM in room 1210 at the Ross School of Business. Panelists include representatives from Kohlberg & Company, Blackstone Group, Pine Brook Partners, Apollo Global Management and Moelis & Company.

Online registration for the conference is open through Wednesday, October 2. For more information or to register, click HERE.

About the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies
The Institute and its Center for Venture Capital and Private Equity Finance bring together a mix of knowledge, experience and opportunities from the front lines of entrepreneurship and alternative investments. The student learning experience is further enhanced through internships, entrepreneurial clubs and events that serve to provide viable networks and engage the business community.  The School’s three student-led investment funds, with over $6.5 million under management, immerse students in the business assessment and investment process. Founding Board Members include Samuel Zell, Chairman of Equity Group Investments and Eugene Applebaum, Founder of Arbor Drugs.  For more information, visit the Institute at www.zli.bus.umich.edu.

© 2013 PEPD • Private Equity’s Leading News Magazine • 9-26-13

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