February Cleveland Deals

Get ready for a busy year

The amount of cash on corporate domestic balance sheets is at an all-time high. The S&P 500 alone has more than $1 trillion. Furthermore, private equity firms have a pent-up supply of capital to invest with more than $450 billion of equity capital to be deployed. With an improved lending market, PE purchasing power is approaching $1 trillion, as well. What does all this mean?

The signs seem to point to a perfect storm on the horizon for 2012. There will still be challenges in 2012, but merger and acquisition activity should be robust.

Lubrizol Corp., TransDigm Group Inc., First Communications Inc., Colfax Corp., Eaton Corp. and PolyOne Corp. all ended the year with completed acquisitions. Lubrizol acquired Active Organics, which provides access to the natural performance ingredients markets for personal and home care. Lubrizol’s other acquisition, Merquinsa Mercados Quimicos S.L., expands its global reach.

TransDigm gave $84 million in cash to Harco Laboratories Inc, which had 2011 sales of $37 million. PolyOne completed its acquisition of ColorMatrix and its intellectual property portfolio of 162 patents and 107 pending applications worldwide for $486 million. The deal structure includes a new secured $300 million Term Loan B, replaces its expiring accounts receivable securitization facility as well as a new $300 million asset-based revolving credit facility and redeemed its 2012 senior notes.

The Riverside Co. wrapped up another busy year with its 25th and 26th acquisitions of 2011. The first, HR Solutions International Inc., is an add-on to its recently acquired portfolio company Avatar International. The second acquisition, Newvision, is a Portuguese customer journey management specialist company. Newvision provides virtual queue management, people counting, self-service, multimedia kiosks and corporate television.

Finally, Rockwood Equity Partners LLC announced a merger between Amistco Separation Products and two divisions of ACS Industries. The new company, called ACS-Amistco, is expected to be a leading manufacturer of separation and mass transfer products.

Albert D. Melchiorre is the president of MelCap Partners LLC, a middle-market investment banking firm. He is also a director on the ACG Cleveland board. For more information on MelCap Partners, please visit www.melcap.co. For more information about the Association for Corporate Growth, please visit www.acg.org/cleveland.

Deal of the Month

The deal of the month is awarded to Linsalata Capital Partners for completing its 100th acquisition since its inception in 1984. These 100 acquisitions are broken down by 43 platform companies and 57 add-ons. On Dec. 19, Linsalata completed the add-on acquisition of Dell Manufacturing Co. Inc. to its portfolio company Whitcraft Group. Whitcraft serves the aerospace and defense industry as a manufacturer of machined and fabricated parts for commercial and military aircraft engines. Dell Manufacturing will increase the manufacturing products on existing and next-generation jet engine platforms.