Prophet Buys Supply Co. From Behrman

Target: Public Safety Supply Resources

Price: Undisclosed

Sponsor: Prophet Equity

Seller: Behrman Capital

Prophet Equity, a young turnaround shop based in Dallas, has acquired Chief Supply and Law Enforcement Supply from Brooks Equipment Company, a firefighting supplier owned by buyout shop Behrman Capital since 1998, according to a source familiar with the situation.

Terms of the deal were not disclosed, though Prophet Equity typically invests between $5 million and $50 million in companies valued between $10 million and to $250 million, according to the firm’s Web site.

Prophet Equity bought the two companies and combined them under the name Public Safety Supply Resources. The new company, which has revenue of about $50 million, “needs a lot of operational support,” as the pieces were largely un-integrated even though they shared the same parent, the source said, adding that Prophet Equity will likely boost the company through add-on acquisitions as well.

It is unclear whether Behrman Capital will profit from the sale. The New York-based firm, which last December laid off most of its San Francisco office as well as two New York professionals, is in the market to raise $1 billion for its fourth investment vehicle. According to a regulatory filing, the firm had accumulated $213.5 million in commitments as of March 2009.

Public Safety Supply Resources is the second deal from Prophet Equity’s debut fund, which has hit its $250 million target but hasn’t yet held a final close for reasons rooted in the recent pay-to-play scandal surrounding advisory firm Aldus Equity. Saul Meyer, founder of Aldus Equity, pleaded guilty to taking part in a kickback scheme that corrupted how some state pension funds chose to make fund commitments.

Originally, Prophet Equity’s $250 million included a $30 million hard commitment from the New Mexico State Investment Council, which at the time was being advised by Aldus Equity. However, once Meyer was implicated in the pay-to-play investigation, Prophet Equity’s commitment from the pension fund fell through. Prophet Equity has not been implicated in the scandal.

Since losing that commitment, however, Prophet Equity has received $115 million worth of interest from both existing investors looking to upsize their commitments to the firm, as well as from limited partners the firm previously turned away after it met its target. The firm plans to take $30 million of that sum in order to maintain its original target size. The firm also plans to cap future funds at $250 million.

Prophet Equity, which makes control investments in companies with revenues under $500 million, formally opened its doors in December 2007. The firm is headed by CEO & Managing Partner Ross Gatlin, who had previously co-founded Dallas-based private equity shop Insight Equity. Southlake, Texas-based Prophet Equity has 14 investment professionals.