Target: Fluoro-Seal Holdings LLC
Price: $30 million to $60 million (equity)
Sponsor: Arsenal Capital Partners
Sellers: Founders Bill Brown, Monty Ballard
Financial Adviser: Sponsor: Madison Capital Funding, LBC Credit Partners;
Legal Adviser: Sponsor: Kirkland & Ellis LLP
New York-based Arsenal Capital put up between $30 million and $60 million of equity for the Houston-based company, which generates EBITDA in the “mid-teens,” Televantos said. Arsenal Capital paid a purchase price multiple of between 6x to 8x EBITDA, he said, and provided 35 percent to 45 percent of the purchase price with equity.
Madison Capital Funding and LBC Credit Partners, a Philadelphia-based mid-market lender, are providing financing for the deal. The lead bankers for the firms on the deal are Grant Haggard of Madison Capital and Homyar Choksi of LBC Credit Partners.
Fluoro-Seal treats plastics to prevent container distortion, odor emissions and flavor or fragrance loss, among other purposes. It serves several markets, including agriculture, automotive, industrial and consumer cleaning, personal care and pharmaceuticals. The company’s business fits well with Arsenal Capital’s expertise of buying companies in the specialty chemicals and materials sectors.
The company, which operates 15 plants in the United States, caught Arsenal Capital’s attention due to its strong cash flow and its development of its own technology, among other attributes, Televantos said. The company has a small international presence, which Arsenal Capital hopes to expand by getting more business from companies in Europe, South America and Asia, he said.
“We believe a lot of the inherent technology has yet to be exploited, and that the company also has some new applications that are interesting niches that we want to grow,” including in the medical, marine and industrial sectors, Televantos said.
The sellers are Bill Brown and Monty Ballard, who co-founded the company in 1983. Both will retain minority stakes in the company.
Arsenal Capital is making the investment out of its $500 million second fund, raised in 2006.
Terry Mullen and Jeff Kovach left