Firms & Funds

Pfingsten preps two platform deals for new fund

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Pfingsten Partners LLC, Thomas Bagley
Thomas S. Bagley, Founder and Senior Managing Director, Pfingsten Partners LLC. Photo courtesy of Pfingsten Partners
  • Firm beats $350 mln target for Fund V
  • Inks two letters of intent for new platform deals
  • Continues to target companies with EBITDA of $3 mln to $12 mln

The founder of Pfingsten Partners said the middle-market shop is close to wrapping up the first two platform acquisitions from its newly raised Pfingsten Partners Fund V LP.

Senior Managing Director Thomas Bagley, who started the Chicago-based firm in 1989, said Pfingsten has inked letters of intent for a company at the lower end of its investment range of $3 million to $12 million of EBITDA and another company toward the upper end.

The smaller deal entails the backing of a known executive in an industry the firm has studied for about a year, Bagley said. He declined to provide further details on the transactions, but said Pfingsten hoped to make a formal announcement around May.

Pfingsten, which focuses on manufacturing, distribution and business services companies, wrapped up fundraising for Fund V on $382 million after little over a year. The fund had a disclosed target of $350 million, according to a Form D filing, which identified Shannon Advisors as the placement agent and Kirkland & Ellis as legal advisor.

Pfingsten decided to trim the target of Fund V from the $525 million it raised for its fourth fund in 2009, partly as a way to maintain discipline in the face of higher deal prices in recent years.

“It’s been hard to find good value,” Bagley said. Although credit markets signal a possible cooling off in acquisition prices, it hasn’t yet been apparent in the lower middle market, he said.

“The market still favors sellers,” Bagley said. “When you’re in a market like this, you have to to dig deep to find good value, sometimes by going direct or doing deals at the lower end of your scale. You have to pick your spots.”

On the deal front, Pfingsten made add-ons in recent months for existing platforms including its Wood Products, Specialty Filtration and Critical Power Services portfolio companies.

Last year, the firm exited Arrowhead in a sale to Riverside Co as well as TPC Wire & Cable to Audax. Bagley declined to provide any return multiples on the deals, but said the firm “did very well” on both.

Action Item: Reach Pfingsten Partners at pfingsten@pfingsten.com.

Photo of Thomas Bagley courtesy of Pfingsten Partners