Sources: Brentwood sells Paper Source for estimated 15x EBITDA

Brentwood Associates has exited Paper Source, a stationery store, after a six-year hold, selling it for an estimated 15x EBITDA.

Investcorp, the Bahrain-based alternative investment manager, said Tuesday it had acquired the stationery store. Financial terms weren’t announced. The deal closed yesterday, three persons said. Brentwood, which owned a majority, has sold its entire stake, two of the sources said.

Los Angeles-based Brentwood Associates put Paper Source up for sale over the summer. Financo and North Point Advisors advised on the process. The auction was expected to be very competitive. Paper Source, which produces EBIDTA in the mid-teens, was seen selling for 10x or more, peHUB reported.

Several bidders were interested in Paper Source, which ultimately sold for 15x EBITDA, two of the sources said. “It’s an outstanding company with top of the line leadership and management,” one person said.

Chicago-based Paper Source sells fine and artisanal papers, custom note pads, as well as wedding and baby shower invitations. The company operates 73 stores currently, up from 21 in 2007. Paper Source’s logo features a paper wasp, which it calls its patron insect. “The diligent paper wasp creates its nest by chewing bark and leaves into a paper-like pulp, and thus receives our affectionate designation as the original paper maker,” Paper Source said on its website.

In 2007, Brentwood acquired a majority stake in Paper Source. The investment came from its fourth fund, which collected $440 million in 2006. It was not clear how much Brentwood invested in Paper Source. The company in May paid out a dividend, peHUB has reported.

News of the sale comes as Brentwood is out fundraising for its latest fund. Brentwood Associates Private Equity V LP has a $500 million target, peHUB has reported.

Rohit Manocha and Brian Booke of Morgan Joseph TriArtisan advised Investcorp. Lee Helman and John Berg of Financo, along with North Point Advisors, provided financial advice to Paper Source.

Damon Fisher and Hamed Meshki of Kirland & Ellis were the attorneys for Paper Source. William Rustum and Michael Greaney of Gibson, Dunn & Crutcher provided legal advice to Investcorp.

Photo courtesy of Paper Source