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This article was originally featured by PE Hub and was written by Rafael Canton.
Good morning, Hubsters! Rafael Canton back with the US edition of the Wire from the New York newsroom.
To kick it off, we’ll start with a look at Monogram Capital Partners, which saw an opportunity to invest in a business adjacent to youth sports with the acquisition of The Vasco Group. The deal was announced earlier this morning, PE Hub was first to report.
Next, we’ll go further into sports with a look at some recent deals in youth and community sports from firms such as KKR and Bluestone Equity Partners.
Then, Butterfly Equity has morphed a multi-asset continuation vehicle into a single-asset process for fast-casual Mexican food chain, QDOBA, four sources familiar with the transaction tell affiliate title, Secondaries Investor.
Finally, we’ll dive into the HR Tech sector with some recent deals and a report on human capital management technology from Harris Williams.
Investing Sweetspot
Earlier this morning, PE Hub was first to report that Monogram Capital Partners has acquired a majority equity stake in the Vasco Group.
Headquartered in Massillon, Ohio, Vasco is an asphalt, paving, repair and maintenance business that specializes in surfaces for sports, such as tennis courts, football fields and running tracks. Its customers include K-12 schools, municipalities, universities, professional sports teams and multifamily residential customers.
Vasco is composed of three companies, Vasco Asphalt & Concrete, Vasco Sports Contractors and Nidy Sports Construction. Founded in 1967, about 85 percent of the company’s overall business is focused on specialized sports surface work; 15 percent is steered toward commercial paving. Vasco’s business primarily operates in the Ohio and Florida markets. The company is expanding in West Virginia, Philadelphia and the Carolinas.
Jared Stein, co-founder and partner of Monogram, said Vasco hits Monogram’s investing sweet spot where it’s technical enough that there’s real know-how to the business, but it’s not too technical where the certification or other administrative parts of the job make it impossible to scale labor significantly or quickly.
“We had also been looking at youth sports as a major growth area,” Stein added. “It has high single-digit growth all driven by higher participation rates from kids across the country. A lot of where we had looked is in the organized leagues or in even some of the other segments serving that market and the valuations have been pretty prohibitive. Ultimately, this was a unique, secondary way to get exposure to that tailwind against this backdrop of specialized facility services.”
There’s potential for both growth organically as well as add-on deals for Vasco. “There’s still quite a bit of territory even just within the states, let alone adjacencies that Vasco keeps getting pulled into again just because of its reputation and service levels,” Stein said. “There’s a ton of organic tailwinds, or greenfield tailwinds, which is essentially Vasco setting up an adjacent satellite and growing into servicing a market that’s currently outside of the radius but near.”
In 2007, Vasco acquired Nidy. Monogram views that acquisition as the prototype for what it can do in M&A with Vasco. Monogram expects to do one large, transformative add-on deal plus two or more smaller ones each year. Monogram is looking to buy core businesses that expand Vasco geographically, give the company a head-start in a new market or extend its technical capabilities.
Read on for an example of what an add-on deal would be for the firm and its investing interests in the consumer sector.
Community Sports
Stein’s insight speaks to private equity’s interest in youth and non-professional sports. Community sports participation has grown post-covid according to a 2024 report from global strategy consulting firm, Stax. The number of amateur sports clubs in the US has grown from 57,000 in 2020 to over 78,000 in 2023, with total revenue growing by 65 percent over the same period from $11.3 billion to $18.7 billion. There have been a few deals over the past year in the subsector that have stood out.
- In November, Bluestone Equity Partners made an investment in Volo Sports. The company is a provider of social and recreational sports events.
- In October, Accel-KKR took a majority stake in LeagueApps.
- Also announced in the deal was Arctos Partners taking a minority stake in LeagueApps. In August, KKR
closed its acquisition of Varsity Brands, a US-based sports uniform and memorabilia provider.
Restaurant process
What was once understood to be a multi-asset continuation vehicle from Butterfly Equity has morphed into a single-asset process for a fast-casual Mexican food chain, reports affiliate title Secondaries Investor’s Silas Sloan, Hannah Zhang and Madeleine Farman.
The Los Angeles-headquartered food sector-focused private equity firm is running a process to move QDOBA into a new vehicle, according to four sources familiar with the transaction. The process was originally worth $1 billion and involved QDOBA and Generous Brands. Butterfly acquired QDOBA from Apollo.
In 2024, I reported on Bolthouse Farms being split into two separate entities – Bolthouse Fresh Foods and Generous Brands. Generous Brands was a beverage and salad dressing business under Bolthouse Farms and Evolution Fresh. Bolthouse acquired Evolution Fresh in an add-on deal from Starbucks in August 2022.
Adam Waglay, co-founder and co-CEO of Butterfly, told PE Hub at the time that both businesses “will end up going to different investors at some point in time and at different values.”
The size of the now single-asset process is unclear. Evercore is understood to be advising on the process, according to two sources. Butterfly and Evercore did not respond to requests for comment.
Enhancing employee experience
Employers leveraging data analytics and digital assessments in the talent acquisition process is one of the trends in human capital management technology according to a report from Harris Williams. Another reason for dealmaking in the sector is employers looking to enhance the employee experience. This is with the objective being to grow employee engagement and retention.
PE Hub has covered the role technology has in the HR sector significantly. Recently, reporter Irien Joseph highlighted how advancements in AI, payroll automation and the digitization of employee benefits, have led to increased M&A interest in the HR tech sector.
And we’ve also seen a steady stream of deals. In February, KKR acquired a stake in Employment Hero, an Australian provider of employment management solutions, from Seek Investments. In January, Apax Partners sold its majority stake in Paycor HCM to Paychex for $4.1 billion. Paycor is a human capital management software business.
In November, EQT acquired PageUp, a global SaaS talent acquisition, recruitment marketing and talent management software provider, from Battery Ventures.
That’s it for me. If you have any questions, thoughts, or want to chat about deals in the tech, consumer or sports sectors, please email me at rafael.c@pei.group.
Tomorrow, Nina Lindholm will be with you for the Europe edition of the Wire and Michael Schoeck will bring you the US edition.
Cheers,
Rafael
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