Texas Lenders Step To Plate On Vending Co. Deal

Target: Accent Food Services

Sponsor: Silver Oak Services Partners

Seller: Undisclosed

Legal Adviser: Sponsor: Edwards Angel Palmer & Dodge LLP

Silver Oak Services Partners turned to local lenders for its most recent deal after searching for financing for six months.

The lower mid-market buyout shop secured a senior loan package, of about 2x debt to EBITDA, from Texas Capital Bank in Dallas, and mezzanine financing from RoyNat Capital, the investment arm of the Bank of Nova Scotia. Greg Barr, managing partner at Silver Oak Services, said that the financing accounted for about 58 percent of the purchase price to acquire Accent Food Services, an Austin, Texas-based company that sells food and beverages to businesses in Central and East Texas. The deal was announced early last month.

Other creditors better established in the private equity market offered financing, but on more expensive terms, said Barr, who believes local banks will become much more important in getting deals done in the current financing environment. “We’re getting back to days when local relationships were important to doing local business deals,” he said.

Other firms such as The Riverside Company and River Associates Investments LLC have also turned to smaller, local banks in recent months. “The typical inclination is to pick up the phone and call the national corporate finance lenders,” Mark Jones, a partner at River Associates Investments, told Buyouts in August. “We do that too, but just as a check to see what the market might hold, we always make a point to talk to local lenders.”

Accent Food Services designs vending programs that provide its customers with meals, snacks, beverages, and water purification systems. The company has already done one add-on acquisition under Silver Oak Services, and the firm is planning several more in an effort to double the size of the company during its ownership, Barr said.

A professional from Harris Preston & Partners, an Austin-based investment management firm that invests in Silver Oak Services, introduced the firm to Tom Hawkins, the CEO of Accent Food, back in the summer, Barr told Buyouts. Silver Oak Services did not release the size of the investment, though the firm typically invests between $15 million and $30 million in companies generating annual revenue of between $15 million and $150 million.

Silver Oak Services made the investment out of its $100 million first fund, which is just more than 50 percent invested, Barr said. Accent Food Services is the firm’s fourth platform deal and its fifth deal overall.