Here is a Case Study of a transaction that one of our Private Equity Investors completed. Periodically, I will send you an interesting case study -- not more than every couple of weeks. If you don't want to receive them, you can "unsubscribe" at the bottom of this message.
As a bonus, I am highlighting one of the Strategic Equity Investors we represent. They will do a transaction similar to this one.
If you have any questions or comments, please send them to me.
Sometimes doing a transaction is about more than just money. In fact, in my experience, money is key, but not necessarily at the top of the list. Here's an owner that had taken a consolidation opportunity as far as he wanted to on his own capital. Read about how he found knowledgeable partners with capital and experience to help him continue to grow the business and consolidate the industry.
Enjoy
Dave Charles was bored. He had sold his business to a large public company for a healthy premium and started to lower his handicap. He soon realized, however, that his true passion was building a company. After identifying an attractive and fragmented industry to consolidate - the Transaction / Access Security (TAS) industry - he bought a couple of local firms in Colorado. But to really take advantage of the opportunity to create value, he needed a strong financial partner. He didn't want to risk all his hard won capital.
... Red Hawk Industries provides comprehensive sales, repair, maintenance, and installation services of all types of security equipment used by banks and retail establishments. This equipment includes ATM's, Cash Boxes, Safe Deposit Boxes and any other type of physical equipment used to secure money or valuables. The largest player in the industry, Diebold (NYSE:DBD), only services the equipment it manufactures. Dave's concept is to provide Red Hawk's customers with a complete, one-stop-shop solution that will service all types and brands of TAS equipment for local, regional, and national customers.
Dave used his own capital to acquire three small TAS service companies in Colorado to test his concept of consolidating the industry. From these three initial platforms, Red Hawk Industries was born. The concept worked better than Dave had expected. After two years, Red Hawk had Nine Million in revenue, about a Million dollars in EBITDA and many other opportunities to expand through acquisition both in the Rocky Mountain region as well as nationwide.
But Dave had a dilemma. To get Red Hawk to the $500 Million industry leader he envisioned, he would have to put up all his personal wealth and personally guarantee any bank loans. Not a pleasant prospect for an entrepreneur who had been there, done that, and didn't want to bet the farm again.
Dave found a Strategic Equity Investor that liked his concept and was eager to help. Through Dave's deal with the investor, he was able to take some money off the table, yet kept a sizable equity position in the company. He knew his idea would create an immense amount of value and he wanted to get a second bite of the apple down the road. He also realized that a smaller piece of a bigger pie funded by a partner was much more valuable than owning the whole pie.
Very quickly, with his financial partner's support, Dave was able to acquire several more firms. Red Hawk was now a dominant regional player, and with the addition of several more locations, was named the nation's second largest TAS service provider behind Diebold. Red Hawk was generating more than $70 Million in revenue and was maintaining a healthy profit margin. Dave's next step . . . to integrate the operations, realize synergies and efficiencies, and increase EBITDA margins. A very achievable goal with his partner's help.
Consolidating an industry has its risks. Dave was able to find a strong financial partner who had the capital and Strategic Knowledge to help grow his company fast. Rather than putting his own money out to acquire companies, Dave received some value for the three companies he originally acquired, and also retained a meaningful equity position that is now worth 15 to 25 Million. He knows the benefits of having your cake and eating it too!
Private Equity groups have been pigeon-holed as financial buyers and low ball buyers for a long time. Some of their reputation is deserved. But, there are a select few Private Equity Investors that belong in a whole different investment league. To find out why most Investment Bankers think Private Equity Investors are Second Class Citizens and why they are wrong
get a white paper here ...
Florida Capital Partners (FCP) has been a Strategic Equity Investor for a long time. FCP was founded in 1988 with the belief that there are many small to medium sized companies that can realize important strategic goals through partnership with an experienced equity fund.
FCP makes equity investments in small, niche-oriented manufacturers and distributors. Most of the companies they deal with are private and in many cases they are still owned and operated by the founding families. They are conservative and cautious stewards of the companies they buy. They have never shut down a manufacturing operation and have never relocated a company to save costs.
Scott Heberlein, a key player in Florida Capital Partners, commented recently "Our first objective is to be outstanding financial partners for our management teams. We invest our capital, our time and our expertise with the goal of funding growth and generating long-term equity value for both our investors and our management partners.".
And he followed up with "We tailor our investments to meet the needs of both selling shareholders and operating managers. In addition, we are sensitive to the employees and the surrounding community. Our objective is to structure investments that cater to the interests and needs of all parties involved."
Would you like an introduction to FCP? I will be happy to provide it. Just send us an e-mail ...
For more information on FCP, visit their website...
We are specialists. We match privately held companies with the right equity source. We never charge a seller a fee. Working with Strategic Equity Buyers is our specialty.
To discuss which Private Equity Group will meet your current needs, let us know here ...
has partnered with a top notch operations consulting firm:
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Business CPR specializes in Manufacturing or Service companies that have revenue between $10 Million and $100 Million.
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