PE Weekly: M&A Targets Consumer Sector, Research Eyes Midmarket Financing Challenges

With holiday shopping in full swing, market analysts’ eyes are turning toward the consumer products space. Investors this week have turned their attention there, too, with recent deals reaching patio furniture sales and hot sauces. Elsewhere, healthcare emerged as a key target in this week’s M&A roundup. Explore the latest transactions below, plus read up on recent research highlighting the ongoing challenges middle-market companies and their private equity sponsors face when seeking capital.

Platform Investments

Bain Capital Private Equity Acquires Stake in 1440 Foods. Bain has acquired a significant stake in 1440 Foods, a portfolio of sports and active nutrition brands including Pure Protein, MET-Rx and Body Fortress. Bain joins existing investor 4×4 Capital in a move intended to expand 1440 Foods’ product offerings.

Blackford Capital Acquires LTD Online Stores. Blackford Capital, a lower middle-market private equity firm, announced its acquisition of LTD Online Stores, a patio furniture e-commerce company and wholesale distributor. The investment marks Blackford’s third acquisition within its Patio Portfolio in the last year; Artificial Turf Supply and Starfire Direct are two existing patio furniture portfolio companies within the firm.

EagleTree Acquires Summit Hill Foods. EagleTree Capital announced recently its acquisition of Summit Hill Foods, owner of food brands including Better Than Bouillon and The Original Louisiana Hot Sauce. In a statement, Summit Hill Foods CEO Steve Goodyear said EagleTree’s “vision and resources align seamlessly with our aspirations.”

Heartwood Partners Invests in Protein Products Business Bush Brothers Provision Co. Middle-market private equity firm Heartwood Partners announced the completion of its investment in Bush Brothers Provision Co., a fifth-generation family-owned business. Headquartered in West Palm Beach, Florida, the company provides premium protein products to restaurants, hotels, country clubs, mega yachts, and private chefs in Florida and the Caribbean.

Pritzker Private Capital Acquires Landscaping Services Provider HeartLand. Pritzker Private Capital, a family direct investor, has acquired HeartLand, a Kansas City, Missouri-based provider of landscaping services to commercial customers across the United States. The company operates more than 60 branches with over 4,000 employees and has completed 27 acquisitions, expanding its geographic footprint to more than 20 states and over 15,000 customers. PPC has invested in HeartLand alongside the company’s founder and members of the management team, according to a press release.

Surge Private Equity Invests in Coastal Amusements. Surge, a Dallas-based firm focused on the lower middle market, closed an investment in Coastal Amusements, a designer, manufacturer and importer of coin-operated games based in New Jersey. Coastal Amusements supplies hit games such as Break-the-Plate and Ring Toss, and will use the investment to develop new cutting-edge products.

Tygon Peak Forms Healthcare Platform Following Two Acquisitions. Tygon Peak Capital, a lower middle-market private equity firm, announced the formation of a new healthcare platform following its investments in primary care businesses Doctors of Internal Medicine and Internal Medicine Associates of Plano. Both acquisition targets are based in Dallas. The new platform will provide a range of services including primary care, radiology, allergy, lab testing and more.

Add-Ons

Allied Industrial Partners-Backed CES Power Acquires Roundrock Technology. CES Power, a global provider of sustainable mobile power generation, distribution and temperature control solutions for large events, has acquired Roundrock Technology, a Raleigh, North Carolina-based provider of scalable IT services to the entertainment industry. CES Power is backed by industrial-focused private equity firm Allied Industrial Partners. With the acquisition, Roundrock will become an integral part of CES Technologies, CES Power’s specialized technology division, according to a press release.

Blue Point Capital’s Portco TAS Environmental Services Acquires Environmental Concepts & Services. TAS Environmental Services, a provider of environmental and industrial services in the southern U.S., and Blue Point Capital Partners have announced their acquisition of Environmental Concepts & Services, a waste transportation and disposal services provider. This is TAS’ fifth acquisition since joining Blue Point in 2019.

Gryphon Investors’ Portco Ncontracts Acquires Quantivate. Ncontracts, a provider of integrated compliance, risk and vendor management solutions to the financial services industry, has acquired Quantivate, a provider of governance, risk and compliance solutions for banks and credit unions. Ncontracts is a portfolio company of middle-market private equity firm Gryphon Investors.

HGGC’s Grand Fitness Partners Acquires Eight Planet Fitness Locations. Grand Fitness Partners, a Planet Fitness franchisee and portfolio company of middle-market private equity firm HGGC, announced its acquisition of eight additional Planet Fitness locations. The investments focused on the California market and acquired the locations from PCV Holding Co., another Planet Fitness franchisee whose owners will retain a minority stake in the business. The acquisitions mark Grand Fitness’ second major add-ons since securing backing from HGGC in 2021, a press release said.

Lee Equity’s Solaris Acquires Urologic Consultants. Solaris Health Holdings, a portfolio of Lee Equity Partners, announced this week it has acquired Urologic Consultants. The investment expands Solaris’ presence in urologic diagnosis and treatment services with the addition of Urologic’s 10 existing providers.

RF-Backed Ally Waste Adds Fifth Acquisition to Growing Valet Trash Platform. RF Investment Partners and its portfolio company Ally Waste Services announced the acquisition of Waste Consolidators, a provider of bulk waste collection services for residential and commercial complexes. This investment builds on Ally Waste’s partnership with Waste Control and the integration of its bulk waste removal services earlier this year. According to a press release, RF and Ally Waste are actively seeking opportunities to partner with additional waste management service providers.

The Riverside Company-Backed ToolWatch Acquires Busybusy, Marking Riverside’s 1,000th Investment. ToolWatch, a construction operations platform backed by private equity firm The Riverside Company, has acquired Busybusy, a developer of time tracking software for construction and other remote industries. The add-on transaction is the 1,000th investment completed by Riverside since the firm’s founding in 1988.

TJC’s Young Innovations Acquires Salvin Dental. Young Innovations, a supplier of dental products and portfolio company of middle-market private equity firm TJC, is acquiring Salvin Dental Specialties, a press release announced recently. Salvin supplies regenerative biomaterials, surgical instruments and other products for implant dentistry. The investment makes Young Innovations the “largest dental implant-agnostic supplier” in the sector, according to Young Innovations Vice President and General Manager Steve Clareen.

Exits

Capita Exits Stake in Fera Science to Bridgepoint. U.K. business process services provider Capita has announced an agreement to sell its 75% stake in Fera Science to middle-market alternative asset manager Bridgepoint Group, according to a recent press release. Fera offers investigation and problem solving solutions around plant and bee health, food and feed quality, sustainable agriculture and more. Bridgepoint will acquire the stake for about $75.4 million, valuing Fera Science—a joint venture with the Department for Environment, Food & Rural Affairs (Defra)—at about $100.5 million.

Comvest Partners Sells Systems Control to Hubbell Incorporated. Systems Control, a substations control solutions manufacturer in Comvest’s private equity portfolio, has sold to Hubbell Incorporated, a utility and electrical solutions manufacturer. Comvest acquired Systems Control in 2018.

Soundcore Capital Exits PumpMan. Soundcore Capital Partners, a private equity firm based in New York, announced the sale of PumpMan Holdings, a water and wastewater pumping systems service and maintenance provider. The company was acquired by Harrington Industrial Plastics, a portfolio company of Bain Capital Private Equity, according to a press release. Soundcore made its initial investment in PumpMan in 2016.

Transom Capital Sells Mackie to RØDE Microphones. Transom Capital, a middle-market private equity firm, has sold Mackie, an audio equipment company, to RØDE Microphones, a manufacturer of microphones, headphones and related accessories. Alex Nelson, Mackie’s CEO, says the company anticipates more major announcements in 2024.

Fundraising

PE and Infrastructure Firm Ara Partners Closes on Over $3 Billion in New Capital Commitments. Ara Partners, a private equity and infrastructure firm that specializes in industrial decarbonization investments, announced the closing of more than $3 billion in new capital commitments, including $2.8 billion of limited partner commitments for Ara Fund III, alongside dedicated LP co-investment vehicles. The fund was oversubscribed at an increased hard cap, exceeding its $2 billion initial target. Fund III will pursue both buyout and growth investments in industrial companies primarily headquartered in the United States, Canada and Europe that have the potential to achieve reductions in carbon emissions across a variety of sectors, according to a press release.

Insights

White Wolf Capital Group Launches ETF. White Wolf Capital Group, an asset management firm, announced the debut of its first exchange traded fund (ETF). The ETF is publicly listed on the Chicago Board Options Exchange with the ticker symbol LBO, offering investors exposure to “certain components of the publicly listed leveraged buyout ecosystem,” White Wolf explained in its press release. LBO will invest in publicly traded private equity firms, including business development companies, and other private investors and lenders.

Midmarket Companies, PE Sponsors Say Capital Raises Are Too Time Consuming. A new survey released by corporate financing platform CAPX finds middle-market companies and their private equity sponsors face plenty of headwinds when securing capital. More than half of survey respondents said the process is too time-consuming, making this the most prominent challenge in the process of securing capital. M&A dealmakers also conveyed the challenge of delays in securing debt financing, while private equity firms pointed to the hurdle of finding a lender as their biggest challenge.

AllianceBernstein Launches NAV Lending Operations. AllianceBernstein, a global investment management firm, announced the launch of its NAV lending strategy, AB NAV Lending. The launch coincides with an anchor investment from Equitable Holdings, a press release noted. AB NAV Lending is an extension of AllianceBernstein’s existing private corporate credit platform AB Private Credit Investors.

U.S. Senators Probe PE’s Role in Healthcare. U.S. senators have launched a bipartisan investigation into private equity’s expanding role in the healthcare sector, according to recent reports from Yahoo News. Sheldon Whitehouse (D-RI), who chairs the Senate Budget Committee, and Chuck Grassley (R-IA), who is the committee’s ranking member, launched the inquiry that aims to examine whether M&A deals have harmed patients and healthcare providers.

Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.