KRG Completes a Banner Year in 2012

  KRG Completes a Banner Year in 2012

      Acquired Four, Sold Three and Recapitalized Two Platform Companies

Business Wire

DENVER -- February 20, 2013

KRG Capital Partners (“KRG”) completed a successful 2012 acquiring nine new
companies (including four platforms), exiting three investments and completing
two dividend recapitalizations. With over $375 million of available capital
from KRG’s $1.96 billion Fund IV along with additional capital from
institutional co-investors, KRG is actively pursuing the acquisition of two or
more additional platforms as well as continuing its aggressive “buy and build”
consolidation strategy for the existing 14 Fund IV platforms. KRG also
anticipates positioning two to three additional companies for exit in the next
12-18 months.

On the acquisition front in 2012, KRG acquired four platforms at an aggregate
enterprise value of $1.4 billion (Ansira Partners, Inc., Convergint
Technologies, Home Solutions Holdings, LLC and Athletic Therapy Institute
Holdings, LLC) bringing the  Fund IV platform count to 14, and acquired five
add-on acquisitions for a total of 133 since KRG’s inception. Such
transactions led to investing more than $700 million in 2012, including
approximately $150 million invested or to be invested on behalf of KRG’s
institutional co-investors. With significant Fund IV capital still available
(approximately $375 million, excluding existing co-investors), KRG currently
remains very active in reviewing both new investment opportunities as well as
seeking add-on acquisitions for its existing portfolio.

From an exit perspective, KRG sold three platform companies in 2012, one from
its $715 million Fund III (PetroChoice) and two additional platform companies
from its Fund IV (Liberty Dialysis and Tronair). These three exits generated
over $1 billion in combined distributions for the KRG Funds and the
institutional co-investors  that invested side by side with KRG.

Additionally during the second half of 2012, KRG recapitalized two platform
companies, Olson + Co., Inc. and Fort Dearborn Company, Inc., enabling
dividend payments to Fund IV investors and institutional co-investors in
excess of $145 million.

Platform Company Acquisitions

KRG continues to generate significant deal flow, closing on four Fund IV
platform acquisitions in 2012 and is actively reviewing several new
opportunities currently. KRG acquired Ansira Partners, Inc. in March 2012 as
its eleventh Fund IV platform acquisition. Ansira is an industry-leading
direct marketing platform with a deep set of data-driven marketing services
that are built on customer intelligence and aimed at maximizing each client’s
return on marketing investments. The company is KRG’s third investment in the
marketing services sector since the Firm’s inception, and with an experienced
and deep management team KRG believes it is well positioned to execute an
add-on acquisition strategy focused on enhancing and expanding the company’s
service offerings and vertical expertise.

In August 2012, KRG acquired its twelfth Fund IV platform company, Convergint
Technologies, one of the nation’s leading providers of integration services
for electronic security, fire and life safety, and building automation in
North America. Convergint initially installed cameras, card readers and smoke
detectors. Today, Convergint is the leading independent integrator in
deploying and servicing IP based devices. These systems and sophisticated
application software are integrated into a client’s enterprise systems to
create business efficiencies, meet regulatory requirements, and provide safe
working environments. With its new partnership with KRG, Convergint expects to
increase its organic growth and pursue acquisitions that will bolster its
geographic coverage and expand its high level enterprise integration business.

In October 2012, KRG acquired its thirteenth platform company, Home Solutions,
the leading independent home infusion provider in the northeastern United
States that services approximately 13,000 patients annually, offering acute
and chronic infusion services to patients in the home setting. Home Solutions
is well positioned as a “provider of first choice” in the attractive home
infusion therapy industry, a niche within the broader home healthcare services
sector. In conjunction with management, KRG intends to pursue a three-pronged
value creation strategy consisting of i) ongoing same-pharmacy revenue growth
driven by the company’s best-in-class reputation leading to penetration of
existing markets through referral sources, ii) expansion of de novo pharmacy
openings and iii) selective pursuit of strategic acquisitions of top market
leaders or hospital-based providers to expand geographic presence.

In December 2012, KRG acquired its fourteenth Fund IV platform company,
Athletic Therapeutic Institute Holdings (“ATI”), a leading provider of
comprehensive outpatient rehabilitation services in the attractive physical
therapy industry with all locations operating under one brand. ATI was
previously owned and subsequently sold by KRG’s Fund III in 2010 for an
attractive return and, prior to being purchased by Fund IV, exhibited
continued expansion and growth through i) driving continued same-clinic growth
by further penetrating referral sources, promoting brand awareness, and
leveraging industry leading clinic management systems; (ii) expanding through
de novo clinic openings; and (iii) pursing select strategic acquisitions
consisting of both in-market tuck-ins and new market anchor transactions. ATI
has an established infrastructure and a strong, experienced senior management
team prepared to absorb aggressive growth. As such, the company acquired its
first two add-on acquisitions approximately one week after signing an
agreement with KRG and intends to maintain its successful growth trajectory
throughout Fund IV’s ownership period.

Add-on Acquisitions

Finally, as evidence of KRG’s consistent ‘buy and build’ investment strategy,
KRG acquired five add-on acquisitions in 2012 and continues to review
additional add-on opportunities for its younger platform companies.
Particularly notable is the transformative acquisition of Franklin Machine
Products (“FMP”), a leading differentiated and growing distributor of critical
MRO parts, supplies and equipment to the foodservice industry, by Diversified
Food Systems (“DFS”, formerly known as AllPoints), a Fund IV platform. With
the consolidation of FMP, DFS is poised to become the premier distributor of
parts, supplies and accessories to the foodservice industry.

Platform Company Exits

KRG began 2012 with the exit of PetroChoice, the largest distributor of
consumable commercial, industrial, and passenger vehicle lubricants in the
Mid-Atlantic and Upper Midwest regions of the United States. KRG acquired
PetroChoice in December 2007 and completed three add-on acquisitions during
its four year ownership increasing the company’s facilities from two to nine
and substantially increasing revenue and EBITDA. This growth trajectory
positioned the company for a successful exit in January 2012.

In February 2012, KRG completed its first exit in Fund IV, selling Liberty
Dialysis to Fresenius Medical Care (NYSE: FMS). Based in Mercer Island, WA,
Liberty provides dialysis services for patients who have been diagnosed with
chronic kidney disease or end stage renal disease. KRG completed a total of
four add-on acquisitions during its less than two year ownership of Liberty,
one of which transformed the business into the third largest dialysis provider
in the world (Renal Advantage, Inc.). Liberty’s growth from 15 programs in
2005 to over 280 at the end of 2011 positioned the company for a favorable

Fund IV proceeded to sell a second portfolio company, Tronair Holdings, in
March 2012 at a sizable return. Based in Toledo, OH, Tronair is a leading
manufacturer of ground support equipment (GSE) for business, commercial and
military aircraft. KRG acquired Tronair in February 2008, prior to one of the
longest and deepest global recessions in recent memory. Given the economic
climate, KRG and management focused on a growth strategy driven by organic
growth (including end market expansion) and improved operating efficiencies
rather than add-on acquisitions. These combined efforts built Tronair into a
leading GSE brand in the business aviation market that continued to capture
additional market share, and also expanded the brand strategically into both
the commercial and military end markets.

Platform Company Recapitalizations

In September 2012, KRG completed a dividend paying recapitalization of Olson +
Co., Inc., one of the ten largest independent full service digital advertising
agencies in the United States. KRG’s funding of the original platform
acquisition in October 2009, created a conservative capital structure that
allowed Olson to fund its buy and build strategy and the purchase of four
add-on acquisitions with only senior debt. However, due to outstanding free
cash flow and strong EBITDA growth, net leverage decreased rapidly to
approximately 1.0x EBITDA at June 30, 2012, providing an opportunity to
recapitalize the balance sheet and return capital to the equity holders. Total
leverage immediately post recap remained conservative at 2.5x.

In October 2012, KRG completed its second 2012 dividend paying transaction,
recapitalizing Fort Dearborn Company, Fund IV’s packaging and labeling
investment. Since KRG acquired Fort Dearborn in August 2010, the company has
exhibited strong financial performance resulting in strong EBITDA growth and
free cash flow generation. Accordingly, the company decreased total net
leverage significantly from over 5.0x at acquisition to 3.7x as of September
2012. Upon completion of the recapitalization, leverage has returned to
historic levels consistent with the original acquisition.

About KRG Capital Partners

Founded in 1996, KRG is a Denver based private equity buyout firm with $4.4
billion of cumulative capital either deployed or available for future
investment, which includes approximately $1.1 billion deployed since inception
by institutional equity co-investors. The firm seeks investment opportunities
for its partners where KRG can work in concert with owners and operating
managers who are committed to expanding their companies and becoming industry
leaders. The result is a partnership that focuses on creating a significantly
larger enterprise through a combination of internal growth and complementary
add-on acquisitions. Since inception, KRG has invested in 45 platform
companies and has completed 133 add-on acquisitions for those platforms. For
more information on KRG, please visit


KRG Capital Partners
Howard Lipshutz, 303-390-5001
Dale Meyer, 303-390-5001
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