PE Weekly: Transactions Target Business Consulting and Advisory Across Specialties

After a bit of a lull last week, middle-market M&A kicked off the new month with a flurry of deals, as well as the close of several new funds. Add-ons continue to dominate the dealmaking landscape, and this week, consulting and advisory services land as a top target for acquirers. It’s a sector spanning a variety of specialties, including wealth management, healthcare, communications, public relations and technology. Explore the latest platform investments, add-ons and exits, plus new funds and insights, below.

Platform Investments

Morgan Stanley Capital Partners Acquires HOA Property Management Company. Morgan Stanley Capital Partners, the middle-market private equity unit of Morgan Stanley Investment Management, announced its acquisition of RowCal, which provides outsourced homeowner association (HOA) property management services. The business currently serves the Minnesota, Colorado and Texas markets and has already scaled via organic growth and strategic acquisitions. The investment marks the firm’s third this year, following acquisitions of Apex Companies and Allstar Services.

Hildred Capital Acquires Pharmacy Services Business. Hildred Capital Management, a middle-market private equity firm focused on the healthcare industry, announced its acquisition of AleraCare, a provider of infusion and specialty pharmacy services across the country. In a statement, Hildred co-founder and managing partner Andrew Goldman pointed to the company’s “sizable market potential, excellent growth prospects, attractive innovation opportunities and manageable pricing trends and competition.” AleraCare will use Hildred’s backing to enhance its existing patient platform and expand geographically.

Everlane Backs Fund Administration Services Company. South Watch, a provider of outsourced fund administration services, has secured backing from middle-market private equity firm Everlane Equity Partners, a press release said. The investment will help South Watch strengthen its market position, said the company’s founder and co-managing partner Paul Timmins.

Crestview Invests in Talent Agency Gersh. Talent agency The Gersh Agency announced it secured investment from middle-market private equity firm Crestview Partners. Gersh co-presidents Bob and David Gersh, as well as Crestview head of media and co-president Brian Cassidy, will maintain a majority interest in the company. Crestview’s investment will help Gersh accelerate its growth across borders and expand resources to support its staff and clients.

Argosy Acquires Plywood Manufacturer. Argosy Private Equity, a lower middle-market private equity firm, has acquired Richwood Industries, a manufacturer and distributor of composite panels, plywood, dry-erase boards and more. The investment involved a partnership between Argosy and private equity firm Stone River Capital Partners, marking Argosy’s fourth joint investment with Stone River, a press release said. Argosy noted that it continues to seek acquisition and add-on opportunities in the niche manufacturing space.

Add-Ons

O2’s Frontier Dental Acquires Friendship Dental. Frontier Dental Lab Group, a dental lab platform and portfolio company of lower middle-market private equity firm O2 Investment Partners, announced via press release its acquisition of Friendship Dental Laboratories. Friendship is a full-service dental lab operating in the Mid-Atlantic region. In a statement, O2 vice president Jimmy Frye said Friendship is “highly complementary to FDL Group and will bolster the platform’s presence in the Mid-Atlantic.”

Coral Tree Partners’ Subject Matter Merges With Kivvit. Subject Matter, a portfolio company of middle-market private equity firm Coral Tree partners, has merged with Kivvit. To form Subject Matter+Kivvit, a communications and marketing firm providing a range of services including digital strategy, government relations and data analytics. Subject Matter was acquired by Coral Tree last year, a press release noted. “The combination of these two firms not only establishes a sizable new entity with a national footprint, but also positions the combined agency for immediate growth,” stated Coral Tree partner Will Wynperle.

Demopolis Equity Acquires Tyfone, Merges FinTech with Cubus Solutions. Impact-oriented middle-market private equity fund Demopolis Equity Partners has acquired digital banking solutions provider Tyfone and subsequently merged the business with industry peer Cubus Solutions. The combined entity will operate under the Tyfone brand, driving adoption of its nFinia digital banking platform for financial institutions. In a statement, Demopolis managing partner Tim Greenfield said the combined business is “well-positioned to lead the next wave of innovation in the community banking sector.”

Svoboda Capital Exits Communications Agency to Broad Sky. Broad Sky Partners, a middle-market private equity firm targeting business services and consumer companies, has announced its investment in communications and public affairs agency Bully Pulpit Interactive. The company was previously a part of the Svoboda Capital Partners portfolio. Broad Sky says it plans to wield its network, industry expertise and value-creation capabilities to grow Bully Pulpit Interactive through organic growth and M&A. The firm will support development of platforms that can measure the impact and growth of BPI’s employee base.

Gemspring’s Amplix Acquires Tech Advisor Intervale. Amplix, which provides technology advisory services and software, has announced its acquisition of tech advisor Intervale Technologies. Amplix is a portfolio company of middle-market private equity firm Gemspring Capital, and will integrate Intervale’s audio/visual and structured cabling services into its existing suite. Intervale will continue to operate as a preferred partner of Amplix, the announcement noted.

Northlane Capital’s VGM Announces Healthcare Consulting Acquisition. Northlane Capital Partners portfolio company VGM Health has announced its add-on acquisition of BSM Consulting, a specialist healthcare consulting firm. BSM services include consulting and compliance across ophthalmology, medical aesthetic and ambulatory surgery. In a statement, BSM president and CEO Judy Williams described the transaction a “an inflection point in BSM’s growth trajectory.”

Argyle’s TRS Components Announces Merger-of-Equals with Terra Nova Truss. TRS Components, a roof truss manufacturer and portfolio company of middle-market private equity firm Argyle Capital Partners, has announced a merger-of-equals with Terra Nova Truss, also a roof truss manufacturer. The companies both operate in the Ontario region. The combined entity includes four manufacturing facilities that expands its geographic reach within Canada as well as Michigan. Argyle first acquired TRS in July of 2022, a press release noted.

Atar’s Keypoint Intelligence Acquires ProPointPerformance. Keypoint Intelligence, a global data and market intelligence firm for the digital print industry, and a portfolio company of lower middle-market investment firm Atar Capital, has acquired Sweden-based ProPointPerformance. The investment allows Keypoint to expand globally and solidify its market position in the consulting, training, platform development and testing space for the print industry.

Odyssey Portco Applied Technical Services Announces Three Add-Ons. Critical testing and inspection service provider Applied Technical Services, a portfolio company of private equity firm Odyssey Investment Partners, has completed three add-on acquisitions, a press release said. The business acquired Process Instruments, Instrumentation Technical Services and Accu-Chek. The investments bring the number of add-on acquisitions for Applied Technical Services to 22 since Odyssey first acquired the business in December of 2020.

Iron Path’s Capitol Pain Institute Acquires Nura Pain Clinics. Capitol Pain Institute, a pain management platform company part of the Iron Path Capital portfolio, has acquired Nura Pain Clinics. The deal that allows the. Company to expand its network of clinics and ambulatory surgical centers across the Midwest. In a statement, Iron Path co-founder. Rob Reistetter pointed to Nura’s “strong clinical leadership” as well as its industry reputation, specialization capabilities and contribution to scientific research as key factors that drove the investment.

Exits

Argyle Capital Exits Footage Tools. Middle-market private equity firm Argyle Capital provided details into its exit of Footage Tools, a tool manufacturer targeting the gas, water and underground utility markets. Argyle completed the exit in March and said in its announcement that the sale led to proceeds representing a 10x multiple and net IRR of 75% for investors. Argyle first acquired the business in 2017 in a majority buyout, and sold the business to Huntstone Capital.

Audax Recaps Investment Advisor Exited by CI Financial. Audax Private Equity, a middle-market alternative investment manager and capital partner, announced its recapitalization of registered investment advisor Congress Wealth Management, a press release said. The transaction involves CI Financial, a Canadian investment management firm, selling its stake in the company. Congress targets high net-worth individuals, foundations and endowments, and family offices with wealth management and financial planning services. Audax will apply its buy-and-build approach to grow Congress via strategic acquisitions.

Kinderhook Industries Exits Waste Management Company to Covanta. Investment firm Kinderhook Industries is exiting waste management business Circon Holdings to Covanta Holding Corporation, investment bank Brown Gibbons Lang & Company announced in a press release. Covanta will be able to double its wastewater footprint through the acquisition, as well as expand its engineered fuels business five-fold. The additional also grows Covanta’s geographic footprint in the Golf Coast and Midwest, marking the company’s largest single acquisition in 20 years. BGL advised Circon in the transaction.

Fundraising

Genstar Capital Raises $12.6 Billion for Fund XI. Genstar Capital, a middle-market private equity firm, announced the close of its Fund XI with $12.6 billion in capital commitments. The firm will continue to focus on control investments in middle-market companies, targeting the financial services, healthcare, industrials and software markets across North America. The fund follows Genstar’s close of Genstar Capital Partner X in April of 2021.

Kian Capital Closes $400 Million Third Fund. Kian Capital Partners, a lower middle-market private investment firm, announced the close of its third fund, Kian Growth Partners III, with $400 million in capital commitments. The fund was oversubscribed, with existing LPs joined by several new lower middle-market investors, the press release noted. “KGP III will strengthen our commitment to the lower middle-market, and allow us to continue helping businesses professionalize and scale within our four core sectors—consumer, services, value-added distribution and specialty manufacturing,” stated Kian co-founder and partner Rick Cravey.

Pacific Avenue Capital Closes First Fund. Pacific Avenue Capital Partners, a private equity firm specializing in corporate divestitures in the middle market, announced the close of its first fund with more than $500 million in capital commitments. Pacific Avenue Fund I was oversubscribed, a press release said, and so far has one platform investment, Sunrich Products, a sunflower product provider. Pacific Avenue has already reached an agreement for a second acquisition, Resin Solutions, a deal expected to close in the year’s third quarter.

Red Arts Capital Raises $270 Million for Supply Chain Investments. Middle-market private equity firm Red Arts Capital, which specializes in the supply chain and logistics sector, announced $270 million raised to close its latest fund. The firm surpassed its initial target of $225 million. “The strong support from our investment partners will energize our efforts to help grow durable businesses in the supply chain sector,” said Chad Strader, the firm’s co-founder and managing partner. The funding follows the firm’s exit of Midwest Motors Express for $150 million.

Noble Capital Poised to Launch Four Late-Stage Funds. Private equity firm Noble Capital has announced its plans to launch four new funds, collectively addressing what Noble describes as the “Founder’s Dilemma.” The funds will target late-stage small and middle-market businesses at a crossroads, facing the decision to “sell, snail or scale their enterprise,” the firm said in its announcement. The funds will partner with the founders of these businesses to drive growth and transition their boards. Noble focuses on investing in real estate alternatives, family office services, mission-critical trades, and business accelerators. The funds will target capital commitments of $80 million and plan to be launched this month.

Insights

Brightstar Capital Releases Survey Eyes Family Business Succession Planning. Middle-market private equity firm Brightstar Capital Partners, along with Campden Wealth, released their North America Family Business Report 2023, finding challenges for family-owned businesses that lack a succession plan. Sixty-one percent of family businesses surveyed lack a formal succession plan. Meanwhile, 60% say they are concerned about a market downturn, and 75% point to rising interest rates as a top concern.