SBIA Update 3rd Issue

SBIA Update is a way to stay up-to-date on the latest industry news, SBIA member information, and policies that impact the lower middle market.  Below are a few articles featured in this edition of SBIA Update. For the full news update, please refer to the SBIA Update email in your inbox.

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Legislative & Regulatory Update

McHenry Announces Republican Committee Leadership Transitions

On October 16, the top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), announced the following changes to the committee’s Republican leadership team:

Ranking Member of the Subcommittee on Housing, Community Development, and Insurance – Steve Stivers (OH-15)

Ranking Member of the Subcommittee on National Security, International Development, and Monetary Policy – French Hill (AR-2)

Ranking Member of the Task Force on Financial Technology – Tom Emmer (MN-6)

Ranking Member of the Task Force on Artificial Intelligence – Barry Loudermilk (GA-11)

 

“Republicans have worked diligently this Congress to foster financial modernization, right-size regulation to grow our economy, and find commonsense solutions for consumers,” said Ranking Member McHenry. “This group has played a critical role in leading these efforts. I have no doubt they will continue to provide valuable insight and thoughtful leadership in their new positions.”

 

House Small Business Committee Hearing: “SBA Management Review: SBA IG Report on the Most Serious Management and Performance Challenges Facing the SBA”

Congresswoman Judy Chu (D-CA), Congresswoman Sharice Davids (D-KS), and Congressman Kevin Hern (R-OK) pressed SBA Inspector General Mike Ware on the vacancies and licensing delays occurring in the Office of Investment and Innovation

The House Small Business Committee held a hearing entitled, “SBA Management Review: SBA IG Report on the Most Serious Management and Performance Challenges Facing the SBA.” Each year the Office of Inspector General for the Small Business Administration releases this report with the goal of focusing attention on significant issues to enhance the effectiveness of the agency and its programs. At this hearing, Members heard directly from the Inspector General regarding the findings.

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House Committee on Small Business’s Subcommittee on Economic Growth, Tax, and Capital Access Hearing: “Can Opportunity Zones Address Concerns in the Small Business Economy?”

On October 17, 2019, the U.S. House Committee on Small Business’s Subcommittee on Economic Growth, Tax, and Capital Access held a hearing entitled, “Can Opportunity Zones Address Concerns in the Small Business Economy?” The hearing focused on investment in Opportunity Zones, which were enacted in the 2017 Tax Cuts and Jobs Act, and the impact it can have on small businesses and economic development. The hearing did not focus on the SBIC program specifically, but SBIA has been working with the Small Business Committees in Congress on ways to make Opportunity Zone investing attractive to SBICs, which have a proven track record of job creation and economic growth.

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Member Deals 

HCAP Partners

Sleep Data Receives $6M Investment from HCAP Partners to Accelerate Expansion of BetterNight

HCAP Partners, a California-based private equity firm and recognized impact investor, announced a $6 million investment in San Diego-based Sleep Data, a leading provider of sleep services, to support growth of its subsidiary BetterNight.

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HCAP Partners Announces New Investment in DYPER™


HCAP Partners, a California-based private equity firm and recognized impact investor, announced its investment in DYPER™, the world’s first bamboo diaper subscription service. Terms of the deal were not disclosed.

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Tecum Capital Partners

Tecum Capital Announces Investment in The Helpful Hardware Company

Tecum Capital Partners announced its new investment in The Helpful Hardware Company, an Ace Hardware franchisee. Tecum provided subordinated debt and equity to support JPB Partners’ acquisition of HHC.

 

Stellus Capital Management

Stellus Capital Management, LLC Provides Unitranche Financing in Support of Lynx FBO’s Purchase of FTC FBO

Stellus Capital Management, LLC announced today that its affiliates provided senior debt financing and an equity co-investment in support of Lynx FBO Network’s acquisition of the assets of FTC FBO, a full-service fixed-based operator at the Morristown Airport in Morristown, NJ.

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Argosy Investment Partners

Argosy Acquires Groome Industrial Service Group

On September 20, 2019, Argosy Investment Partners V, L.P. and its parallel fund, funds managed by Argosy Private Equity together, acquired Groome Industrial Service Group.

 

Aldine Capital Partners

Aldine Invests in N.J. Sullivan Company


Aldine announced its investment in N.J. Sullivan Company. N.J. Sullivan is a Northern Virginia-based fabrication and machining business primarily servicing the electrical and telecom industries. The Company focuses on manufacturing and delivering niche, customized, industry-rated electrical enclosures, with industry-leading turnaround times. These mission critical components include electrical junction boxes, switch gear cabinet enclosures and bussed troughs for customers located throughout the Northern Virginia and Washington D.C. area.

Aldine provided a subordinated note and equity investment alongside Alium Capital Partners.

Spring Capital Partners

Spring Capital Partners Invests in Leahy Landscaping, Inc.

Spring Capital Partners III, L.P. invested $2.5 million of subordinated debt with a warrant and $500,000 of Preferred Equity in Leahy Landscaping, Inc..  Proceeds of the investment were used to support the majority recapitalization of the Company by Anvil Capital, LLC.

 

Plexus Capital

Plexus Capital closed an investment in SuccessEd, LLC.


Headquartered in Frisco, TX, SuccessEd develops and sells SaaS-based administrative software solutions to K – 12 schools and school districts primarily in the state of Texas.  SuccessEd’s products allow school districts to actively track and review the administration of special education and other special programs to ensure compliance with federal and state regulations. The Company’s products are a mission-critical component of a special education department’s operations and helps schools to appropriately administer individualized education plans to its students with special needs. SuccessEd has grown revenue by a 15% CAGR since 2015 and added several employees over this period to support historical and future growth.

 

Modern Bank

Modern Bank Announces Debt Financing for Milrose Consultants

Modern Bank participated in the debt financing of Milrose Consultants in support of Southfield Capital Partners’ investment in the Company. Milrose provides mission-critical building compliance consulting services to the Class A commercial real estate market through its diverse portfolio of permitting, code & zoning, regulatory filing, due diligence and other compliance solutions.


SBIA is the voice and advocate for the lower middle market. Go to www.SBIA.org/about to learn more about the Small Busines Investor Alliance.

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