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KKR backs supply chain software provider apex; LLCP practiced patient capital with spa franchisor

Sycamore is bested in bid for Kohl's.

Good morning, dealmakers. MK Flynn here with the Wire.

It looks like Kohl’s will soon to be sold to retail holding company Franchise Group for $8 billion, reportedly beating out PE firm Sycamore Partners. The retailer confirmed it is in exclusive talks with the owner of Vitamin Shoppe, according to the Wall Street Journal.

Retailers are facing yet another set of challenges, as store shelves sag with unsold goods. Target warned profits would drop due to unwanted merchandise.

Supply and demand. We’ve seen many private equity firms invest in software and other services aimed at shoring up the fragile global supply chain. I’m intrigued by a deal announced yesterday afternoon by KKR. The PE firm is taking a majority stake in apexanalytix, a provider of supply chain risk management software and services. Carousel Capital remains a significant minority owner.

“Apex sits at the intersection of multiple themes where we have had strong conviction over the past decade, including digitization and data-enabled platforms, the increasing fragmentation of global supply chains, and the rise of sophisticated technology solutions and tech-enabled services that can create operational efficiencies and generate tangible savings,” said Webster Chua, partner at KKR.

Bounce back. In deal news this morning, Levine Leichtman Capital Partners announced it has sold Hand & Stone Massage and Facial Spa, a franchisor and operator of spas offering massage, skincare and health and wellness services. PE Hub’s Aaron Weitzman conducted an exclusive interview with Andrew Schwartz, partner at LLCP, to talk about the growth strategy as well as the exit strategy.
Founded in 2004 and headquartered in Trevose, Pennsylvania, Hand & Stone currently operates nearly 550 locations in the US and Canada. According to sources familiar with the deal, Hand & Stone grew EBITDA by more than 8x under LLCP’s ownership.

LLCP held onto the asset a year longer than originally planned to ensure that the company had bounced back fully after covid hit the person-to-person service industry extremely hard.

“We did a full auction, marketing process for the sale, and the question of ‘how is this company going to bounce back from covid?’ was off the table, because it already did bounce back, it led to a competitive process and a very successful outcome.”

For more, see the full story.

Inside the exit. Rotunda Capital Partners, a Bethesda, Maryland-based private equity firm that backs lower mid-market companies in distribution, logistics, industrial and business services, recently sold Motis Brands to Boston-based Prospect Hill Growth Partners. PE Hub’s Obey Martin Manayiti spoke with Rotunda partner Corey Whisner about the exit.

Rotunda made its initial investment in Motis, an online seller of ramps, lifts and other hauling products, back in 2013. Since then, revenues at Motis have quadrupled. The PE firm focused on building Motis’s management team, expanded its digital marketing capabilities, put up new operating facilities and made several acquisitions, Whisner said.

Acquisitions included Heavy Duty Ramps, Race Ramps, Elasco Products, Mac’s Custom Tie-Downs and Pier d’ Nort, all of which helped Rotunda to scale the business.

As for the future, “I think we created a business that can continue to grow organically and through acquisitions,” Whisner said.

For more, read the full story.

Make way. Three long-time senior executives are expected to leave Hellman & Friedman over the coming months as the firm embarks on an unprecedented fundraising pace, raising its next flagship after closing its prior mega-pool in July 2021, reports Buyouts’ Chris Witkowsky. The three departing partners are: Philip Sternheimer, who leads value creation in Europe; Adam Durrett, who focuses on financial services and healthcare; and Erik Ragatz, who has led the firm’s focus on consumer, retail and industrials. The three are expected to leave over the next year, according to a person with knowledge of the firm.

Chris writes: “While partner departures are generally viewed with concern by LPs, in this case, the departures were anticipated as the partners invested out the last fund, the person said. The departures will allow a changing of the guard, another source said. ‘They keep making room for the next generation of stars,’ the source said.

Read the whole story here.

Operational Excellence. Calling all operators. Do you know a best-in-class operator? If so, submit your nominees to enter Private Equity International’s Operational Excellence Awards 2022.

Submit your entries to OpEx@peimedia.com by Tuesday, June 21.

That’s all for now. Chris writes the Wire on Wednesdays, so I’ll see you on Thursday.

Until then,

MK