Chicago-based Frontenac Co. last month led an investor group in the acquisition of Nth Degree, a trade show and event marketing service company, providing one-third of the equity for the deal. Among the other investors in the deal are Lake Capital, PPM America Capital Partners LLC, Banc One Venture Partners, and Svoboda Collins LLC.
The total equity commitment into the deal was $150 million, of which Frontenac provided $50 million. The deal also has a $25 million credit facility, provided by an affiliate of PPM America, that the investors are looking to expand as the company makes acquisitions.
Frontenac, a private equity firm that prefers investments in telecommunications, information infrastructure and business services, had been actively looking for a deal in the specialty marketing solutions space when the Nth Degree transaction came to its attention. “It’s a very large, growing industry and relatively recession resistant,” said Tom Salentine, a principal at Frontenac. “It’s really an increasingly indispensable marketing tool for any company that wants to take a specific message to a target audience.”
In the case of Nth Degree, Frontenac liked the size of the company and the opportunity to grow the business and to partner with Lake Capital again on a specialty marketing services company, Salentine said.
“Right now it’s a very solid, stable business, and what we plan to do is add on businesses that will complete the total solution on the face-to-face marketing side,” he said. “So we’ll add pieces that are a little more consultative, a little more specialty marketing services-oriented, [such as] event planning.”
Nth Degree, which has revenues close to $100 million, is Frontenac and Lake Capital’s third investment together in this space in two years. The first two deals were the buyout of DVC Worldwide, a sales promotion company, and the buyout of Lighthouse Global Network, a marketing services company later sold to Cordiant Communications Group Plc.
“We had a number of successes in specialty marketing services and are always out there looking for new opportunities,” said Salentine.