North Castle Wins Turnaround Of The Year

North Castle Partners is the winner of our Turnaround of the Year award for its resuscitation of Atkins Nutrional Holdings Inc.

Atkins, of course, is the purveyor of the meat-heavy carb-light diet that was all the rage last decade, causing restaurants to waste a whole lot of burger rolls and driving a wedge between people and donuts. North Castle sold it in December to Roark Capital, generating 5x its investment, the firm’s best return yet.

In 2003, the company’s founder died, reportedly from a head injury after slipping on ice. “Yeah, right,” the rumor mill went, as many were convinced it was his oft-criticized diet that did him in. Atkins’s death seemed to portend the diet’s decline.

After generating peak financial performance in 2003 with $700 million in revenue and $200 million of EBITDA, the company steadily declined. Two years later, it filed for bankruptcy. By the time North Castle Partners bought the company from its post-bankruptcy lenders in 2007, Atkins was generating $110 million in trailing revenue and $14 million in EBITDA.

The company had also been a disaster for its investors, Parthenon Capital and Goldman Sachs Merchant Banking, which had bought the company in October 2003 for $533 million. The debacle was widely blamed for nearly destroying Parthenon, which critics said had over-paid and over-allocated for it within its portfolio.

Find out how North Castle, which specializes in buying companies that focus on healthy living, in doing in the 4/25 issue of Buyouts.