Pittsburgh Shop Expands B-2-B Outsourcing Portfolio

Target: APEX Analytix, Inc.

Price: Approximately $40-50 million

Sponsor: PNC Equity Partners

Seller: Noro-Moseley Partners, Wakefield Group

Financial Adviser: Seller: Raymond James

Legal Adviser: Sponsor: Cohen & Grigsby P.C.

PNC Equity Partners is expanding its outsourced business services portfolio but at a more expensive price than it is used to. On May 8, the Pittsburgh-based firm bought APEX Analytix Inc., a Greensboro, N.C., provider of profit recovery audit services, from two venture capital firms.

Jack Glover, a partner with PNC Equity, declined to discuss the exact price range, but said it was smack in the middle of the firm’s typical equity check of $10 million to $30 million for companies with enterprise values of $25 million to $125 million. The firm obtained senior financing from Union Bank of California, led by Vik Thadani, vice president, and Gerald Ford, senior vice president. Pittisburgh-based TriState Capital Bank also contributed to the senior debt, and Babson Capital Management provided sub-debt. Glover said the firm paid equal parts equity and debt for the deal, which is a substantially higher equity component than the firm would prefer. Before the financing market crashed, Glover said PNC Equity would typically finance its deals with 70 percent debt.

APEX Analytix attracted PNC Equity executives because of its specialty in helping companies cut costs, a common objective during a recession. The company charges no up-front fee, but takes a cut from whatever savings it obtains after examining a client’s books. APEX Analytix professionals look for human and technical errors—for example, paying a vendor multiple times or paying, say, $19,280.00 when a bill was for $1,928.00. Most of its clients are Fortune 1000 companies. “In tough economic times, companies continue to look for ways to save money,” Glover said.

PNC Equity has experience in the sector. In 2001 it bought Receivable Management Services Corp., a division of Dun & Bradstreet Corp. that that offers similar services.

Glover and his team are currently scouting add-on opportunities and see domestic and international growth possibilities for the company. Specifically, PNC Equity pros want to expand the company’s retail industry client base, Glover said.

The investment comes out of PNC Equity Partners II LP, a $272 million fund closed in August 2007 that, with the APEX Analytics deal, is about 40 percent invested. PNC Equity is the private equity affiliate of PNC Financial Services Group.

APEX Analytics is PNC Equity’s first platform investment since September 2008, when it bought The Orthotic Group, a Markham, Ontario-based company that makes sandals, athletic footwear and heel lifts.