Linsalata Wraps Fund VI At $427M With Help From New Investors

The Mayfield Heights, Ohio-based buyout shop closed the fund, Linsalata Capital Partners VI LP, on June 20 but has not announced it yet. That announcement should be made in the next week or so.  

Linsalata Capital reached its target despite a fundraising environment that looks a lot different than when the firm raised $425 million for its fifth fund in 2005. Limited partners yield more power today, and the firm needed some new investors to make up for three commercial banks that could no longer invest in the fund because of provisions in the Dodd-Frank financial reform law limiting banks involvement with private equity funds, Senior Managing Director Eric Bacon told Buyouts. New investors include the New Mexico Public Employees Retirement Association, which committed $20 million. Previous investors that re-upped include the Ohio Police & Fire Pension Fund, which committed $25 million.

“Is it harder? Yes, it’s harder,” Bacon said, adding he agrees with a lot of the changes in fund terms to favor LPs. “And so it just meant we needed to go meet more people and that takes time.”

While the fund maintains a 2 percent management fee and 20 percent take of carried interest, Bacon said the firm has made concessions to LPs in Fund VI as well as previous funds in areas such as clawback provisions, though he declined to discuss specifics. While LPs have more power these days, Bacon sought to put the trend in context.

“I would say terms have continued to move to the LP, but that’s a process that’s been happening for 25 years,” Bacon said. “Every fund we’ve done has gotten a little bit better for the LPs.”

A generalist firm, Linsalata Capital eyes deals in business services, consumer packaged goods and pet products and services, among several other sectors, typically investing $10 million to $50 million of equity in companies generating EBITDA between $7 million and $50 million. With Fund VI, the firm is also looking to do more deals in health care, food and beverage, and aerospace and defense, which are sectors in which the firm first invested with Fund V.

The firm launched Fund VI in early 2011 and raised the vast majority of the fund within a year, but left it open a few months for a few stragglers.

Linsalata Capital has been relatively quiet on the deal front of late. Its most recent acquisition and and its first investment in the health care sector was in February 2011, when it bought NeuroTherm Inc., a manufacturer of radio frequency generators and other products used in interventional pain management. Its most recent exit appears to have come in April 2011, when it and Resilience Capital Partners sold Lund International Holding Co., a designer and manufacturer of truck accessories, to Highlander Capital Partners.

Chairman Frank Linsalata, a former CFO of Cleveland-based manufacturer Midland-Ross Corp., founded Linsalata Capital in 1984. The co-presidents and senior managing directors are Bacon and Stephen Perry, who had also held a series of management positions at Midland-Ross prior to joining Linsalata Capital in 1998. The firm has about 12 investment professionals total.