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An Overview ofCapital Sources for
Independent SponsorsPresented by Opus Connect
Moderator:Rich Erickson, Red Oak Growth Partners
Panelists:Tom Affolter, Victory Capital Partners
Tom Henderson, Accord FinancialChris Sheeren, Huron Capital PartnersMichael Teplitsky, Wynnchurch Capital
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• Please submit your questions via “Q&A” to “All Panelists”
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Questions for the panel?
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• Founded by Lou Sokolovskiy
– Founder of Genero Capital Partners
• Chapters: LA, NY, San Francisco, Chicago, Orange County
– Monthly seminars
– Specialty: webinars, Deal Connect “speed-networking”
• Membership by invitation only
– Only accomplished senior executives, vetted by selection committee
• Intimate, productive events3
Red Oak Growth Partners Overview Founded Late-2012 by Rich Erickson and Conor Mullett
‒ Combined 50+years of investment and operating success in technology and business services companies
‒ 9+ years prior experience together as General Partners at Updata Partners ($450mm AUM)
‒ First Red Oak investment Q2 2013, Card Scanning Solutions
Firm Strategy
‒ Investments funded deal by deal with institutional and family office partners
‒ Building a concentrated portfolio (3-4 Companies), with very active “hands-on” involvement
‒ Economics built in at company or investor level – fees and performance driven equity ownership
Investment Approach
‒ Target profitable, lower middle market private companies in North America ($2mm -$15mm EBITDA)
‒ Sectors – technology and business services with consistent repeat / recurring customers
‒ Control transactions: majority recapitalizations, buy-outs, corporate divestitures
‒ Generate consistent investment performance (low loss ratio)
‒ Focus on multiple expansion post-investment to drive superior returns
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9+ Years Investment Experience:
‒ Direct investing experience as a General Partner at Updata Partners and Red Oak Growth Partners in both majority and minority transactions
‒ Helped raise and invest two institutional private equity funds totaling over $375mm
‒ Led, sourced, and actively managed investments including Acclaris, Card Scanning Solutions, Interactions, Jobs2Web, RES Software, and Redvision
22+ Year Operating Career in Technology and Business Services, including:
‒ CEO of publicly-held Managed and IT Services Company –Alphanet Solutions (ALPH-NASDAQ) sold to Ciber (CBR-NYSE)
‒ Senior operating executive for 2,000+ employee web consultancy (IXL-NASDAQ)
‒ Founder of bootstrapped, high-growth managed services provider focused on the finance vertical that was monetized through acquisition by a public company
‒ Bachelor of Science – Mechanical Engineering, Villanova University
Co-Founder Red Oak Growth Partners
Rich Erickson
Rich EricksonE: [email protected]
P: 917-991-7691
Conor MullettE: [email protected]
P: 973-464-6455
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Victory Park Capital – Firm Overview
Victory Park Capital (“VPC”) is a privately held, registered investment advisor dedicated to alternative investing.
As specialists in less efficient markets, we focus on niche credit and private equity opportunities in both distressed and improving U.S.-based lower middle market companies. Whether as a lender or a control investor, Victory Park Capital looks to identify situations on behalf of our LP’s where we believe the potential for reward outweighs the risks entailed.
Founded in 2007, our headquarters are in Chicago with additional resources in New York, Boston and San Francisco.
Contact Information
Tom AffolterPrincipal
T | 312 705 2791
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Why Victory Park Capital
Experienced Team
More than $1.5 billion of investments across 40 transactions
Investment professionals average 15 years of experience with extensive underwriting and operating capabilities
Complimentary backgrounds as investors, operating professionals, advisors and service providers
Focus on Complex Transactions
Distressed or special situations
Out-of-favor industries
Inconsistent or concentrated earnings
Expertise to restructure and operate a business if necessary
Asset light businesses
Value Added Partner
Companies have many options for capital, so VPC works hard to earn a borrower's business
VPC is responsive to all inquires and provides a confidential, secure process with certainty to speed and close
VPC team has established a track record of successful transactions
Flexible Capital
Invests across the capital structure
Control and non-control investment opportunities
Creativity and flexibility in complex unique situations
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Business FocusTransactions Types
Acquisition Financing
Asset/Equipment Financing
Bankruptcy Related
Exit Financing
Growth Initiatives
Lender Transaction
Recapitalizations
Restructurings
Special Situations
Turnaround & Workouts
Company Criteria
EBITDA <$35M
Solid Collateral Value
Strong or Improving Fundamentals
Committed Management Teams
Identifiable Value Creation Catalysts
Financing Focus / Structure
Invest $5 million to $100 million per Transaction
Sponsored and Non-sponsored Transactions
Target Industries
Business Services
Consumer / Retail / Restaurants
Distribution
Energy
Healthcare
Industrials
Manufacturing
Specialty Finance
Transportation
Products
Term Loans
Revolving Credit Facilities
Unitranche Facilities
Convertible Debt
Bridge Loans
DIP Financing
Control, Minority or Structured Equity
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Selected Investments – Financing Transactions
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Selected Investments – Control Investments
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Distinctive Senior Debt Solution
Provider for Lower Middle Market
Businesses in the U.S. and Canada
Tom HendersonPresident and CEO
Accord Financial Corp.Direct: (864) 527-1407
Facility Size (in millions)• $1-$20
Purpose• Acquisitions (many
with no equity check)
• Growth Capital• Turnaround/
restructuring
Business Segments• Manufacturers• Wholesalers• Business Services• Retailers &
e-commerce• Specialty Finance
Financing Structures• Accounts receivable
– domestic & foreign
• Inventory revolvers• Term loans – M&E
Client Benefits• Speak directly with
decision makers (no BDO’s)
• Speed & certainty of close
• Creative financial solutions
• Do not take upsides
About Accord35 + year history
Publicly traded (TSX:ACD)Strong balance sheet
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Who is Tom Henderson?
• Position: Tom joined Accord in 1998 and hisoutstanding productivity and people skills ledto his elevation to president of our U.S.finance business in 2001. He was appointedpresident and CEO of Accord Financial Corp. in2009.
• Experience: Tom began with Heller Financial inChicago, formerly one of the largest financecompanies in the world, where he eventuallysupervised all of their overseas operations inAsia and Australia.
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What does Accord look for in an Independent Sponsor?
• Value buyers with ability to execute multiple transactions per year.
• Hands-on experienced operators that turn underperforming companies into valuable enterprises.
• Transaction discipline: willing to walk away from bad deals.
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Based in Detroit since 1999, with a satellite office in Toronto
Over $1.1 billion in capital raised across four funds
Target industries: niche manufacturing, consumer, healthcare and business services
Revenues of up to $200 million
EBITDA of at least $5 million
Majority investor, in companies based in the U.S. and Canada
Have done four independent sponsor deals; looking to do one a year
Operations oriented; our professionals have diverse backgrounds
Who Is Huron Capital?
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Position: Partner with Huron Capital. Joined in 2004. Portfolio responsibilities have included specialty chemicals, auto aftermarket, building products, lab testing, and others.
Experience: Previously worked in turnaround consulting (interim CFO), public accounting, and sales. Registered CPA. Don’t hold that against him.
Education:
B.A. from the University of Nebraska
M.B.A. from the University of Michigan
Family: Four children (17, 15, 14, 11)
Interests: College football, basketball,
fantasy baseball, theater
Who Is Chris Sheeren?
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Ideally, a proprietary opportunity
Reasonable terms
Transparency
Industry expertise
From the sponsor’s background, or
In the form of an executive
What does Huron look for in an IS?
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Wynnchurch Capital – Background and Focus
• Founded in 1999, Wynnchurch Capital is an operationally focused private equity firm
• Team: 22 experienced professionals in Chicago, Detroit and Toronto
• Portfolio: 20 active platform companies, with combined sales of over $2 billion
• Capital: over $360 million available for new investments; over $1 billion under management
• Experience: invested in more than 40 companies, with combined average annual sales of $6 billion
• Value Creation: use lean manufacturing and other quality tools to drive performance improvement
• Focus on Complex Transactions in the Industrial Sector
• Industries: Aerospace & Defense, Automotive & Transportation, Building Products & Materials, Capital Goods, Chemicals, Energy & Power Services, Industrial Products, Logistics & Distribution, Metals & Mining, and Paper & Packaging
• Situations: corporate carve-outs, succession planning, management-led buyouts, turnarounds, underperformers, special situations, recapitalizations, out-of-favor industries
• Company Size: revenues of $50 - $500+ million for new platforms; any size for add-ons
• Equity Investment: $10 - $90 million per transaction; significant additional LP co-invest available
MICHAEL TEPLITSKY
– Experience includes transactions involving family businesses, corporate carve-outs, underperforming companies and restructurings
– Focus on niche manufacturing, industrial services, transportation and natural resources. Significant experience in energy services and equipment industries
– Played a key role in Northstar Aerospace, U.S. Pipe, and NSC Minerals investments
– Formerly at Lime Rock Partners and UBS Investment Banking Department
– B.A., Northwestern; M.B.A., Kellogg School of Management
Michael TeplitskyChicago
(847) 604-6120
Wynnchurch Capital – Management Sponsored Buyouts
Wynnchurch is a value-added partner to teams seeking to position their businesses for profitable growth
Pro-Fab Group Inc.
Safeworks, LLC
2010
2006
Surepoint Technologies Group Inc.
2008
NSC Minerals Ltd.
Groupe Moreau
Loadmaster Derrick & Equipment, Inc.
Portfolio Company Sector YearBusiness Description HeadquartersSample Product
Energy Equipment & Services
Derricks and related offshore and onshore equipment and services
2012Broussard, LA
2011Saskatoon, SKProducer and distributor of rock salt
Chemicals
www.loadmasterderrick.com
www.moreauelectrique.com
www.nscminerals.com
www.profab.ca
www.safeworks.com
www.surepoint.ca
Mining Construction
Electrical and mechanical services 2012Rouyn-Noranda, QC
Saint-Apollinaire, QCHigh-quality modular homesBuilding Products
Calgary, ABIndustrial instrumental and electrical services
Energy Services
Seattle, WAPowered suspended access and safety solutions
Safety Products
Foss Manufacturing Company, LLC Niche
Manufacturing Specialty engineered fibers 2012Hampton, NH
www.fossmfg.com
Detroit Tool Metal Products, Co. Manufacturing Precision metal stampings, fabricated
components2013Lebanon, MO
www.dtmp.com
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JAC Products, Inc.
Senco Brands, Inc.
Humanetics Innovative Solutions
Henniges Automotive, Inc.
AxleTech International
2010
2009/2010
2012
Portfolio Company Sector YearBusiness Description HeadquartersSample Product
www.uspipe.com
www.jacproducts.com
www.humaneticsatd.com
www.senco.com
www.hennigesautomotive.com
www.axletech.com
Water Infrastructure Birmingham, AL
2009Building Products
Fastening tools for residential and commercial construction
Cincinnati, OH
Automotive Detroit, MI
Roof rack systems and cargo management products
Automotive Pontiac, MI
Safety testing instrumentation and measurement equipment
Testing and Measurement
Plymouth, MI
Troy, MIAftermarket, Automotive
2007 - 2010Sold to Financial
Investor
2002 – 2008Sold to Financial
Investor
Ductile iron pipe products, fittings and joint restraints. Acquired from Mueller Water Products, Inc. (NYSE:MWP)
Vehicle sealing systems and anti-vibration products. Acquired from Metzeler Automotive / GDX Automotive
Specialty vehicle drivetrain systems. Acquired from ArvinMeritor(NYSE:ARM)
Northstar Aerospace, Inc.
2012Aerospace & Defense
Manufacturer of military and commercial aircraft applications
www.nsaero.com
Bedford Park, IL
Wynnchurch Capital – Carve-Outs, Underperformers, Turnarounds
Wynnchurch Capital specializes in underperforming and cyclical businesses facing operational or market challenges which require a systematic approach to solving problems and improving performance
United States Pipe and Foundry Company, LLC
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What do you like about working with the IS
model?
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What does Accord like about working with the IS Model?
• More decisive/ Prefer aggressive closing dates
• Not bureaucratic/ Imaginative in getting seller agreement
• Willing to consult on business model with lender
• Willing to pay a fair price for debt recognizing the control trade-off
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How do you build relationships with the IS?
How do you identify and maintain communications
with them?
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When do CPs like to see a potential deal from an IS:
before or after exclusivity?
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Do you want to have terms pre-defined or be
actively involved in defining them prior to
exclusivity?
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What are the key economic components of your
relationship with the IS?
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What are some of the challenges you face when
working with an IS?
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Q&A with the Panel
• Please submit your questions via “Q&A” to “All Panelists”
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Thank you!
• You will receive:– Survey about today’s webinar
– Contact information for our panel
– Link to a recording of today’s webinar
• Questions? Contact Nick Zobel ([email protected])– Potential members are invited to attend TWO Opus Connect chapter
meetings free of charge.
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