PE Weekly: Dealmakers Power up Energy, Industrials Investments

The industrials sector has remained a resilient pocket for dealmaking activity in the middle market throughout the recent M&A slump, and this week, investors zeroed-in on the space. The energy industry also saw significant attention, a sector adjacent to the industrials landscape and a similarly resilient one. In other news this week, new analysis finds that while exit volume remains strong, exit value has declined year-over-year. Review the latest research and middle-market transactions below.

Platform Investments

NewSpring Acquires FBI, DOJ Security Solution Provider. NewSpring Holdings has acquired Xpect Solutions, a provider of enterprise IT and security solutions for government agencies including the Federal Bureau of Investigations, Department of Justice and National Institutes of Health. The investment marks NewSpring’s third acquisition within its Federal Platform, which targets U.S. government agencies with mission-critical services.

Sound Growth Acquires Stueve Construction. Lower middle-market private equity firm Sound Growth Partners announced its acquisition of Stueve Construction, a provider of engineering, design and construction services for bulk fertilizer storage facilities. The investment was made under the firm’s One-Stop Buyout structure, a press release noted.

GreyLion Backs Birdseye Security. Birdseye Security Solutions, a provider of logistics security services, has secured an equity investment from GreyLion Partners. The investment marks Birdseye’s first institutional capital and will support the company’s efforts to scale within the logistics sector.

Allied Industrial Invests in JCL Energy. Allied Industrial Partners, a lower middle-market private equity firm, announced its investment in JCL Energy this week. The company is a distributor of pad-mounted transformers and other electrical equipment, servicing commercial and industrial facilities, electrical contractors and other end customers.

Summa Equity Backs U.K.-Based EA Technology. Summa Equity, an impact investment firm, has invested in EA Technology, an energy grid solutions provider. EA fuels research and development in the energy sector to develop smart grid hardware and software and support decarbonization efforts. Summa will support the company’s efforts to scale globally.

Centerbridge Acquires Manufacturer Precinmac. Investment firm Centerbridge Partners is acquiring precision component manufacturer Precinmac, according to a recent press release. Centerbridge is acquiring the company from its previous owners Pine Island Capital Partners, Bain Capital’s Private Credit Group and Compass Partners Capital, which invested in the business in 2020. Precinmac serves the aerospace and defense sector, among other end-markets.

Kava Equity Acquires Environmental Remediation Service Provider. Kava Equity Partners, the private equity investment group of the Southern Ute Growth Fund that invests in lower middle-market businesses, has acquired Arrowhead Contracting. Arrowhead provides environmental remediation services. The Southern Ute Growth Fund is the business entity of the Southern Ute Indian Tribe.

Oaktree Capital Acquires Majority of B. Riley’s Great American. B. Riley Financial, a financial services platform, has announced the sale of a majority stake in Great American unit to investment firm Oaktree Capital. Oaktree is acquiring the business, which helps business value their assets, for $386 million.

Kian Capital, The Riverside Company Merge Labor Law Portcos. Kian Capital, a lower middle-market private equity firm, has announced that it is merging portfolio company Labor Law Center with OutSolve, a portfolio company of The Riverside Company. Both Labor Law Center and OutSolve offer labor law compliance services. Kian noted that it will continue to hold an investment in the merged business, becoming a minority investor in OutSolve with The Riverside Company.

THL Takes Majority Stake in Red Nucleus. THL Partners, a middle-market private equity firm, has acquired a majority stake in Red Nucleus, a provider of research and development, medical affairs and other services for the life sciences sector. THL’s backing will help Red Nucleus expand its commercialization services for clients, an announcement noted.

Add-ons

Blackford Expands Patio Platform with Empire Distributing. Blackford Capital has announced its latest add-on acquisition for its Patio Consolidation platform. The firm acquired Empire Distributing, an outdoor living and hearth distributor, which expands the platform’s operations to become a one-stop-shop product and marketing platform for the outdoor living sector.

Gryphon’s Shermco Acquires KTR Associates. Shermco Industries, a provider of power system engineering, maintenance and other services, has acquired KRT Associates, a power system engineering business. Shermco is backed by Gryphon Investors, a middle-market private equity firm.

Susquehanna Growth’s Tekmetric Acquires Shopgenie. Tekmetric, a shop management system for automotive repair shops, has acquired Shopgenie, an auto repair shop CRM. The merger integrates Shopgenie’s capabilities into Tekmetric to offer a comprehensive solution to shops in the U.S. and Canada, according to a press release. Tekmetric is a portfolio company of Susquehanna Growth Equity.

MidStreet’s Columbia Home Services Acquires Airmax Heating. Columbia Home Services, a residential and light commercial home services platform backed by MidStreet Mergers & Acquisitions, is acquiring Airmax Heating and Cooling, according to a recent announcement. Airmax is a residential HVAC contractor.

Nexa Equity’s Autura Merges with Radian Capital’s Traxero. Autura, a government towing management software backed by Nexa Equity, is merging with private towing solution provider Traxero, backed by Radian Capital. A press release said the combination of the two businesses creates a fully integrated towing software platform for end users.

Strategics

Do It Best to Acquire True Value Following Bankruptcy Filing. Hardware retailer True Value Company announced it is filing for bankruptcy and has reached an agreement with rival Do It Best, which will acquire True Value’s operations. A press release this week said selling the business was “the path forward to maximize value and best serve our retailer partners,” according to True Value CEO Chris Kempa.

Exits

Warburg Pincus Exits Kestra Holdings to Stone Point. Stone Point Capital, a private equity firm focused on the financial services sector, is acquiring a majority stake in wealth management platform Kestra Holdings, replacing sponsor Warburg Pincus, according to a press release. Oak Hill Capital will retain its majority stake in the company. Stone Point previously invested in Kestra in 2016 to support its spinout from NFP, subsequently exiting its minority stake to Oak Hill in 2022.

Fundraising

CID Capital Closes Fund IV. CID Capital, a private equity firm focused on the lower-middle market, has closed its fourth fund with $250 million in capital commitments. Fund IV surpassed its initial $200 million target and will continue the firm’s investment focus on the industrials space, including industrial products, services and distribution.

Corbel Capital Closes Lower-Middle Market Fund. Corbel Capital Partners, a lower middle-market investment firm, has closed its latest fund with more than $200 million in capital commitments. Corbel Equity Partners SBIC (CEP III) will target businesses with less than $20 million in EBITDA in partnership with independent and private equity sponsors.

Victor Capital Raises $310 Million for Fund II. Victor Capital Partners, a middle-market private equity firm focused on branded businesses in the consumer, industrial technology and business services spaces, has closed its latest fund. The firm secured $310 million in capital commitments for Victor Capital Partners Fund II, exceeding its fundraising target.

Insights

S&P Analysis Eyes Declining PE Exit Value. New analysis from S&P Global Market Intelligence found that while private equity exit volume increased 10% year-over-year in the first three quarters of the year, the value of those exits has declined. The report pointed to fewer big-ticket exits from larger PE firms as a key factor behind the drop. Firms produced 1,700 exits in the first three quarters of 2024.

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.