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 talented management team that was hired because the entrepreneur got bored running the business. Management was looking for a way to cash out the owner and retain some equity for themselves. Read about how they accomplished their objectives with a Strategic Equity Investor.
Enjoy
The Company was founded by a true entrepreneur. He had the sense to hire some very talented managers. Company was very profitable, but the founder had lost interest and became essentially an absentee owner. He was more interested in sailing than paying attention to the business. The management team wanted to find a way to cash out the founder, have an equity partner to aggressively grow the business and get some equity for themselves.
... manufactured machines that automatically cleaned swimming pools. They had a number of patents, some proprietary technology and a leading market share. At the time, the founder was somewhat interested in selling the operation to pursue his own interests. It was a very seasonal business, but had excellent margins. It was doing about $26 million and generated $5.5 million in EBITDA.
A Private Equity Group created a transaction that accomplished the objectives of the management and the founder. They paid him $30 million at close, enough to support his lifestyle, allowed key management to have 20% of the business and proceeded to grow the firm.
But, in the first year after acquisition, a recession hit that caused the business to slip from where it was before the acquisition. The Equity group helped guide the strategy to bring the business through the recession, and the management group, now owners, aggressively cut costs.
Coming out of the recession, EBITDA jumped. After 4 years, the company was doing $40 million and had an EBITDA of around $13 million. Then, another Private Equity Group paid nearly $82 million for the firm. And, the management team had the opportunity to roll over some of their equity with the second firm.
Although they didn't make any money the first time around, the management team did very well working with the Private Equity Group. They were able to cash out the founder. They had a strategic partner to help them through some tough times. And, they made several million when the first liquidity event was realized.
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 ...
Charter Oak Partners has been a Strategic Equity Investor since its inception. The firm focuses on small to middle market industrial products, consumer products, medical device components and financial services companies.
Charter Oak looks for a definable business franchise, a proprietary product, process or market coupled with a substantial opportunity for growth and value creation. The interest of high quality, capable managers seeking to become owners with Charter Oak is its number one criteria for investment
Tony Dowd, the Managing General Partner of Charter Oak, said recently "Early in an investment, we work with the management team to improve the performance of the businesses, both top line – through our ideas and investment, and bottom line – through help in cost savings and working capital management.".
And he followed up with "A key element of our value build strategy is to further grow our companies through add-on investments. We work to identify optimal acquisition targets and assist in the merger integration process. "
Would you like an introduction to Charter Oak? I will be happy to provide it. Just send us an e-mail ...
For more information on Charter Oak Capital, 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:
Allomet specializes in helping equity investors, owners, lenders and other stakeholders assess operational problems, understand how to solve them and help oversee implementation.
Would you like to determine if an assessment of margin enhancement, operational strategy, or crisis evaluation is right for you? For a thorough preliminary consultation let us know ...
has partnered with a turnaround consulting firm:
Business CPR specializes in Manufacturing or Service companies that have revenue between $10 Million and $100 Million.
Would you like more information on specific techniques to managing a company with problems?
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7 Best secrets of managing a Corporate Renewal from Dr. Kash.
