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 at the top of the list. Here's a couple of owners that had taken their company as far as they could on their own resources. Read about how they got the several paydays as well as knowledgeable partners to help finance and grow the business.
Enjoy
Mohan and Suri, first generation immigrants from Sri Lanka, built a repro graphics services business by acquiring five firms in ten years. Their operation was a regional powerhouse in a fragmented industry. Yet, to continue their consolidation, they needed a partner with capital.
... is the nation's leading provider of repro graphic services including blue printing, other large format engineering copying and large format digital color imaging. It primarily serves the architectural, engineering and construction industries.
Recognizing the benefits of scale and having been successful in their prior acquisition efforts, the principals were eager to lead a consolidation of the fragmented repro graphics industry. However, the principals did not have the resources to lead the consolidation independently and wanted an experienced partner with capital.
A transaction was structured so the principals received a substantial amount of cash, some notes, and a 50% ownership stake. In addition, Mohan and Suri were relieved of their personal guarantees and had the ability to earn additional consideration based on performance.
Our Strategic Equity Investor provided the necessary equity capital and arranged for bank financing to allow the Company to continue making acquisitions. In fact, over the ensuing 30 months they helped Mohan and Suri acquire 38 companies and grow revenues from $75 million to over $300 million. During that time period, management significantly improved the operating margins of the acquired companies and continued to grow the business internally.
Even better, the Strategic Equity Group structured a second transaction that management received more liquidity (about two times the original amount) without selling any of their equity. The equity group sold substantially all of its ownership interest to a new private equity firm chosen by management.
Mohan and Suri achieved more than their original goals. They went from being stretched financially to growing the business to more than four times its original size. All of it was done with other people's money. Further, they have already achieved two bites of the apple and are working on a third. Impressive.
Private Equity groups have been pigeon-holed as low-ball financial 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
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ZS has been a Strategic Equity Investor for a long time. The firm was established in 1985. Soon to be 20 years of successful investing and partnering with management and owners.
ZS makes long-term investments in successful middle-market companies. Since 1985, they have focused on transactions that provide liquidity to business owners while enabling them to maintain a significant ownership stake and keep their company independent. Their strengths are in understanding the objectives of business owners, structuring transactions that respond to these objectives, and then being constructive partners.
Jeff Oyster, a partner in the ZS Fund, said recently "We don't over leverage companies - we always use a lot of equity in our transactions so the company operates as it always has in the past. We only want partners who desire operating autonomy - we can't run their company. We also structure our transactions as flow through entities (i.e., sub-s, lp's, llc's) so everyone benefits from only paying income tax once."
And he followed up with "Our firm is flat and entrepreneurial - no bureaucracies here - just like the companies in which we invest. Our investors are largely high net worth families and individuals who have built and run successful private companies, not state or corporate pension funds. Our investors give us a lot more than their money - they share their business experience as well. That's a very valuable resource - and we use it."
Would you like an introduction to ZS? I will be happy to provide it. Just send us a note ...
For more information on the ZS Fund, 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 ...
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