Information on the Target

Nth Degree, Inc. ("Nth Degree") is a prominent provider of exhibit management and event services, headquartered in Duluth, Georgia. Since its inception, the company has established a strong market presence by delivering comprehensive solutions for clients worldwide, facilitating successful events and exhibitions through expert management and logistical support. With a focus on innovation and quality service, Nth Degree has become a go-to partner for businesses seeking to enhance their brand visibility and engagement through tailored event experiences.

Under the stewardship of a dedicated management team, Nth Degree has navigated various challenges, including the impact of the global pandemic. This resilience is primarily credited to the strategic partnerships and operational efficiencies implemented throughout the company's operations.

Industry Overview in the United States

The event services industry in the United States has shown remarkable adaptability amidst economic fluctuations and shifting consumer behavior. With demand for live events rebounding post-pandemic, the sector has been on a recovery trajectory characterized by innovation and digital integration. Companies in this space are increasingly embracing technology to enhance participant experiences, such as virtual and hybrid formats.

As organizations recognize the importance of engaging their audiences through immersive experiences, the industry is benefitting from increased spending on marketing and event execution. Additionally, there is a growing emphasis on sustainability, prompting companies to incorporate eco-friendly practices into their event planning and execution, thereby aligning with broader societal expectations.

Moreover, the landscape is competitive, with firms striving to differentiate themselves through unique service offerings and superior customer experiences. This dynamic environment presents both challenges and opportunities for firms like Nth Degree as they seek to expand their market share in an evolving industry.

The future of the event management sector looks promising, supported by the increasing integration of artificial intelligence and data analytics, which enable more personalized and effective event strategies for clients. As such, companies that can leverage these advancements and remain agile in their operational strategies are poised for success.

The Rationale Behind the Deal

Capitala Group’s recent sale of its entire equity stake in Nth Degree to Shamrock Capital marks a significant milestone for the asset management firm. Having transformed its investment into an 85% internal rate of return (IRR) since the initial investment, Capitala's decision reflects a strategic exit following a successful partnership where Nth Degree navigated through challenging market environments and demonstrated impressive growth.

This transaction underscores the culmination of a fruitful engagement with Nth Degree's management team and MSouth Equity Partners, highlighting Capitala's commitment to fostering strong leadership and strategic direction within its portfolio companies. The successful exit is not only a testament to the resilience of Nth Degree but also to Capitala's effective investment strategy in the lower- and middle-market segment.

Information about the Investor

Capitala Group is a distinguished asset management firm specializing in providing private credit and private equity financing to lower- and middle-market businesses across North America. Established in 1998, Capitala has successfully managed over $2.7 billion in investments, utilizing a flexible capital mandate to support businesses with creative financing solutions.

With a rich experience spanning over twenty-five years, Capitala's focus is on partnering with strong management teams to create value, drive growth, and implement strategic initiatives. This approach has positioned the firm as a reputable player in the investment landscape, allowing it to navigate diverse market cycles effectively.

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In assessing the investment made by Capitala in Nth Degree, it is clear that the partnership yielded substantial returns despite inherent market risks. Achieving an 85% IRR demonstrates both effective management and a commitment to strategic decision-making during turbulent times. The emphasis Capitala placed on supporting Nth Degree’s management team certainly contributed to the successful transformation and exit strategy.

Moreover, the alignment with MSouth Equity Partners provided valuable resources and insights, further strengthening Nth Degree's operational capabilities. Given the growth trajectory of the event services industry, Capitala's decision to exit at this juncture appears to be well-timed, positioning the firm favorably for future investments.

Overall, the investment in Nth Degree represents a strong example of how effective partnerships and strategic oversight can result in impressive financial outcomes. Capitala’s ability to realize its full equity position while navigating the complexities of the market suggests that this investment strategy could serve as a model for similar opportunities in the future.

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