Burlington, Wis.-based Cannella buys television time, on both cable and broadcast networks, for infomercial companies. Harris Williams is advising on the process, the persons say. Cannella generates about $18 million EBITDA and is seeking to sell for about 7x, one person says. However, a third source says that EBITDA figure is low.
New York-based Palladium Equity invested in Cannella in 2009. At that time, ZM Capital, the PE fund of ZelnickMedia, invested in Cannella along with Palladium. It’s unclear how much they put into the company. Veronis Suhler Stevenson provided mezzanine debt. (Addition: ZM Capital was lead investor on the buy of Cannella in 2009. And, Karl Slatoff, a ZelnickMedia partner, is chairman of Cannella.)
Palladium owns a majority of Cannella while it’s unclear how much ZM has, one source says. VSS retains a small equity stake, the third person says.
ZM Capital is also seeking to cash out of Cannella, a source says.
Cannella specializes in placing “long form” infomercials, which are typically 28 minutes and 30 seconds in length (short form is two minutes or less). Cannella has placed infomercials for Ab Magic, Smartware Cookware and WalkFit Orthotics, according to the company’s web site. Other players in direct response marketing include R2C Group and Mercury Media.
The sale of Cannella comes as Palladium Equity continues fundraising for its fourth pool. Palladium Equity Partners IV LP has an $800 million target. In December, Palladium agreed to sell Wise Foods to Arca Continental. Palladium also put Taco Bueno up for sale last year for a second time but that sale looks like it’s off. In December, the Mexican quick-service restaurant chain completed a new $118 million loan, which it used to refinance debt and pay out a dividend to shareholders.
Officials for Palladium and ZM Capital declined comment. Harris Williams and Cannella could not be reached for comment.
(Correction and Addition: The original version of the story said Palladium owns a majority stake in Cannella. They do not. Palladium and ZM Capital own equal, minority stakes in the company. Also, the following information was added to the original story for completeness: ZM Capital was lead investor on the buy of Cannella in 2009. And, Karl Slatoff, a ZelnickMedia partner, is chairman of Cannella.)
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