PE firm buys back distributor it previously sold

CHARLOTTE, N.C.—Private equity firm Behrman Capital likes BECO Holding Company, a wholesale distributor of fire equipment based here, so much that it recently bought the company back after selling it four years ago.

“They really like the company, the team and the market that it was in,” David Kennedy, a director at Harris Williams & Co., a middle market investment bank that advised BHC on the deal, told Security Systems News.

He added, “I think there's a lot that Behrman thinks they can do with [BECO], by maybe doing some additional acquisitions to make the company even larger.”

Behrman bought BECO from another PE firm, Freeman Spogli & Co., to which Behrman had sold the company in 2010, after owning it for 12 years. The repurchase deal closed Aug. 29 and the sale price and terms of the deal are not being disclosed, Kennedy said. He described the transaction as “a good deal,” adding, “I think it will be very beneficial for the customer base and for the company as a whole.”

He told SSN that it's unusual that a PE firm buys back a company it previously owned. “It's not too often where that happens,” Kennedy said. “A lot of times, as companies grow, they go to larger private equity funds.”

BECO did grow during the past four years it was owned by Freeman Spogli, Kennedy said, “but it's still in the size range that fits for [Behrman], so it ended up working out.”

Founded in 1941, BHC is a leading business-to-business wholesale distributor of fire equipment and related parts. It has 18 locations across the United States, and its customers have access to an inventory of more than 6,200 items often on a next-day basis, according to Harris Williams & Co.

Behrman, based in New York and San Francisco, originally had owned BECO for from 1998 to 2010. Owning a company that length of time also is unusual for a PE firm, which more typically sells after about four years, like Freeman Spogli did, according to Kennedy.

“With private equity funds, they do sort of have a limited amount of time for owning companies before they have to return money to their limited partners,” Kennedy explained. “And so part of the dynamic of the original sale back in 2010 was just driven by that: It was sort of time for [Behrman] to sell [BECO].”

Harris Williams & Co., whose U.S. headquarters are in Richmond, Va., advised BECO on both the 2010 deal and this one. “We know the company pretty well by now,” Kennedy said.

He said Behrman's continued interest in BECO, “says that if you know [BECO], it's a great team that you want to get behind and back.”

BECO sells directly to installers, Kennedy said. From the installers' perspective, he said, “There shouldn't be any change at all, just because the ownership changed. It will be the same business as usual.” In fact, installers could benefit because there “could be additional product opportunities” in the future.

Harris, Williams & Co.'s Specialty Distribution Group led the transaction. In addition to Kennedy, the group included Bob Baltimore, Derek Lewis, and Marshall Croft.