Deal activity among both strategic and financial buyers dropped off significantly in February. This slowdown in deal volume was due in large part to the rush to get deals done by the end of 2010, which was driven by the fear of tax changes that never occurred.
Strategic buyers led the way in the second month of 2011 by focusing on smaller deals. The Euclid Chemical Co. bought LaFayette, Ga.-based PSI Packaging Inc., which has annual sales of approximately $6 million. Euclid Chemical is a Cleveland producer of micro and macro fibers for the ready-mixed and precast concrete market and subsidiary of RPM International Inc. The move is expected to add a complementary product line and boost manufacturing capacity and expertise for Euclid Chemical.
Cleveland-area Hartland Payments Systems Inc., the fifth-largest payment processor in the country, sold a small portfolio of merchant customers to Sage Payment Solutions, which furthers Sage’s strategic growth goals. I.D. Images LLC, the Brunswick-based and industry-leading producer of variable information printed labels, closed its third strategic acquisition in the last 18 months and expanded its presence in the Southeast with its purchase of Heather Label Inc. of North Carolina.
In a move to continue its transformation and portfolio repositioning, Cleveland-area PolyOne Corp., a premier provider of specialized polymer materials, services and solutions, sold its stake in Sunbelt Chlor Alkali Partnership to Olin Corp. for $175 million. In addition, Smart Business Network Inc. acquired Cleveland-area Wise Group to further expand its Smart Business Content Marketing Division.
As the inventory of quality targets increase later in the year, look for more strategic buyers to come off the sidelines, rested and ready to make quality acquisitions.
Private equity firms were also active in February, although not nearly at the same level as they were in the fourth quarter of last year. Chicago-based private equity firm Pfingsten Partners, LLC acquired Independence-based TPC Wire & Cable Corp., a leading distributor of industrial wire and cable, from private equity firm Premier Farnell plc for approximately $43 million. Pfingsten Partners investment in TPC is aimed at capitalizing on TPC’s market opportunities and growth potential.
James M. Hill is a director on the ACG Cleveland board. He is also executive chairman, a partner and the chairman of the private equity practice of the law firm of Benesch, Friedlander, Coplan & Aronoff. For more information about the Association for Corporate Growth, visit http://chapters.acg.org/cleveland.
Deal of the Month
February’s deal of the month is Mayfield Heights-based Linsalata Capital Partners Inc.’s purchase of NeuroTherm Inc., a leading manufacturer of interventional pain management products. In addition to marking Linsalata’s fifth platform company acquisition in the last 13 months, the purchase of NeuroTherm is Linsalata’s first platform investment in the health care field. Congratulations to the Linsalata team on embarking into the health care sector.
