CNL Strategic Capital Grows Its Portfolio With Investment in 16th Company
CNL Strategic Capital LLC, a publicly registered non-traded limited liability company externally managed by CNL Strategic Capital Management LLC and Levine Leichtman Strategic Capital LLC, has closed on an approximately $29.5 million investment in its 16th portfolio company: Madison Retirement Holdings TopCo LLC, or MAP.
Through its wholly-owned subsidiary, MAP Strategic Capital EquityCo LLC acquired an approximately 50.5% indirect equity ownership interest in MAP. CNL Strategic Capital’s investment is comprised of an indirect common equity interest investment of approximately $21.5 million and a concurrent debt investment of $8 million made through its wholly-owned subsidiary, MAP Strategic Capital DebtCo LLC, in the form of a senior secured note issued by MAP. At the closing of the transaction, substantially all of the remaining MAP equity is owned by certain of the pre-closing members of MAP and management.
MAP is a third-party administrator of retirement plans. Serving small and mid-sized businesses across all 50 states, MAP provides customers with plan design and implementation, plan administration, compliance, fiduciary services and customized support to approximately 3,700 plans and 200,000 participants. Established in 1993, MAP has over 100 employees and is headquartered in Appleton, Wis.
CNL Strategic Capital seeks to provide current income and long-term appreciation to individuals by acquiring controlling equity stakes in combination with loan positions in durable and growing middle-market businesses.
CNL Strategic Capital believes that MAP is a provider of resilient, non-discretionary services to a large and growing industry. Over the period from Dec. 31, 2014, through Dec. 31, 2023, MAP achieved a compound annual revenue growth rate of approximately 19.2% primarily driven by growth in customer count and revenue per plan. CNL Strategic Capital further believes that MAP has an attractive financial profile with the potential for high recurring revenue; strong margins of earnings before interest, taxes, depreciation, and amortization; and high free-cash flow conversion.
Key growth opportunities for MAP, according to CNL Strategic Capital, include customer retirement plan and associated participant growth, enhanced cross-sell opportunities across a broader customer base, expanded regional and national sales and marketing efforts as scale of the business develops, and continued acquisition of strategic targets with complementary new products and services.
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