Dowagiac-based Mno-Bmadsen, the non-gaming investment arm of the Pokagon Band of Potawatomi Indians, takes a familiar portfolio-based approach to its economic development enterprise.
But rather than drive overall top-line revenue for its family of companies, Mno-Bmadsen is focusing on growing the combined earnings before interest, taxes, depreciation and amortization (EBITDA) of its holdings.
The tribe’s goal for its portfolio companies, which are spread over the real estate, professional services, construction and manufacturing sectors, is $25 million in combined EBITDA by 2022.
“Overall, our focus is return on invested capital,” said Julio Martinez, the CFO and de facto chief investment officer at Mno-Bmadsen.
The tribe established the economic development corporation in 2012 and last year adopted a new five-year long-term buy-and-hold investment plan that included the EBITDA goal.
“We have a very long time horizon, which is actually a significant advantage in our evaluation of potential acquisitions. As opposed to strict private equity where you have investors that a need a return fairly quickly in a five- to 10-year time horizon, we don’t have that pressure,” Martinez said.
After three decades of running tribal gaming operations, Michigan-based Native American tribes have started to leverage their casino revenues to launch economic development corporations and diversify their economies. The tribes say the moves are necessary to ensure their economic sustainability and benefit tribal members for generations to come.
Most recently, Mno-Bmadsen added to its Mno-DREK manufacturing portfolio with the acquisition of Fraser, Mich.-based Enmark Tool & Gage Co., a family-owned precision machining company. The Southeast Michigan manufacturer primarily supplies the aerospace, automotive, defense and machine tooling industries; its main clients include Caterpillar, Park-Ohio Holdings Corp. and Timken Co.
Mno-Bmadsen plans to pursue SBA 8(a) certification for Enmark, Martinez said. Federal defense contracting “definitely would be the market that we’d want to look into” after securing the certification.
“They have a limited exposure (to defense contracting),” Martinez said. “I think the 8(a) designation and status would help us tremendously into expanding in those revenue streams and into that market. We’re definitely targeting that.”
Along with Enmark, Mno-DREK also includes Mishawaka, Ind.-based Michiana Global Mold, into which a previous acquisition, Portage-based Accu-Mold LLC, was folded. Red Tail Properties serves as the tribe’s real estate holding company, which recently invested with Cressy Commercial Real Estate in a historic hotel redevelopment in downtown Elkhart, Ind.
Mno-Bmadsen’s Seven Generations portfolio of professional services companies includes Seven Generations Architecture and Engineering that recently moved its headquarters to Kalamazoo and WBK Engineering LLC.
Meanwhile, Martinez said Mno-Bmadsen is actively seeking companies in mechanical and electrical engineering design and mechanical contracting construction and services to join its portfolio of construction companies, which currently just includes mechanical contractor D.A. Dodd LLC.
Mno-Bmadsen also looks to diversify its holdings outside of the Upper Midwest and currently is exploring a possible target in Phoenix, Ariz., according to Martinez.
The tribe also honed a targeted approach to acquisitions, rather than reacting to opportunities as they were presented to Mno-Bmadsen, which engaged with a buy-side sourcing firm to help find companies that fit its investment criteria.
“Instead of reacting, now I’m proactively searching,” Martinez said, noting the process has streamlined the tribe’s acquisitions process and helped get rid of distractions. “I know what I’m looking for.”
EDITOR’S NOTE: This story has been updated to clarify that Accu-Mold’s business was wrapped into Michiana Global Mold and that Mno-Bmadsen has four investment portfolios, including a yet-to-be-named construction group, which includes one company, D.A. Dodd.