Brentwood exit spree comes at the right time

The Los Angeles-based firm led by partner Bill Barnum has sold three companies this month and is expected to come to market with its next fund later this year.

Los Angeles-based Brentwood Associates has had the busiest month in the firm’s history, according to partner Bill Barnum.

The firm has sold three portfolio companies during the month of June: display advertising business Array Marketing, apparel and accessories company Filson and equestrian footwear and apparel manufacturer Ariat. Financial terms were not disclosed.

The exits could not come at a better time for Brentwood, whose fourth fund is roughly 80 percent invested, as limited partners want to see capital distributions from realisations before re-upping to an existing manager.

“As much as we like the businesses, it was time to get the liquidity and give it back to our LPs,” Barnum said.

Brentwood is expected to come to market with its next fund in either the third or fourth quarter of the year, according to a source with knowledge of the situation. The firm declined to comment on fundraising. Brentwood’s fourth fund closed on $440 million in 2008.

Bill Barnum

Barnum attributed the timing of the three exits to a combination of solid portfolio company performance and a “pretty robust” exit environment.

“Company performance has been really strong across our portfolio for the past 18 months,” Barnum said. “The economy is not doing great, but it seems to be stable and growing slowly, so performance across many portfolios, not just ours, is good.”

Brentwood has also been actively pursuing a number of investment opportunities, and expects to have made at least two new investments before the end of the year, according to Barnum, who said that the quality of investment opportunities has “improved pretty dramatically”.

“There are a lot of specialty retail businesses for sale and a lot of opportunities in branded consumer products,” he said. “The middle market seems to be very active…when higher quality companies are for sale, the number of closed deals increases pretty dramatically also.”

Current investments in Brentwood’s portfolio include restaurant chain Veggie Grill, specialty paper company Paper Source and athletic club operator Spectrum Clubs.

The firm was founded in 1972 and manages an equity pool of more than $750 million.