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SBIC Shop Sees 5x Return With More Likely To Come

Target: Koontz-Wagner Custom Controls Holdings

Price: $31.5 million

Sponsor: Global Power Equipment Group Inc.

Seller: High Street Capital

Financial Adviser: Seller: Livingstone

Parties announced July 31 that publicly traded Global Power Equipment Group Inc. had acquired Koontz-Wagner Custom Controls Holdings, a division that makes control-house buildings containing electrical systems and other equipment used in running gas turbines and pumps and compressors used in energy pipelines, for $31.5 million. The company, whose customers include Siemens AG and General Electric Co., expanded in part by adding several new clients in the pipeline industry under High Street, Dick McClain, a principal with High Street, told Buyouts.

“We had done several things with the company,” including building out the sales force to help land new clients, McClain said. “We had lots of interest in it; the timing was right.”

Between that deal and the sale last year of former Koontz-Wagner subsidiary South Bend Controls to the Curtis-Wright Corp., High Street has generated about 5x its invested capital in the company, which it bought in August 2008 for an undisclosed amount, according to a source close to the firm.

High Street continues to hold two remaining Koontz-Wagner businesses. K-W Maintenance Services repairs industrial motors, and K-W Construction services installs and maintains electrical systems for utilities as well as industrial and commercial customers.

The returns are a promising highlight for a small firm like High Street that has been steadily building its name with Small Business Investment Company-assisted funds since the late 1990s. The Koontz-Wagner deal comes out of the firm’s third fund, an $85 million vehicle. The firm is presently investing from its fourth fund, which closed in April at $130 million.

High Street targets companies with revenues up to $100 million and cash flow up to $15 million in several industries, including outsourced business services, niche manufacturing and health care services. The firm has seven investment professionals.