L Squared Capital Partners acquires Functional Devices

L Squared Capital Partners has acquired Functional Devices, Inc., a provider of field devices for building automation and emergency lighting systems, for an undisclosed sum. This acquisition marks a significant step for L Squared in its strategic focus on scaling platforms within the building automation sector. Functional Devices, recognized for its RIB® (Relay in a Box®) brand, will continue its operations under the leadership of its current president and CEO, Mark Fernandes, who invested in the transaction alongside L Squared.

The acquisition aligns with L Squared’s investment strategy in the building automation and controls market, which benefits from persistent trends like energy efficiency mandates and the increasing complexity of systems. Functional Devices' well-established RIB® brand is known for reliable and easy-to-install products such as relays, current sensors, and power supplies, utilized in commercial buildings and data centers. The partnership anticipates leveraging these established capabilities to further drive product development and expand through strategic acquisitions.

Mark Fernandes emphasized the shared long-term vision between Functional Devices and L Squared, focusing on delivering high-quality products and investing in strategic growth initiatives. The collaboration aims to harness Functional Devices' reputation and market presence to pursue further acquisitions and broaden its footprint in critical components of building automation systems.

The building automation industry is characterized by its fragmented nature, with numerous specialized market participants. L Squared’s acquisition of Functional Devices positions it to capitalize on this fragmentation. By integrating complementary businesses, the firm seeks to deepen market penetration and introduce adjacent offerings, thereby enhancing Functional Devices' position as a key player in HVAC, lighting, and building management systems.

Looking ahead, L Squared, alongside Functional Devices' management team, plans to invest in new product development and expand commercial reach. The partnership involves evaluating additional acquisition opportunities within the sector to build on the platform's capabilities and market share. Financing for the transaction was provided by L Squared Capital Partners IV and affiliates, with debt support from Apogem Capital and BMO.