The Private Business Owner

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A Different Focus for Private Equity Firms: Geographic

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Quite often I focus on equity firms and/or strategics that have an industry focus. These companies specialize in, or are looking to acquire, middle-market companies that have operations in certain industries that would be good matches for their existing portfolio companies. A few days ago for example, we looked at a synergistic acquisition by Monitor Capital Partners that allowed them to expand into a new end-market via the acquisition of a contract manufacturer in the OTC space.

You may not be aware of this but some equity firms actually have a geographic focus. They typically are industry agnostic, meaning that they acquire companies in a wide range of industries, but the common denominator in their acquisitions is that they are all located in a specific geographic vicinity. One example of this is the recent announcement by Palm Beach Capital that it has raised $133.5 million for its third fund. According to the press release, Palm Beach Capital “invests in lower middle-market companies located mainly in the state of Florida.” [Read more…]

Case Study: The Perfect Example of A Synergistic Add-On

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In prior postings we have defined an “add-on” as the acquisition of a company by an equity firm that is “added on” or “bolted on” to an existing platform company. In most cases the equity firm will make a number of add-on acquisitions to a platform company. The goal is to grow the initial platform investment into a larger entity and using economies of scale and synergies, enable the growing new entity to expand into new markets, improve profitability and sustain its growth. Ultimately after a number of add-ons the new, larger entity will either be taken public or sold.

Last week I came across a deal that gives you a picture of this in action. It was recently announced in the M&A press that Monitor Clipper Partners (MCP) acquired the assets of Pharmetics Inc., a Quebec-based maker of vitamin, mineral and dietary supplements. It turns out that Pharmetics is a leading OTC and nutrition contract manufacturer specializing in the retail brand market. Pharmetics is dedicated to promoting health and wellness through the development of the highest quality standards of products.

After reviewing the announcement, I was curious why Monitor Clipper Partners had made this specific acquisition. So I did a little research and I found that MCP has a portfolio consisting of 16 companies. Although a number of their portfolio companies are in the medical field, it appears that Monitor is “industry agnostic,” meaning that they invest in companies operating in a number of industries. [Read more…]