Recapitalization • Machinery

HKW and Northstar Capital Acquire Workhorse Rail

On August 9, 2014, private equity firm HKW and mezzanine finance firm Northstar Capital acquired machinery company Workhorse Rail

Acquisition Context
  • This is HKW’s 3rd and Northstar Capital’s 3rd transaction in the Machinery sector.
  • This is HKW’s 27th and Northstar Capital’s 60th transaction in the United States.
  • This is HKW’s 1st and Northstar Capital’s 4th transaction in Pennsylvania.
Investment Fate
  • Workhorse Rail was sold to a publicly-traded strategic buyer in 2016.

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M&A Deal Summary

Date August 9, 2014
Target Workhorse Rail
Sector Machinery
Buyer(s) HKW
Northstar Capital
Deal Type Recapitalization

Target Company

Workhorse Rail

Pittsburgh, Pennsylvania, United States
Workhorse Rail LLC is a designer and supplier of freight car parts for the North American rail industry.
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Buyers Overview 2

Buyer

HKW

Indianapolis, Indiana, United States

Investor Investor Investor Investor


Category Private Equity Firm
Founded 1903
Size Middle-Market
Type Sector Agnostic
DESCRIPTION

Hammond Kennedy Whitney & Company (HKW) is a private equity firm focused on making control investments in mid-sized, 'market leading' companies generating sales of $5 to $75 million. HKW looks for companies with low risk for technological obsolescence, defined growth strategies, and talented management who want to own equity. Target transaction situations include industry consolidations, corporate divestitures, generational changes in ownership, growth equity, management buy-outs and recapitalizations. HKW prefers North American based opportunities. HKW dates back to 1903, however the Firm transitioned from sole to institutional investors in 2001. The Firm has offices in Indianapolis and New York City.


Deal Context for Buyer #
Overall 32 of 56
Sector: Machinery 3 of 3
Type: Recapitalization 12 of 18
State: Pennsylvania 1 of 1
Country: United States 27 of 46
Year: 2014 2 of 3
PREVIOUS DEAL
DATE TARGET DEAL TYPE VALUE
2014-07-01 RST Instruments

Maple Ridge, British Columbia, Canada

RST Instruments is a manufacturer and marketer of geotechnical measurement instruments for engineering and consulting firms, oil and gas, mining, utility, and other sectors. R.S.T. Instruments is based in Maple Ridge, British Columbia. RST Instruments was founded in 1977 and is based in Maple Ridge, British Columbia.

Buy -
FOLLOWING DEAL
DATE TARGET DEAL TYPE VALUE
2014-08-18 Duncan Systems

Elkhart, Indiana, United States

Duncan Systems is a distributor of replacement motorhome windshields; RV, heavy truck and specialty vehicle glass and windows.

Sell $18M
Buyer

Northstar Capital

Minneapolis, Minnesota, United States

Investor Investor Investor Investor Investor


Category Mezzanine Finance Firm
Founded 1993
PE ASSETS 1.7B USD
Size Large
Type Sector Agnostic
DESCRIPTION

Northstar Capital is a mezzanine finance firm that provides junior capital to middle-market companies operating in the value-added distribution, light manufacturing, business services, financial services, education, and specialty healthcare sectors. Northstar's typical investment size is $5 to $30 million in businesses generating sales of $20 to $300 million with an EBITDA of at least $3 million. Prospective companies have stable cash flows and sustainable margins. Investments typically have maturities of five to eight years. Northstar does not invest in start-ups, real estate development, natural resource exploration, or high technology companies. Northstar Capital was formed in 1993 and is based in Minneapolis, Minnesota.


Deal Context for Buyer #
Overall 63 of 121
Sector: Machinery 3 of 9
Type: Recapitalization 10 of 17
State: Pennsylvania 4 of 7
Country: United States 60 of 116
Year: 2014 5 of 10
PREVIOUS DEAL
DATE TARGET DEAL TYPE VALUE
2014-07-23 Specified Fittings

Bellingham, Washington, United States

Specified Fittings LLC is a manufacturer and distributor of polyvinyl chloride (PVC) and high-density polyethylene (HDPE) pipe fittings. Specified Fittings was founded in 1997 and is based in Bellingham, Washington.

Buy -
FOLLOWING DEAL
DATE TARGET DEAL TYPE VALUE
2014-10-21 TMI International

Pittsburgh, Pennsylvania, United States

TMI International LLC is a manufacturer and value-added distributor of industrial products, including strip doors, air doors, industrial curtains and separators, loading dock accessories, and flexible PVC products. The Company sells its products through distributors, catalog houses, and purchasing groups to a wide range of customers. Its end users include warehouses, manufacturing facilities, distribution centers, retail non-food facilities, restaurants, and food processing facilities.

Buy -