Kind of a Big Deal: Insight Equity Completes Take-Private (And Other Fabulous Facts)

Insight Equity this week closed its $61.3 million take-private of Meadow Valley, a Phoenix-based construction contractor and construction material supplier. The firm struck the deal back in July, and even after the disaster that was Q4, Insight Equity and its lenders managed to close at the original price, terms and conditions.

Not to say Insight Equity didn’t cry “MAC.”

Insight partner Connor Searcy says, “We felt that there was a material adverse change in the business, but we still closed on the original terms and conditions from July. When we commit to a deal we get it done.”

Capital One and LBC provided financing for the deal. Insight Equity’s new mezzanine fund contributed as well. Which leads me to the following cluster of fundraising updates:

*** We previously reported that Insight Equity is raising its second fund, a $500 million pool which is double the size of its first fund. We also knew the firm had applied some hefty carried interest terms on deals with high returns. Searcy declined to comment on all of that, but according to an SEC filing, the firm had accumulated at least $209 million toward its goal as of mid-November.

*** We also knew Insight Equity is raising a $250 million mezzanine fund alongside its new buyout fund. We can safely assume that fund has had at least one close, since it provided financing for the Meadow Valley deal. As of November the fund had $79 million in commitments. UBS is the placement agent for both funds.

*** peHUB previously reported that the firm was suggesting new LPs invest a matching 1:1 investment in both the mezzanine and the buyout fund. I asked Searcy about that, and he said, without elaborating, that we were “incorrect.” (For the record, I double-checked that info from more than one potential LP, one of which was reading directly from the prospectus. Perhaps things have changed since October?)

*** Meadow Valley is the last platform purchase from the firm’s first pool of capital. Expect any future platform deals to come from fund two.

*** Insight Equity is within four to six weeks of signing another deal. It’s an add-on that will also come from fund one.

One last notable thing about the deal: It’s Insight Equity’s second Southwestern infrastructure transaction. In 2006 the firm acquired Hirschfeld Steel. Searcy says, “We’re eager to look for other opportunities in this space. We have a real appetite for infrastructure-related spaces and even more specifically in highway construction.” Arizona and Nevada are the two fastest growing areas in the country for this thing, he said. Likewise, the firm is interested in taking advantage of new stimulus spending in the field.

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