Blue Capital Management LLC, a buyout firm based in New York and Los Angeles, this month made its first purchase of the year, taking a controlling interest in Stravina Operating Co. LLC, a supplier of personalized novelty and gift items. The terms of the transaction are undisclosed.
Blue Capital, along with management, acquired 100% of the company from Milestone Partners, a Rosemont, Penn.-based firm that acquired Stravina in 1999. Union Bank of California provided the senior debt for the deal, while American Capital Strategies provided mezzanine. Crescent Private Capital also provided financing for the deal.
Stravina, which was advised by Harris Williams & Co. through the buyout, sells products such as pens, holiday ornaments, photo frames and party goods under the brand names Stravina, Fason, Funworks, Artistic Impressions, and Bloom Brothers. Robert Taylor, a managing director and co-founder of Blue Capital, said one of the firm’s attractions to Stravina was its business model, which bears a great deal of resemblance to its successful portfolio company Decorative Concepts Inc., which designs and distributes home decor items, including giftware. “I think Harris Williams sought us out because of our Decorative Concepts investment,” said Taylor. “There’s a great deal of similarities in the business models.”
R. Giles Tucker, vice president at Harris Williams & Co., concurs that Blue Capital seemed like a good fit with Stravina based on their common location in Los Angeles and Blue Capital’s experience in the space.
Taylor said the fact that it was a leader in an attractive sector as well as led by a strong management team also made Stravina an attractive buyout. The company falls into two categories of products, gifts and novelties, both of which show room for growth. Gifts is a $55 billion market, while novelties is approximately $8 billion.
Though Taylor would not reveal the purchase price, he said Stravina is a perfect example of the type of lower middle-market buyout Blue Capital targets. Generally, the firm looks to take a controlling stake in companies with revenue between $40 million and $100 million, and he said Stravina falls in that range. The previous owner, Milestone Partners, seeks investments in companies in a $10 million to $50 million valuation range.
“Our plans are to continue to build on the success [Stravina’s] had to date and to continue to grow the company in its current channels,” said Taylor. “There are opportunities to grow by adding new customers, as well as new product introduction, and then there’s the potential for add-on acquisitions.”
Sheldon Morick will continue to lead the management team at Stravina.
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