Exits: Rosecliff Finishes Investment Wrap-Up –

New York-based buyout firm Rosecliff Inc. in March exited its last significant investment, FreshPoint Holdings, merging it with SYSCO Corp., the largest food distributor in the U.S. This exit brings Rosecliff to the tail end of its two year wind-down following the death in June 1998 of Peter Joseph, founder of the firm.

FreshPoint, based in Dallas, has 28 facilities throughout the U.S. and Canada, generating approximately $750 million in revenue in 1999. “FreshPoint’s product expertise, strategic locations and specialized delivery capabilities will allow us to pursue our objective of being the leading national produce supplier,” said Thomas Lankford, SYSCO’s executive vice president , in a statement.

FreshPoint was formed in 1996 when Rosecliff acquired the U.S produce distribution assets of Albert Fisher Group PLC for $115 million.

The value of the transaction with SYSCO was undisclosed, but John Geisler, acting co-general partner and president at Rosecliff said the exit provided “excellent returns”. Salomon Smith Barney advised FreshPoint on the deal.

Rosecliff was once a middle-market-focused firm with an average of $150 million under management on a pledge fund basis. With an eye toward opportunity, Rosecliff invested anywhere from $800,000 to $22 million per deal. It bought majority stakes in such companies as valve manufacturer Ames Company Inc., later sold to Watt Industries Inc., and Vermont Castings Inc., which produces cast-iron stoves and fireplaces, later sold to CFM Majestic Inc. (BUYOUTS March 25, 1996, p 12).

Then in 1995, Joseph was diagnosed with cancer and “that was the beginning of the end of his business,” said Geisler.

“The way Rosecliff was managed the last few years before Peter died, it was not a traditional fund,” said Geisler. “It was a lot of Peter investing his own capital with a bunch of other investors [on a] quasi-pledge fund basis.”

Without the additional capital that had been provided by Joseph, Rosecliff’s strategy shifted to maximizing value and distributing assets to the limited partners, according to a statement.

A month before Joseph’s death, Geisler was appointed to his current position where he and Stephen Testa are divesting Rosecliff’s assets. He plans to put the remaining assets into a liquidating trust once the other investors agree.

Geisler will be joining another private equity firm in New York when he leaves Rosecliff, but he could not comment further at this time.