The Top 15 Axial Member Deals of 2020

We will all remember 2020. 

Against the backdrop of a global public health crisis, an ensuing devastating economic crisis, and intense U.S. political and social turmoil, private capital markets found a way to march on.

After Q2 2020’s near complete stoppage of lower middle market M&A activity, the diversity of the lower middle market’s buyer set was on full display in the second half of the year. Gone are the days where business owners find themselves choosing between a few incumbent private equity firms and known strategic buyers. The lower middle market is deep and broad, with far more shades of grey, and that is a great thing. 

2020’s lower middle market contains many sophisticated family offices, micro PE search funds, SMB owner-operators, thousands of PE-backed strategic buyers, emerging private equity managers, and seasoned independent private equity sponsors. Sector specialists, buy and build generalists, category consolidators. It’s all here, and the data backs it up.  

For the fourth year in a row (see 2017, 2018, and 2019), we profile the top 15 Axial Member to Member closed transactions. This year, we selected a set of transactions that demonstrate the aforementioned diversity that we are seeing in the lower middle market. 

Despite all the headwinds of Covid-19 and otherwise, I am bullish on what the lower middle market can achieve in this next decade. Zoom makes it easier and far cheaper for counterparties to build rapport and initial trust. Purpose-built cloud software platforms are accelerating technology-enabled sourcing, due diligence and post-transaction business transformation. A growing source of deal by deal equity and debt capital partners are helping to level the playing field for emerging GPs and other new entrants.

Without further ado, here are 2020’s top 15 deals. We are delighted to have been the initial conduit for each of these consummated transactions. Congratulations to all these members who overcame 2020’s many obstacles to get these deals done.

The Top 15 Axial Members Deals of 2020

Jack Farris Advises Undisclosed Label & Packaging Company on Acquisition by Heartwood Partners

Acquisition / Industry: Labeling & Packaging

The company is a full-service label company, providing flexographic, digital, and offset label printing, in addition to folding carton and flexible packaging. Its end markets are primarily the food and wine & spirits industries. Heartwood Partners recapitalized the business, providing partial liquidity to the founder-owner CEO, who will remain with the company post recapitalization both as CEO and as a substantial investor. The founder-owner chose Heartwood based on their (1) unique low leverage and current income approach, (2) creativity in structuring to optimize tax efficiency and achieve his personal goals, (3) desire to support the busines on a go-forward basis with capital equipment investment and “add-on” acquisitions; (4) deep experience in packaging, and (5) lengthy track record of successfully partnering with founder / owners.

Philadelphia Investment Group Advises Aetna Felt Corp on Acquisition by Industrial Opportunity Partners’ Portfolio Company Creative Foam

Acquisition / Industry: Health Care, Manufacturing

Aetna is a converter, fabricator, and distributor of felt and other non-woven material solutions. The Company offers an extensive line of podiatry and foot-care products to medical distributors, hospitals, schools, surgery and health centers, government facilities, and private label markets. In addition, Aetna provides non-woven material products to the industrial, consumer, crafts, and various other end-markets. Creative Foam, acquired by IOP in 2017, is a manufacturer and supplier of custom-engineered die-cut, formed foam, nonwoven and multi-material component solutions to the transportation, healthcare, and wind-energy markets.

Trafalgar Capital Partners Advises Ashburn Consulting on Acquisition by IMB Partners

Acquisition / Industry:  Business Services

Ashburn Consulting, founded in 2002, provides superior, vendor agnostic engineering and IT architecture solutions and is highly experienced in infrastructure design, development, implementation, and on-going support. The company’s capabilities address the full lifecycle of network and security engineering support needs, which results in Ashburn becoming an embedded, long-term partner for its clients.

Decathlon Capital Invests in DirectDerm

Investment / Industry: Health Care

DirectDerm brings expert skin care directly to patients wherever they may be. The company’s leading, board-certified dermatologists provide diagnosis, treatment and follow-up care for all skin conditions, from the common to the complex, including rashes, skin growths, hair and nail problems, and skin cancers. DirectDerm’s patients get accurate answers right away because healthy skin and peace of mind is what they’re all about.

Providium Advises Logistimatics on Acquisition by Saltwater Capital

Acquisition / Industry: Technology

Logistimatics provides GPS tracking solutions to companies who ship high value freight. The company provide GPS trackers and mapping applications and exist to help its customers locate the people and things they care about most. Logistimatics believe there is a growing expectation that people should be able to know where valuable assets and people are located. Logistimatics sells high quality tracking hardware and software that is affordable and easy to use.

First Choice Business Brokers Advises SurfaceLogix on Acquisition by Elvisridge Capital

Acquisition / Industry: Industrials

Located in Pompano Beach Florida, SurfaceLogix manufactures paver sealers, roof coatings, surface cleaners and prep products, and a comprehensive line of eco-friendly, low-VOC cleaning and sealing products.

Consensus Advises E-Cloth on Acquisition by Camano Capital

Acquisition / Industry: Consumer

E-Cloth produces a line of environmentally conscious microfiber cleaning products – designed to clean using just water and no harsh chemicals – that are sold through the direct-to-consumer, e-commerce, and retail channels. The company was founded in 1995 in the UK before expanding into the US in recent years. E-Cloth, led by CEO Jamey Bennett, has offices in Boston, Massachusetts and Royal Tunbridge Wells, UK (50 miles southeast of London) and a newly-opened distribution center in Dover, New Hampshire.

Dailey Resources Advises SP Service Pros Auto Center on Acquisition by Greenbriar Equity Portfolio Company, GB Auto Service

Acquisition / Industry: Automotive

Service Pros Auto Center is a full service auto repair center headquartered in Arlington, TX. Greenbriar Equity makes privately negotiated investments in market leading services and manufacturing businesses in selected sectors where our capital, expertise and resources can accelerate growth and enhance strategic positioning. Since its founding in 1999, Greenbriar has raised over $4 billion of committed capital across four funds.

Peakstone Group Advises Nicki’s Diapers on Acquisition by 365 Holdings

Acquisition / Industry: Consumer

Nicki’s Diapers is a family business founded by Nicki and later joined by her husband Jesse. As a husband and wife team, they worked together to ensure the highest quality products while following responsible environmental and social business practices. Nicki saw a need – she wanted to cloth diaper her first son, but couldn’t find the information or products she wanted anywhere. She bought a handful of diapers and accessories and started selling them herself. What started as a stay-at-home mom business in 2003 has grown out of Nicki’s basement (and then garage, and then a small rented warehouse space) into a brick and mortar retail store in Madison, WI (2009) and a new warehouse and office space in early 2012. Beyond Nicki’s Diapers, Nicki created the Imagine Baby Products brand, Planet Wise Inc. and Best Bottom Diapers. The company is now located in Akron, Ohio.

DGP Capital Advises ZenTech on Acquisition by Blackbern Partners

Acquisition / Industry: Technology, Manufacturing

Zentech Manufacturing, Inc. is an engineering-driven electronics contract manufacturer specializing in the design and manufacture of highly complex electronic and RF circuit cards and assemblies. The company is headquartered in its purpose-built facility located in Baltimore, MD, with subsidiary operations in Fredericksburg, VA. Zentech maintains several key certifications, including ISO 9001:2015, ITAR (US State Dept.), AS9100 (aerospace) and ISO 13485 (medical). In addition, Zentech is a certified IPC 610 Trusted Source supplier for Class 3 mission-critical electronics and the company is IPC J-STD-001 Space Addendum QML certified. Zentech supports many DoD programs and is NIST 800-171 compliant and an IPC 1791 Trusted Assembler.

EXODUS Business Solutions Advises Tenacore on Acquisition by The Courtney Group

Acquisition / Industry: Industrials, Manufacturing

Tenacore is an ISO 13485:2016 certified medical device service and repair company that operates across all 50 states. It has been providing repair and maintenance to hospitals for the last 20 years.

Parcrest Advises Trophy Skin on Acquisition by Formula 5

Acquisition / Industry: Consumer

Trophy Skin is a leading skincare tools brand that provides at-home devices providing microdermabrasion, light therapy, and ultrasonic infusion. The Company sells its products primarily direct-to-consumer via the Company’s website and Amazon and through TV shopping channels such as QVC and HSN..

Select Business Brokers Advises Undisclosed Behavioral Health Companies on their Acquisition by Tide Rock Holdings, forming BeWell Network

Acquisition / Industry: Health Care

BeWell Network is a family of drug and alcohol addiction treatment centers offering evidence-based, trauma-informed care for those suffering from addiction and underlying mental health conditions. The company currently has inpatient and outpatient facilities located in Los Angeles and Orange County, CA and is continuing to expand throughout Southern California. Tide Rock Holdings is a San Diego-based evergreen holding company that invests in and acquires profitable, economically resilient lower middle market companies.

IT ExchangeNet Facilitates Acquisition of BPI Information Systems by WD Holdings

Acquisition / Industry: IT Services

BPI Information Systems was established in 1976 and has served as a cornerstone for the IT Industry in Northeast Ohio for 40 years. As a Technology Solution Provider, BPI specializes in the design, installation, support, and emergency repair of network solutions for business, healthcare, government and education. Our mission is to provide the highest level of integration support and service to keep your business functioning without loss of productivity or downtime. As a technology solution provider we specialize in the following areas.

Generational Equity Advises Bell & Williams Associates on Acquisition by Envest Private Equity

Acquisition / Industry: Business Services

Bell & Williams Associates is the leader in providing collateral collections, nationwide asset recovery, skip tracing, and remarketing services for the vehicle finance, equipment leasing and credit union industries.