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CODI’s Arnold Magnetic Adds Ramco

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Arnold Magnetic Technologies, a portfolio company of publicly traded Compass Diversified (CODI), has acquired Ramco Electric Motors.

Ramco is a maker of custom stators (the stationary part of an electric motor), rotors, shaft assemblies and subassemblies, and full electric motors that are used in hybrid buses, airplanes, forklifts, industrial fans, building elevators, mining equipment, earthmovers, and medical devices.

Ramco is led by CEO Dan Seger and has just over 120 employees. The company was founded in 1987 by Ray Dunaway and is headquartered 40 miles northwest of Dayton in Greenville, Ohio.

Arnold Magnetic manufactures and distributes magnets, magnetic assemblies, thin and ultra-thin gauge (as thin as two microns) metal strips and foil products that are used in motors, generators, and sensors. Customers of the company, totaling more than 2,000, are active in the aerospace and defense, general industrial, motorsport, oil and gas, medical, and energy sectors.

Arnold Magnetic is headquartered in Rochester, New York and has additional facilities in Ohio, Illinois, Wisconsin and Nebraska, and internationally in the United Kingdom, Switzerland and China.

The history of Arnold Magnetic dates to 1896 when it was founded by electrical engineer Bion Arnold, a close friend of both Charles Steinmetz, the developer of alternating current theory, and famed inventor Thomas Edison. The company was acquired by Allegheny Ludlum in 1946, sold to SPS Technologies in 1946, and acquired by Compass Diversified in 2012 for $129 million. Today, the company is led by CEO Dan Miller.

“Over the past 125 years, Arnold has successfully evolved and adapted its technologies and manufacturing presence to provide world-class quality products and service to our customers,” said Mr. Miller. “By augmenting our technical know-how and engineering capabilities with Ramco’s complementary product portfolio, we will move up the technology ladder and be able to offer more comprehensive, turnkey solutions to our customers. We have a clear line of sight to future growth opportunities through partnering with Ramco’s talented team.”

Compass Diversified (NYSE: CODI) is a publicly-traded investment company that invests between $75 million and $700 million in companies that have EBITDA of at least $10 million. Sectors of interest include niche industrial or branded consumer companies that are headquartered in North America. Compass went public in 2006 and is based in Westport, Connecticut.

“With the acquisition of an industry leader like Ramco, Arnold is continuing to execute its strategy to become a leading technology-based, engineering solutions company,” said Elias Sabo, the chief executive officer of Compass. “Arnold and Ramco are naturally complementary businesses and, together, are more competitive in the marketplace – offering significant opportunity to gain market share and acquire new customers. We look forward to partnering with the Arnold and Ramco teams to integrate their capabilities and realize the full benefits of this transaction, and we remain confident in the future of Arnold’s business.”

With the close of the transaction, Ramco’s operations remain in Greenville, Ohio and it continues to go to market under its brand name as a division of Arnold Magnetic.

© 2021 Private Equity Professional | March 4, 2021

Vance Street Forms Spectra, Looks to Consolidate C4ISR Sector

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Vance Street Capital has formed Spectra A&D Holdings to acquire and merge three aerospace and defense technology companies.

The three acquired businesses include Las Cruces, New Mexico-based Calculex; and Alpharetta, Georgia-based Argon Corporation and FDS Avionics. Together these companies design and manufacturer avionics and electronics that record, process, route, and display data used in aerospace and defense applications.

Vance Street partnered with Bob McGill, a 35-year veteran of the defense technology industry, on this transaction and he now leads Spectra as its CEO. Earlier in his career, Mr. McGill led multiple divisions of defense and aerospace companies L3 Technologies and General Dynamics. He has also worked with Calculex in a senior executive/consultant role since 2016.

“The formation of Spectra through the combination of Calculex, Argon and FDS Avionics is a transformative event,” said Mr. McGill.  “I am excited to partner with Vance Street who brings a strong team, highly relevant investing experience and network in the C4ISR sector, along with significant operational resources.” C4ISR is an acronym that stands for Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance.

The investment in Alpharetta, Georgia-headquartered Spectra was funded through Vance Street Capital III LP and represents the fund’s third platform investment.

“Spectra’s engineering and technical capabilities, combined with its proprietary products, are differentiated in the market,” said Brian Martin, the managing partner at Vance Street. “We plan to leverage our prior aerospace and defense technology experience, network and resources to help Bob grow Spectra organically and through acquisition.”

Los Angeles-based Vance Street makes control investments in companies with enterprise values of $30 million to $250 million and EBITDA of $3 million to $25 million. Sectors of interest include aerospace, defense, industrial, and medical.

“Vance Street is custom-tailored to provide entrepreneurs and executives the resources they need to accelerate growth,” said Nic Janneck, a principal at Vance Street. “With the additional support and capital that we can bring, Spectra will be able to invest in the continued development of advanced avionics technologies to address the challenges of some of the most demanding customers in the world.”

Vedder Price acted as legal advisor to Vance Street.  Debt financing for this transaction was provided by Fidus Investment Corporation.

Argon was represented by Janes Capital Partners while Calculex and FDS Avionics were acquired by Vance Street via separate proprietary transactions.

© 2021 Private Equity Professional | February 26, 2021

Varsity Closes Fifth Probo Add-On

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Probo Medical, a portfolio company of Varsity Healthcare Partners since October 2018, has acquired IMAX Medical.

IMAX specializes in the sale, purchase, inspection, installation/de-installation, and transport of pre-owned medical diagnostic imaging equipment including ultrasound, X-Ray, CT and MRI systems. The company, led by CEO Simon Roussel, was founded by Patrick Roussel in 2012 and is based 240 miles southwest of Paris in Nantes, France.

Probo Medical provides new, used and refurbished ultrasound systems and ultrasound probes. The company uses its global supply chain to procure used ultrasound equipment from more than 250 source points and its internally trained workforce of repair technicians then refurbishes the equipment for resale to more than 500 customers globally.

Probo Medical, led by CEO Michael Asmer, was founded in 2014 and is headquartered north of Indianapolis in Fishers, Indiana with additional US facilities in Tulsa, Oklahoma; Tampa, Florida; and Harrisburg, Pennsylvania.

“This is a significant announcement for Probo as we continue to grow our business on a global scale,” said Mr. Asmer. “France is an important market in the diagnostic medical imaging equipment vertical and we looked hard for a partner that shared our vision for the future.”

The add-on buy of IMAX follows Probo’s buys of UK-based Mount International United Services in January 2021; UK-based Future Medical Equipment and Florida-based Elite Medical Technologies in February 2020; and Pennsylvania-based Trisonics in February 2019.

Varsity Healthcare Partners invests from $10 million to $60 million in companies that are active in the healthcare services sector and have from $5 million to $15 million of EBITDA. Varsity is currently investing out of its third fund, Varsity Healthcare Partners III LP, which closed in August 2019 with $417 million of capital commitments. The firm was founded by David Alpern and Kenton Rosenberry and has offices in Los Angeles and Stamford.

© 2021 Private Equity Professional | February 26, 2021

After 37 Years, Yellow Wood Reunites Dr. Scholl’s

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Scholl’s Wellness Company, a portfolio company of Yellow Wood Partners, has agreed to acquire the Scholl footcare brand (Scholl), which operates globally outside of the Americas, from consumer-goods company Reckitt Benckiser. The buy of Scholl will reunite the business with the Dr. Scholl’s brand after 37 years of separate ownership.

Dr. Scholl’s is a footwear and orthopedic footcare brand that was founded by Chicago podiatrist William Mathias Scholl in 1906. The original company expanded globally to design and patent over 1,000 footcare products and was acquired by Schering-Plough in 1979. Schering-Plough was acquired by Merck in 2009, and in 2014 Merck sold its consumer care business, which included Dr. Scholl’s, to Bayer. In November 2019, Yellow Wood formed Scholl’s Wellness Company to acquire Dr. Scholl’s from Bayer for $585 million.

Since its formation, Scholl’s Wellness has been actively expanding its e-commerce capabilities, developing new products, and strengthening its senior management team. Today, Scholl’s Wellness, which had sales of $234 million last year, sells insoles, inserts and a variety of other footcare and treatment products.

“Our experience of successfully executing corporate carve-outs has helped us gain a deep understanding of the many complexities that accompany the separation of an operating subsidiary from a large global parent company,” said Tad Yanagi, a partner at Yellow Wood. “Our previous experience with other global multinational CPG companies enabled us to work directly with Reckitt Benckiser to create this opportunity.”

The Scholl brand became separated in 1984 when Schering-Plough sold the non-North American operations of the business to European Home Products which later, after a series of mergers, became SSL International. Reckitt Benckiser acquired SSL in 2010.

With the close of this transaction, expected in the third quarter of 2021, the once-again combined business will have annual sales of more than $700 million.

“This transaction provides us with a unique opportunity to create a global brand as an undisputed leader in the footcare category. We are excited to reunite these two companies to continue the legacy and heritage of the century-old Dr. Scholl’s brand,” said Dana Schmaltz, a partner at Yellow Wood. “The combined company will have the global resources to continue to develop innovative wellness products with a single vision focused on providing the best footcare products for consumers around the world.”

Yellow Wood invests in consumer brands and companies that operate in the mass, drug, food, specialty, value, club and e-commerce channels and have revenues between $30 million and $200 million. In July 2017, the firm completed fundraising for Yellow Wood Capital Partners II LP at an oversubscribed $370 million of committed capital. Yellow Wood was founded in 2011 and is based in Boston.

Reckitt Benckiser (OTC: RBGPF) is a multinational consumer goods company with operations in the hygiene, health and nutrition sectors. Company-owned brands include Clearasil, Lysol, Air Wick, Calgon, Woolite and Vanish among many others. Reckitt Benckiser was founded in 1823 and is headquartered near London in Slough, United Kingdom

Fried Frank provided legal services to Yellow Wood on this transaction. The Fried Frank team was led by corporate partner Dan Oates and included corporate partner Neil Caddy and corporate associates Angela Becker and Hannah Luqmani.

© 2021 Private Equity Professional | February 25, 2021

Aterian’s Bright Buys Bocchi

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Bright International, a portfolio company of Aterian Investment Partners, has acquired Bocchi Laboratories from its family ownership. Aterian acquired Bright International in August 2019.

Bocchi Laboratories is a high volume contract manufacturer of liquid personal care products including shampoos, conditioners, lotions, creams, gels, and fragrances.

Headquartered near Los Angeles in Santa Clarita, California, the company has 225,000 sq. ft. of facilities including an 86,000 sq. ft. production plant and a 96,000 sq. ft. warehouse facility. In New Albany, Ohio, located northeast of Columbus, the company has nearly 200,000 sq. ft. of research and development, production and warehouse facilities.

Bocchi was founded in 1989 by Bob Bocchi and was acquired by Bain Private Equity in 1996. Bain sold the business in 2003 to ClearLight Partners and in 2008 the company was reacquired by Mr. Bocchi. Today the business is led by CEO Joe Pender.

“The partnership between Bocchi and Bright is the ideal outcome for our employees and customers as the combination provides significant resources and capabilities as we continue our growth strategy and our commitment to our customer base through execution and innovation,” said Mr. Pender.

Bright manufactures hair bleach products, shaving depilatory powders, developers and hair colors that are used by consumer product brands sold into the professional salon and retail markets. The company’s services include research and development, formulation, blending, packaging, filling, and kitting. Bright was founded in 1987 by Anthony Bibars and has a manufacturing facility and headquarters near Phoenix in Coolidge, Arizona.

According to Aterian, the combination of Bright with Bocchi creates one of the most diversified full-service beauty and personal care platforms in North America.

“The Bocchi and Bright platform is highly strategic,” said Christopher Thomas, a co-founder and partner at Aterian. “Although each company is a leading North American manufacturer in its respective categories, the combination provides each business and their customer base access to new capabilities, technology, production equipment, innovation and excellence in execution to further align the customers and organization.”

Aterian invests up to $50 million in small-to-middle market businesses with $25 million to $500 million in revenues that are underperforming, turnarounds or otherwise unique situations. Aterian held a final closing of Aterian Investment Partners III LP with $350 million of committed capital in July 2018. Aterian’s earlier fund closed in December 2013 with $257 million of capital commitments.

“We are very excited for the direction of the organization,” added Josh Ciampa, a principal at Aterian. “This is an example of how we continue to grow and invest behind two family-owned and operated organizations, ultimately creating a best-in-class manufacturing and innovation platform for the customer experience.”

Lincoln International was the financial advisor to Bocchi Laboratories.

© 2021 Private Equity Professional | February 11, 2021

PMC Carves Out UniversalPegasus

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PMC Capital Partners has acquired UniversalPegasus International (UPI), a provider of engineering and construction management services, from publicly traded Huntington Ingalls Industries.

UPI was formed in February 2008 by KRG Capital Partners through the acquisition and merger of Universal Ensco and Pegasus International. Huntington Ingalls acquired UPI from KRG in June 2014.

Today, UPI provides engineering, project management, survey, and inspection services to the energy industry including onshore and offshore pipelines and facilities. UPI, led by CEO Tom Davison, is headquartered in Houston with an additional office in Calgary and currently has more than 600 employees.

According to Engineering News-Record, UPI is one of the top 10 engineering design companies in the petroleum sector and the 59th largest overall.

“We are extremely excited to acquire UniversalPegasus and its amazing team of 600 professionals,” said Chris Aye, a managing partner of PMC Capital. “Spearheaded by an impressive business leader in Tom Davison, the UPI team maintained record-level engineering design revenues during an economically crippling COVID-19 pandemic while building a backlog of business that will continue to support future success. Acquiring UPI coincides with PMC Capital’s vision to acquire and support an elite technical staff of engineers who deliver first-class mission-critical business services to blue-chip customers.”

PMC Capital invests from $10 million to $100 million in companies with revenues of more than $20 million and EBITDA of more than $2 million. Sectors of interest include business services, niche manufacturing, consumer, health care, and telecommunications, media and technology. The firm is based near Los Angeles in Sun Valley, California.

“UPI’s decades of record success delivering engineering, logistical, and construction management solutions captivated PMC Capital. Not only will PMC Capital support UPI in maintaining a high level of service for its clients — we look forward to building and exceeding UPI’s past accomplishments. We’re excited to partner with Tom and his team as we aggressively embark on a multifaceted growth strategy,” added Mr. Aye.

Newport News-headquartered Huntington Ingalls (NYSE: HII) designs, builds, overhauls, and repairs military ships. The company’s technical solutions division provides professional services to government and commercial customers in the areas of fleet maintenance and modernization, rapid prototyping, nuclear engineering and fabrication, and software development.

“We are pleased to have reached this agreement,” said Andy Green, HII’s executive vice president and president of the technical solutions division. “PMC Capital is a great new home for UniversalPegasus, its world-class people and services. It will enable UPI to continue to flourish, ensuring the business remains at the forefront of innovation and customer service in the future.”

PMC Capital is part of PMC Global, a multinational conglomerate founded in 1974 by Philip Kamins (PMC stands for Plastics Management Corp.) The firm operates businesses in the chemical, liquefied natural gas, pharmaceutical, plastics, packaging, construction, financial, machinery and fabrication, and health and beauty industries.

“With PMC Capital behind us, UPI will continue to differentiate itself and outperform the competition as one of the few remaining independent oil and gas engineering companies. We expect to emerge from the pandemic in a strong financial position poised for double-digit growth,” concluded Mr. Davison.

Ernst & Young Capital Advisors provided financial services to Huntington Ingalls Industries on this transaction.

© 2021 Private Equity Professional | February 9, 2021