The company today sold a controlling interest to GF Capital Management, a buyout firm based in New York. The deal included a co-investment from a new fundless buyout firm called Stockton Road Capital and small equity contributions from senior management.
Stockton Road Capital was founded six months ago by Joe Rhodes, a former partner with Charterhouse Capital. At Charterhouse, Rhodes led the firm’s consumer products investments, including a deal for nutritional products company Amerifit Nutrition. Airborne Health is Stockton Road Capital’s first deal. Rhodes said he plans to continue to seek co-investment deals, using capital from a network of investors. He founded the company six months ago and said he would entertain the idea of raising a proper fund in an improved fundraising environment.
Sawaya Segalas advised the seller, the company’s founder Victoria Knight-McDowell.
You may remember Knight-McDowell, a former second grade teacher, who launched a mildly cheap dig at Summit Partners a year ago through an ad campaign dissing the firm’s management of the company.
I call her move cheap, not because I’m a private equity apologist, but because the company’s troubles stemmed from lawsuits based on false claims and bad evidence that were most likely made while she still owned the company. Before she earned nice chunk of cash selling the company to Summit Partners. Summit may well have been partly responsible for the company’s struggles, too, especially its poorly rated debt after the firm took one of those dreaded dividend recaps. But keep in mind Knight-McDowell was on the board and a minority shareholder during Summit’s ownership, too. Either way, why broadcast it to consumers? Wasn’t the company’s class action lawsuit enough bad press for one year?
GF Capital and Stockton Road Capital hope to move past that, stressing that the company has returned to growth in the past year and remains one of the best-selling products in the “cough-cold category.” The firms brought in Martha (Marti) A. Morfitt to run the company. Morfitt is the former CEO of CNS, Inc., another health products company which Sawaya Segalas advised in a sale. Under Morfitt’s leadership, the company will invest in marketing and development of new products. “The business has worked with the government to bring its marketing in line with regulations, and is in a nice growth trajectory now,” said Rhodes.
GF Capital raised its first fund in 2007 and received a $15 million investment from New Mexico Educational Retirement Board.