GRAND RAPIDS — Blackford Capital’s latest deal brought a new investment partner to the table: Gun Lake Investments, the economic development arm of the Gun Lake Tribe.
Gun Lake Investments joined with Comerica Bank to finance Blackford Capital’s acquisition of Tustin, Calif.-based Hall Research Technologies LLC, a designer and producer of professional audio/visual systems.
The deal could represent the start of a partnership between Gun Lake Investments and the Grand Rapids private equity firm, according to executives.
“We need to partner with smart and experienced people,” said Kurtis Trevan, CEO of Gun Lake Investments, which rents office space in downtown Grand Rapids from Blackford Capital.
After moving into the office a little more than a year ago, Trevan started to get to know his counterparts at Blackford Capital.
The two investment firms “started building a solid relationship and having a good understanding for what they do and what they’re looking for, and them having some very genuine interest in sitting down and understanding what we do and what we want to do,” Trevan said.
The relationship led to Blackford “helping to provide some guidance from their experience to help us move forward,” he added.
The conversations eventually led to Blackford Capital introducing the Hall Research deal to Gun Lake Investments, which had grown comfortable enough to take part in it, Trevan said.
Terms of the deal were undisclosed.
After making one investment with Blackford Capital, Trevan sees the two firms doing business together again on future deals.
“We have that base and relationship with them. I would hope that we find future opportunities with Blackford again,” Trevan said. “I expect that we will.”
That budding business relationship is not exclusive, however. Gun Lake Investments hopes to connect with other investment groups in the region as well.
“We continue to look for more partners to help us achieve our goals,” Trevan said. “We’re too small to be able to get the deal flow that firms like Blackford and other private equity firms and even family offices see. Finding good people that believe in and understand our purpose and mission, we (believe) we can find some good opportunities that way.”
Gun Lake Investments seeks to partner or invest in commercial real estate or mature middle-market companies with earnings before interest, taxes, depreciation and amortization (EBITDA) between $500,000 and $1.5 million. The firm invests as a “relatively passive player,” taking majority or minority stakes through investments that it will hold for several years, perhaps even decades, Trevan said.
Since becoming operational a little more than two years ago, Gun Lake Investments has made five investments. They include the Hall Research deal with Blackford Capital, financing for an office building in downtown Grand Rapids and opening the $4.4 million Noonday Market gas station and convenience store, located across from the tribe’s Gun Lake Casino along U.S. 131 in Allegan County, where it also launched a Subway restaurant.
Additionally, Gun Lake Investments acquired Hudsonville-based Commercial Sanitation Management LLC (CSM), a commercial custodial services provider.
“We focus more on a buy-and-hold strategy,” Trevan said.
In forming Gun Lake Investments with casino revenues, the Match-e-be-nash-she-wish Band of Pottawatomi Indians, or Gun Lake Tribe, seeks to reach out and reinvest in the community, form partnerships, and educate people about the tribe through business. Gun Lake Investments also wants to expand economic opportunity for tribal members and others in West Michigan.
From its perspective, Blackford Capital welcomes the potential to partner on additional deals with Gun Lake Investments.
“We’ve been really impressed with the team at Gun Lake,” said Eric Kamstra, Blackford Capital’s director of investor relations.
“We think highly of the work they’re doing,” Kamstra said. “Both groups would love to find ways to work together. Our investment criteria and approach to investing are strongly aligned. Whenever you find somebody like that in the marketplace, you want to find opportunities to continue to do business together.”
The Hall Research deal made good sense for Gun Lake Investments’ involvement and initial partnership, Kamstra said.
Blackford Capital sees the event and gaming industry as a sector for Hall Research to target. The Gun Lake Tribe’s casino business can help Hall Research enter the sector.
“We think there’s a lot of strategic value that Gun Lake Investments can provide,” Kamstra said. “They can add a lot of value through connections and relationships.”
Hall Research designs, engineers and manufactures customized audio/visual systems for the corporate, I.T., education and health care sectors, said Dennis Dunn, operating partner for Blackford’s National Growth Practice, which closed on the deal in July.
Gaming is “an area where we want to be aggressive,” Dunn said.
The Hall Research deal was the sixth investment for Blackford Capital’s National Growth Practice, which continues to hold four companies after recording two exits. The private equity firm also operates the Michigan Prosperity Fund, which focuses on deals in the state.