Auxo Investment Partners has acquired sister companies Paramount Tube and Euclid Medical. The two companies both operate under the Precision Products Group (PPG) brand name.
Paramount Tube is a manufacturer of small diameter paper and plastic tubes used in a variety of niche applications requiring tight tolerances, unique materials, performance attributes, or difficult to produce shapes. The company’s products are used as components in electric motors, transformers, fuses, pharmaceutical and consumer packaging, and military ordinance. Paramount Tube is headquartered in Fort Wayne, Indiana.
Euclid Medical designs and manufactures automated single- and multi-dose pharmaceutical packaging and barcoding systems used in hospitals, retail pharmacies, and long-term care facilities. Euclid Medical is headquartered 35 miles southwest of Akron in Apple Creek, Ohio.
“We selected Auxo as our partner because of their desire to support our vision for growth and the values our organizations share,” said Dave Hooe, the CEO of PPG, who will continue in this role under Auxo ownership. “We think Auxo’s hands-on investment approach will bolster our ability to aggressively pursue our growth plan and ensure a prosperous future for our company and for our long-standing employees.”
The buy of PPG is Auxo’s seventh acquisition for its inaugural fund, Auxo Growth Holdings I, which closed in the fall of 2018.
“We were immediately impressed with PPG’s unique capabilities and dominant market position,” said Jeff Helminski, a managing partner of Auxo. “It’s clear the company’s values are closely aligned with ours — and its success has been driven by the leadership team’s unrelenting pursuit of excellence and customer service. We’re excited to work with Dave and his team to honor the legacy they have built and support them in leveraging their unique capabilities to expand their global footprint both organically and acquisitively.”
Paramount Tube was founded in 1927 and was acquired by packaging maker J.L. Clark in 1986 as part of its Precision Products Group (PPG) which also included Stone Industrial, Michigan Spring & Stamping, and Timms Spring. In 1992, PPG was acquired by LaSalle Capital and in 2008, two parts of the group – Michigan Spring & Stamping, and Timms Spring – were sold to Hines Corporation. In 2013, PPG was acquired by Long Point Capital and Greyrock Capital. Euclid Medical was founded in 1956 as Euclid Spiral Paper Tube Corporation and was acquired by PPG in 2015.
Auxo invests in North America-based companies that have from $1.5 million to $15 million of EBITDA. Sectors of interest include manufacturing, industrial, value-added distribution and business services. Typical investments for Auxo occur at corporate transition points, including owner-operators planning retirement, companies exploring family succession, and ownership/management teams seeking growth capital. The firm prefers majority-control investments but will consider select minority opportunities.
“We couldn’t be more thrilled to be working with the PPG team,” added Jack Kolodny, a managing partner of Auxo. “This is exactly the kind of company we had in mind when we formed Auxo — and we look forward to being an active and additive partner in the continued growth of an already outstanding company.”
Auxo was founded in October 2016 and is led by its managing partners Mr. Helminski, Mr. Kolodny and Fred Tedori. The firm, which is named after the ancient Greek goddess of growth, has offices in Grand Rapids, Michigan and Los Angeles, California.
Brown Gibbons Lang & Company (BGL) was the financial advisor to PPG on this transaction. “BGL’s team demonstrated a thorough understanding of both the industrial and healthcare-related aspects of our business,” said Mr. Hooe. “The BGL team was committed to driving the process at every stage of the transaction and identified a partner that shares the vision of the management team and will support our growth strategy.” Managing Director Andrew Petryk led the transaction for BGL.
As part of the sale of PPG to Auxo, Greyrock has re-invested in the company through an $8.5 million subordinated debt and equity investment. In September 2020, Greyrock held a final closing of its fifth fund, GCG Investors V LP, with $280 million of capital. Greyrock’s earlier investment in PPG was though its third fund.
Greyrock Capital provides from $5 million to $35 million of subordinated debt and equity to lower middle-market companies that have revenues of at least $10 million and EBITDA of at least $3 million. Greyrock has offices in Walnut Creek, California; Chicago, Illinois; Wilton, Connecticut; and Naples, Florida.
Long Point Capital invests from $10 million to $50 million of equity in manufacturing, distribution, and service companies with at least $5 million of EBITDA and enterprise values of $20 million to $200 million. The firm has offices near Detroit in Royal Oak, Michigan and New York City.
© 2020 Private Equity Professional | November 2, 2020