High Road Capital Partners has sold Banner Solutions, a distributor of hardware products, to Tailwind Capital.
Banner Solutions is a wholesale distributor of commercial, institutional, and residential door hardware, electronic access control and security products that are used for maintenance, repair and renovation applications. The company, then known as Midwest Wholesale Hardware, was acquired by High Road’s second fund in February 2017.
During High Road’s ownership term, the company completed four acquisitions, and revenue and EBITDA more than tripled. The four add-on acquisitions were California-based Specialized Builder’s Hardware in September 2019; Oregon-based Berg Wholesale in June 2019; Iowa-based Strauss Lock Distributors in December 2017; and Ohio-based Akron Hardware and its sister company Hardware Suppliers in October 2017.
“Our successful investment in Banner Solutions exemplifies High Road’s strategy of building lower-middle-market niche leaders into bigger and qualitatively better companies in partnership with management,” said Ben Schnakenberg, a partner at High Road.
Banner’s inventory includes mechanical locks and parts, exit devices and door closures, electronic access controls and other parts from all major hardware brands. The company, led by CEO Brendan Deely, was founded in 1987 and is based in Kansas City with additional distribution centers in California, Florida, Pennsylvania, South Carolina, and Texas.
“Under CEO Brendan Deely, Banner expanded its geographic reach, product categories, and end markets,” added Mr. Schnakenberg. “Today, the company has a robust management team, twice the number of distribution centers, a larger technical sales force, more sophisticated information systems, and enhanced e-commerce capabilities.”
New York-based High Road invests in manufacturing, service, or value-added distribution businesses with revenues of $10 million to $100 million and EBITDAs of $3 million to $10 million. The firm has completed 59 transactions – 20 platform investments, 31 add-on acquisitions, and 8 exits – since its founding in 2007.
High Road’s investment in Banner was led by Mr. Schnakenberg with assistance from Operating Partner Nicholas Martino; Principal Scott Rubino; Senior Associate Tom Cassidy; and Associate Anthony Tripodoro.
“With High Road’s guidance and support, Banner has become a leader in a still fragmented business, distinguished by our close relationships with manufacturers, just-in-time fulfillment capabilities, and outstanding customer service,” said Mr. Deely. “The company is well-positioned for continued growth and success in partnership with Tailwind.”
New York-based Tailwind invests from $25 million to $100 million of equity in middle-market companies that have enterprise values of up to $300 million and EBITDA from $10 million to $30 million. Sectors of interest include healthcare, business services, and industrial services. In September 2018, Tailwind held an above-target and oversubscribed final closing of Tailwind Capital Partners III LP with $1.8 billion of capital. Since its founding in 2003, Tailwind has invested in 42 portfolio companies and completed over 105 add-on acquisitions.
Twin Brook Capital Partners, the middle-market direct lending arm of Angelo Gordon, served as joint lead arranger and syndication agent on financing to support Tailwind’s leveraged buyout of Banner Solutions. 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.
BB&T Capital Markets was the financial advisor to High Road and Banner Solutions on this transaction.
© 2019 Private Equity Professional | November 15, 2019
