Read about select case studies characterizing typical Halyard transactions and highlighting our investment strategies, process and proven results.
Engauge
Marketing Services
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OVERVIEW:
- Executive Sponsorship Initiative
- Next generation marketing services platform company with three targets: database analytics, digital/online advertising and traditional direct marketing communication
- Significant cash flow generation from organic and strategic acquisitions
- Agency of record with long-standing relationships with blue chip clients such as SONY, InterContinental Hotels, Turner Broadcasting, CocaCola, Home Depot, etc
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Next generation marketing services platform company focused on three fundamental direct marketing disciplines: database analytics, digital/online advertising and traditional direct marketing communication.
INVESTMENT THESIS | PARTNERED WITH OPERATING TALENT | HALYARD VALUE-ADD |
- Advertisers are increasingly demanding measurable ROI from their advertising dollars
- The traditional advertising agency has been slow to respond to the evolving needs of its clients
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Partnered with Stan Rapp, co-founder of Rapp Collins Worldwide (world’s leading direct marketing ad agency) and former CEO / Chairman of McCann Relationship Marketing
- Evaluated more than 75 potential acquisition candidates
- Four acquisitions completed to date:
- Austin Direct Impact, a database marketing agency
- Ten United, a top 25 independent advertising agency
- Streamright, a digital technology development firm;
- Spunlogic, a leading digital marketing services
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GOVERNANCE - Control all major decisions through 5 of 7 board seats
- STRATEGY - Created strategy to develop next generation marketing services agency focused on three fundamental centers of excellence: direct or brand communication, data & analytics and digital / interactive advertising
- ACQUISITIONS - Led diligence and negotiation of both acquisitions
- PERSONNEL - Recruited Kam Kamerschen, former Chairman and CEO of ADVO, Inc, to serve on Board of Directors
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Result
- STRATEGY EXECUTION - Within one year of company founding, Engauge built a multidisciplinary agency offering digital marketing services, data analytics and brand communications serving clients such as CocaCola, Home Depot and SONY.
- POSITIONED FOR GROWTH - Engauge is expert in the most highly demanded and fastest growing marketing discipline today. Its digital, direct and brand focus is resonating in the marketplace and setting apart from both smaller boutique and “integrated” holding companies.
Presidio
Enterprise IT Services
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OVERVIEW:
- Executive Sponsorship Initiative
- Proactive thesis development and successful strategy execution
- Significant growth through proprietary acquisitions and organic growth
- Fasted IT company to reach $1 billion in sales
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Presidio, Inc. (www.presidio.com) was formed on a platform/buildup strategy focused on the delivery of networking solutions to middle market enterprise customers. Presidio assists clients in the design, deployment and management of voice and data networks and the challenges associated with emergence of new complex applications, such as voice-over-IP ("VOIP"), wireless local area networks ("WLANs"), storage and network security.
INVESTMENT THESIS | PARTNERED WITH OPERATING TALENT | HALYARD VALUE-ADD |
- Convergence of enterprise voice and data networks
- New high growth applications such as IP telephony, security and storage
- Increased complexity leads to increased outsourced solutions
- Cisco centric vendor strategy
| - Recruited senior, experienced management team
- Sourced, closed and integrated six proprietary acquisitions
- 11% CAGR acquired organic revenue growth over the 6 1/2 year investment period
- Increased EBITDA margin by 150 basis point
- Fastest IT company to reach $1 billion in sales
| - Prior relationship with CEO
- Incubated idea/strategy
- Active in sourcing and diligencing acquisitions
- Active on Board; member of both Audit and Compensation Committees
- Lead role among investors in financing and exit process
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Result
- LEADERSHIP POSITION - Established as the largest pure-play, advanced IT infrastructure solutions provider with clear leadership in its markets
- EXCEPTIONAL GROWTH - Initial platform company had less that $100 million of revenue. Through a combination of siginificant organic growth and accretive acquisitions, the Company now generates well over $1 billion of revenue annually
- SUCCESSFUL MONETIZATION - Sold to American Securities on March 30, 2011, IRR of 33% and MOIC of 4.2X
Education Dynamics
Education Services
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OVERVIEW:
- Executive Sponsorship Initiative
- Platform company targeting two high growth sectors: education and online marketing
- Significant cash flow expansion from organic growth and strategic acquisitions
- Created the #1 interactive marketing services company focused on education sector
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Leading interactive marketing and information services company focused helping higher education institutions find, enroll and retain students
INVESTMENT THESIS | PARTNERED WITH OPERATING TALENT | HALYARD VALUE-ADD |
- Intersection of online marketing and online education: two high growth sectors
- Extremely high-quality lead provider / premier education websites
- Opportunity to further expand content and suite of marketing services to the both for-profit and not-for-profit schools
| - Recruited experienced direct marketing executive to serve as Chairman and CEO of the platform company
- Worked alongside this executive to assess over 30 acquisition targets
- Four acquisitions completed to date: eLearners.com, Educational Directories, GoalQuest, WorldClass Strategy
| - GOVERNANCE - Hold 4 seats of 7 person board and control all major decisions
- STRATEGY - Active in all aspects of company strategy (initial platform, acquisitions & growth initiatives)
- ACQUISITIONS - Active in identification and negotiation of four key acquisitions
- FINANCING - Led negotiations with lenders for senior credit facility
- PERSONNEL - Recruited CEO and industry veteran for the Board
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Result
LEADERSHIP POSITION - Established as the #1 provider of interactive marketing service solutions focused on recruitment, enrollment and retention of students for the post-secondary education sector
TRANZACT
Marketing Services
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OVERVIEW:
- Sole equity sponsor in turnaround of distressed asset
- Diversified customer base & completed 2 acretive acquisitions
- Significant cash flow expansion
- Exit - Sale to private equity firm: 12.0x / 80% IRR
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Leader provider of sophisticated digital, data and direct marketing solutions that delivers qualified leads, fully provisioned sales, and robust customer management systems to brands seeking to acquire and manage large numbers of customers
INVESTMENT THESIS | PARTNERED WITH OPERATING TALENT | HALYARD VALUE-ADD |
- Identified growing demand for innovative, performance-based marketing solutions
- Unique insight into TRANZACT’s business model, management, client base and pipeline of business
- Led to acquisition of company out of bankruptcy at attractive valuation (invested $8M for 74% ownership stake)
| - Tracked progress of management and company for three years
- Partnered with existing team who had strong track record of creating value (previously built two marketing services companies >$100M revenue)
- Management’s commitment solidified by their own capital investment of $2M
| - GOVERNANCE - Control all major decisions through 3 of 5 board seats
- STRATEGY - Right-sized employee base and repositioned new business efforts to financial services sector
- CUSTOMERS - Provided customer introductions that led to new business
- ACQUISITIONS - Sourced approximately ten acquisition opportunities and completed two accretive aquisitions
- FINANCING - Led recapitalization and negotiations with senior lender
- PERSONNEL - Recruited key management hires
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Result
- VALUE CREATION - Through a series of recapitalizations Halyard has been able to recoup 100% of capital invested while retaining full ownership; Halyard sold TRANZACT for $185 million to VSS in October 2007 generating a 12x return on Halyard’s original investment and an internal rate of return in excess of 80%
- RECOGNITION - Transaction was awarded Deal of the Year for 2007 by Buyouts Magazine
Netgear
IT Services
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OVERVIEW:
- Location: Santa Clara, CA
- Investment Date: September 2000
- Exit Date: April 2004
- Capital Invested: $7 million
- Total Value (Realized): $26.4 million
- Gross IRR (Realized) / MOC: 43% / 3.8x(1)
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- Develops and markets branded small business and home networking equipment
- Spun out of Nortel in March 2000
INVESTMENT THESIS | PARTNERED WITH OPERATING TALENT | HALYARD VALUE-ADD |
- Small business and home networking equipment market poised for growth due to increased high speed internet penetration
- Strong domestic and international relationships with retailers and resellers
- Strong brand name and reputation for high quality product and customer service
| - Sourced through a relationship with Pequot Capital, an early investor in company
- Halyard’s knowledge of sector and BMO’s relationship with Nortel helped solidify investment
| - Active in negotiating purchase of Nortel’s residual ownership in cash-less exchange, increasing Halyard’s ownership from 3% to 8%
- Prior to public offering, active in discussions and negotiations with strategic acquirers
- Aided in the IPO process
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Result
- EBITDA grew from a loss of $14.1M in 2001 to $39.6M in 2004
- Completed IPO in July 2003 and secondary in April 2004
- Halyard exited investment at 3.8x MOC and 43% Gross IRR(1)
1. Net IRR 34%
