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Midwest HVAC News

Rotunda Capital Acquires HVAC Distributor Munch's Supply Co.

The investment, the terms of which weren't disclosed, will enable the New Lenox, Ill., company to solidify its position in the Chicago market and expand into new geographies, said Rotunda Capital Partner Corey Whisner.

Munch's Supply Chief Executive Robert Munch and the rest of the Munch management team will remain in place at the company, a news release said.

The company, which has seven branches in the Chicago area and Northwest Indiana, distributes heating and cooling supplies to dealers and contractors

Mr. Whisner said the family that owned the business was interested in cashing out, while one family member wished to remain involved with the company. The company hired advisory firm Livingstone Partners to find a partner to invest in the business.

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Mr. Whisner said the company fit squarely into Rotunda's distribution vertical, adding that he had been looking at the HVAC space for many years and that there wasn't a lot of private equity investment in the sector, as many of the companies up for sale were family owned and quickly snapped up by strategics. Mr. Whisner said his firm tended to focus on investments in family- or founder-owned businesses like Munch's Supply, especially those seeking for a partner to help them with future growth.

As for Munch's Supply, Mr. Whisner cited the company's "superior performance" and that it was a "business driven by replacement demand, the ability to differentiate with service, outstanding cash flow and is a distributor that is a key partner with their [original equipment manufacturers]."

Mr. Whisner added that Rotunda saw Munch's Supply as a platform investment, and the company would continue to grow in Chicago while expanding "into other markets, primarily through acquisitions, but also through greenfield expansion." He said the surrounding Midwest region would be one location it would peruse for expansion.

A Federal Trade Commission filing from November said Greenbriar Equity Group was seeking approval to acquire Munch's Supply. Mr. Whisner said Greenbriar wasn't a co-investor in this deal, but declined to say if Greenbriar had bid on the company. A spokesman for Greenbriar declined to comment.

Rotunda Capital, of Washington, D.C., typically invests in companies with enterprise values of $15 million to $100 million. Sectors of interest include value-added distribution, logistics, specialty finance, business services and insurance services. The firm invests the capital of its principals, as well as family offices and high-net-worth individuals, on a deal-by-deal basis.




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