Case Studies

Background

Established outside Houston, Texas in 1988 as a home inspection firm, DPIS Builder Services (“DPIS”) has grown to become a full-service engineering, inspection, and quality assurance firm primarily serving residential home builders. As of 2014, DPIS had grown significantly in Texas by acting as a quality control arm for medium to large residential builders. The company’s founder was seeking a transaction that would provide liquidity and a pathway to retirement for certain original management members along with career and ownership opportunities for next generation managers. DPIS characteristics include: (i) strong base of loyal customers; (ii) operation in attractive/favorable geography; (iii) robust, proprietary technology platform; and (iv) deep management team.

Transaction & Post Closing

In December 2014, Brass Ring sponsored the recapitalization of DPIS in a transaction that generated liquidity for the original management group along with ownership and increased responsibilities for next generation managers. The deal was completed in conjunction with a strong operating executive who joined the board to help support DPIS’ growth strategy. Post-closing accomplishment include: (i) recruitment of strong CEO, CFO and CIO; (ii) geopraphic expansion into new operating territories beyond Texas; and (iii) acquisition of several energy testing firms including Simple Energy Testing, Home Energy Group, Cool Testing and Infrared Solutions. In July 2019, DPIS was sold to Saw Mill Capital. The transaction provided significant liquidity and ongoing career opportunities for management.

Background

Portu Sunberg (“PS”) was established in Minneapolis, MN in 1977 as a vendor-rep organization serving various product companies. Over the years, PS’s strategy evolved to offering a suite of services ranging from consumer research studies to packaging design to inventory sales tracking and analysis. PS now manages distribution for over 100 product companies ranging from emerging businesses to some of the world’s largest consumer packed goods companies. By 2012, the company’s second generation ownership was seeking liquidity and outside resources to continue the company’s growth and development. PS was characterized by: (i) deep relationships but high sales channel concentration with one large national retailer; (ii) strong and youthful management team; (iii) entrepreneur stage business practices and strong company culture; (iv) fragmented market with numerous acquisition opportunities.

Transaction & Post Closing

In December 2012, Brass Ring sponsored the recapitalization of PS in a transaction that generated significant liquidity and large ongoing ownership for management. The transaction was completed in roughly 6o days in advance of the 2013 tax law changes. Post-closing developments have included: (i) enhanced management team depth through the addition of strong CFO, controller, and VP human resources; (ii) realignment and formalization of go to market strategy; (iii) highly successful penetration into food sector; (iv) implementation of robust ERP system; (v) prepayment of subordinated debt and (vi) completion of a strategic acquisition. In December 2021, PS was sold to a larger private equity firm. The transaction provided significant liquidity and ongoing career opportunities for management.

Background

Founded in Port Washington, WI in 1994, Franklin Energy Services (“Franklin”) provides both utility and government sponsored energy efficiency program services to business and industry. By 2007, Franklin’s founder was seeking personal liquidity, ownership and career opportunities for management, and a limited confidential process with local buyers. Franklin characteristics included: (i) front-runner status with strong regional reputation in a rapidly growing industry; (ii) sales largely driven by legislative fiat; (iii) high level of customer concentration; (iv) entrepreneurial stage business practices with very strong culture; and (v) deep management team anxious to grow business.

Transaction & Post Closing

In November 2007, Brass Ring sponsored the recapitalization of Franklin in conjunction with the company’s founder and management. Working with an outside industry consultant, Brass Ring and management mapped out an analysis of industry opportunities which was paired with a highly targeted sales strategy. Other post-closing initiatives included: (i) implementing robust IT systems; (ii) deepening an already strong management team with a CFO and several other executives; (iii) recruitment of an experienced board member who had parallel growth experience; and (iv) relocation to new headquarters. The initiatives enabled Franklin to win a significant number of new contracts, dramatically expanding the company’s customer base, geographic scope of operations, and employment. In October 2010, Franklin was sold to private equity firm Cortec Group. The transaction provided significant liquidity and ongoing career opportunities for management.

Background

IGC Technologies (“IGC”) was established in Milwaukee, WI in 1982 by a classic “backyard tinkerer”. Selling a variety of industrial ingredients, IGC’s founder stumbled across a formulation that addressed an age old problem of veining defects endemic to the metal casting process. This formulation thus became the company’s main product. By 2005, IGC’s founder developed life threatening health issues that led him to seek liquidity in a process where he sought to avoid using an intermediary. At the time, IGC was characterized by: (i) high domestic market share in a niche segment of the foundry additives market; (ii) significant customer concentration as the domestic foundry industry consolidated (iii) modest growth rates as end markets remained tied to low growth segments like automotive; (iv) large supplier concentration reliant on one source; (v) an aggressive young president with international experience and a well-regarded chemist in place; (vi) entrepreneur stage business practices and stagnant new product development; and (vii) opportunity to expand sales internationally.

Transaction & Post Closing

In October 2006, Brass Ring sponsored the buyout of IGC in an all cash transaction that provided complete liquidity and retirement for the founder. The president gained the opportunity for significant ownership and was appointed CEO. Post-closing accomplishments included: (i) recruitment of a strong CFO and VP of Operations; (ii) consolidation of three operating facilities into one; (iii) realignment of resources and introduction of several next generation products; (iv) formalization of partnership with the world’s largest foundry supply company based in Germany, which led to significant international sales; (v) development of alternative supply sources for critical ingredients; and (vi) managing through the 2008/09 recession and concurrent increase in raw material costs which significantly impacted financial results. By 2011, Prince Minerals, one of IGC’s key new suppliers, expressed considerable interest in the company which ultimately led to IGC’s acquisition by Prince in October 2011. IGC’s CEO has since gone on to become a senior executive at Prince, managing numerous larger businesses.

Background

Founded in Chilton, WI in 1983, American Finishing Resources (“AFR”) provides paint and powder coating removal services as well as fixture fabrication to a broad array of Midwest based manufacturers. By 2006, the two founding owner-manager siblings were seeking liquidity on their AFR ownership as a means to address strategic differences. AFR characteristics included: (i) high market share in an environmentally sensitive niche industry segment; (ii) strong recurring revenues with route based operation; (iii) flat to declining revenue trends; (iv) idled five year old Shelbyville, IN plant; (v) scaled back management team; and (vi) several identified acquisition opportunities.

Transaction & Post Closing

In July 2006, Brass Ring sponsored the buyout of AFR in an all cash transaction that provided liquidity to ownership and investment opportunities for management. Post-closing accomplishments included: (i) recruiting a strong CEO who also purchased equity; (ii) reopened the idled Indiana facility; (iii) acquired a small competitor; (iv) developed an interchangeable material handling cart which solved a problem of limited use carts in manufacturing settings; (v) expanded employment and revitalized sales efforts; and (vi) significantly expanded the customer base and rebuilt reputation with former customers. After an 8 year ownership and having achieved the initial strategic goals, Brass Ring exited AFR through a sale to DuBois Chemicals in October 2014. The transaction provided significant liquidity to management and ongoing managerial roles.

Background

Infinity Precision Systems (“Infinity”) was founded in 2002 by several engineers who had previously worked together in another setting. The company specialized in automated precision wet process and drying equipment for clients making high-value components in primarily technology industries. By 2005, the company was seeking an outside partner to provide liquidity to angel investors and management, as well as access to resources for growth. At the time, Infinity was characterized by: (i) large customer concentration in the computer disk drive sector and significant international sales; (ii) lumpy revenue stream owing to volatile end markets and capital goods based nature of business; (iii) young, aggressive CEO and deep roster of engineers; and (iii) flexible, outsourced production model that kept overhead low.

Transaction & Post Closing

In August 2005, Brass Ring and two other private equity firms sponsored the recapitalization of Infinity. Closed in 45 days, the transaction provided complete liquidity for angel investors and partial liquidity for the CEO as well as movement to a part time management role. Other key employees also gained the opportunity become investors in the company. Post-closing accomplishments included: (i) development of significant sales into the solar market; (ii) recruitment of outside board member; and (iii) development of IT infrastructure. In December 2009, Infinity was sold back to its CEO founder.