Kohlberg & Company: Back to Basics InvestingSeptember 20th, 2008
Kohlberg & Company recently announced the firm had signed a definitive merger agreement to acquire Centerplate, a Spartanburg, South Carolina based provider of food and concession services to sports venues and other entertainment facilities across the US and Canada.
What’s interesting about this public-to-private transaction is how the last 12 months of deteriorating valuations on Wall Street is now presenting some interesting opportunities to the PE firms patiently waiting on the sidelines. Centerplate traded nearly as high as $18 a share last October and with Kohlberg’s proposed offer of $4 a share, is essentially paying about 5.5x EBITDA for a service based business that has actually shown descent top-line growth (and steady cash-flow) in each of the past 3 years. At that multiple it most likely didn’t take the most sophisticated Excel model to justify the offer and pull the trigger. It remains to be seen the activity that now follows as we near Q4 of 2008.