An Old Deal For a New Firm

Prophet Equity, a new-ish turnaround shop based in Dallas, has acquired Chief Supply and Law Enforcement Supply from Brooks Equipment Company, a firefighting supplier that Behrman Capital had owned since 1998, according to a source familiar with the situation.

Prophet Equity bought the two companies and combined them under the name Public Safety Supply Resources. The company, which has revenue of around $50 million, “needs a lot of operational support,” as the pieces were largely un-integrated even though they shared a parent company. Also expect some add-ons.

This was Prophet Equity’s second deal from its debut fund, which has met its $250 million target but hasn’t yet closed. For that last piece, prophet can thank our felonious pal Saul Meyer.

Prophet’s $250 million included a $30 million hard commitment from New Mexico State Investment Council, which was being advised by Meyer’s firm Aldus Equity. Prophet has not been implicated in any of the pay-for-play mess, but its capital commitment has nonetheless fallen through.

Since then, Prophet has received $115 million worth of interest from both existing investors looking to “upsize” their commitments and LPs Prophet Equity previously turned away after it met its target. The firm plans to take $30 million of that, in order to maintain its original target size. Prophet also plans to cap future funds at $250 million.

Maintaining a disciplined fund size is likely one of the reasons Prophet Equity’s founder Ross Gatlin left his previous employer, Insight Equity. Insight is attempting to double the size of its first fund, a $250 million vehicle, to $500 million. The firm remains in the market with fund two since launching marketing in 2008. The firm has closed on $361 million in commitments, according to a July regulatory filing.

In the meantime, Prophet Equity has lured a new hires on board from some familiar shops. The firm’s team has 14 buyout professionals, including Brian Hegi, formerly of AlixPartners, Ben Eakes, formerly of Sun Tx Capital Partners, John Tatum, formerly of H.I.G. Capital and Charterhouse Group, Matt McCutchen, formerly of ComVest Group, Nate Bard, formerly of Monomoy Capital Partners, Charles Collie, former SVP at PNC Business Credit, and Sam Metz, formerly of Insight Equity.

All that hiring and fundraising is in a stark contrast to the situation at Behrman Capital, which laid off most of its San Francisco office and two New York professionals last December. The firm continues to own Brooks Equipment Co., which is an 11-year-old investment for the firm. It’s not the oldest investment I’ve ever heard of-that honor goes to the buyout of Lombard Investment’s 21-year “slow flip” on Dakota, Minnesota & Eastern Railroad Corp.-but I imagine Behrman Capital’s investors aren’t quite that patient.

Impatience over the lack of exits is likely undermining Behrman’s fundraising efforts. You might recall that the firm is in the market raising $1 billion for its fourth vehicle. According to a regulatory filing, the firm had only accumulated $213.5 million in commitments as of March 2009. That does not bode well for Behrman, considering March 2009 was when fundraising activity really hit a brick wall.