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West Michigan manufacturing executives acquire Ram Electronics COURTESY PHOTO

West Michigan manufacturing executives acquire Ram Electronics

BY Wednesday, April 20, 2016 10:00pm

FRUITPORT — Two former office furniture executives hope to leverage their collective experience as they start on a new business venture in West Michigan.

Brad Davis and Lynne Bosgraaf, both formerly of Grand Haven-based Light Corp., see strong growth opportunities ahead for Ram Electronics Inc., a manufacturer in Fruitport of printed circuit boards, custom wire harnesses and other components. The partners recently closed on a deal to acquire the company, whose owner was looking to retire.

“There are printed circuit boards in so many things and we’re just uncovering where this world of electronics is going,” Davis told MiBiz. “Opportunities are being presented to us daily and that’s where it seems like the opportunity for growth is even larger than what we thought when we entered the business.”

Ram Electronics fit the qualifications the business partners were looking for in an acquisition, he said. In particular, Davis and Bosgraaf wanted a company that was located in West Michigan with an established customer base and proven manufacturing capabilities.

Moreover, Ram Electronics offers both high-volume and low-volume manufacturing capabilities, allowing the company to be flexible during downturns in the business cycle, Bosgraaf said.

Davis and Bosgraaf plan to use their experience in strategic planning — something the company lacked under its previous ownership — to grow sales at Ram between 10 percent and 15 percent annually, Bosgraaf said. The company generated annual sales of between $4 million and $6 million last year.

“We both have vast experience in helping companies get bigger,” Davis said. “Lynne is experienced in sales and engineering, and I’m experienced in business operations and finance. That’s where our strengths lie — in what the company was not so much focused on in the past.”

Davis and Bosgraaf partnered with Zeeland-based Rua Associates LLC to broker the deal. 

Rather than finance the deal through U.S. Small Business Administration-backed loans, the executives partnered with Mercantile Bank Corp. to structure a loan through the Michigan Economic Development Corp.’s collateral support program. The program provides collateral to fund down payments on expansions or mergers and acquisitions, allowing buyers to structure conventional loans with shorter repayment terms and reduced fees compared to loans backed by the SBA.

“We were able to use this as an alternative to put together a financing plan that reduces their risk short term,” said Doug Holtrop, senior vice president at Mercantile Bank. “In a matter of a couple years, they’ll be able to be out of this program, where the other (SBA) deal was for 10 years. Then you’re paying SBA fees for a decade.”

Ram Electronics’ repayment term for the collateral support program is between three and five years, Bosgraaf said.

To qualify for the collateral support program, companies must be located in Michigan, have fewer than 750 employees and use a credit facility also based in the state, according to the MEDC.

Terms of the deal were not disclosed.

On the seller’s side, Ram Electronics’ previous owner, Don Neidlinger, opted to sell the business after reaching retirement age, underscoring a larger trend in the M&A market, said Travis Ernst, business development and transaction manager at Rua Associates.

“A lot of owners are getting to that retirement age, and there’s a large pool of them. Sometimes it’s passed down to a family member or employees, but sometimes the family has no interest or the employees don’t have the money,” Ernst said. “I think we’ll see more of this over the next few years.”

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