An emphasis on shared family values and the promise of continued investment and growth made last year’s sale of privately-owned Structural Concepts Corp. to private equity firm Mason Wells a “very friendly, reasonably smooth deal all the way along.”
That’s according to Dave Geerts, who retired as CEO and president of Structural Concepts earlier this month.
Structural Concepts Corp.
Top executive: Brad Gates, president and CEO; Dave Geerts (retired)
Annual sales: $100+ million
Full-time West Michigan employees: 550
Brief business description: Manufacturer of temperature-controlled food display cases
Advisers: Warner Norcross + Judd LLP (legal), P&M Corporate Finance LLC (financial), Beene Garter LLP (accounting)
Structural Concepts manufactures temperature-controlled food display cases for supermarket and foodservice operators. The company employs 550 people at its 500,000-square-foot manufacturing facility in Norton Shores, just south of Muskegon.
After 48 years of building the business, founder James Doss and the senior management owners decided to start looking for a buyer of Structural Concepts, the winner of the manufacturing category in the 2019 MiBiz M&A Deals of the Year Awards.
“Our founder was getting up in years and really wanted some liquidity and the two members of the senior management team that also own stock, including me, were wanting to retire,” Geerts told MiBiz.
The company, which generates annual revenues in excess of $100 million, received “incredibly strong interest” from potential acquirers, including strategic private equity firms and family offices. However, the owners were looking for more than just the highest bidder.
“We had built it from nothing into something really cool,” Geerts said. “We wanted shareholder liquidity, but we needed the right partner.”
In the end, the leadership at Structural Concepts found a match in Milwaukee, Wis.-based Mason Wells, a leading Midwest-based private equity firm with $1 billion in assets under management. Mason Wells acquired Structural Concepts in October 2018 — its first acquisition in Michigan — adding the company to its engineered products and services portfolio.
“We’ve had a strong growth record and wanted that continue,” said Geerts, who has led the company for 25 years. “We picked Mason Wells because they had a reputation for doing the right things to grow their companies.”
In this case, that included a track record of investing in companies via new products, processes and equipment-enabled growth. In addition, Mason Wells seemed “extraordinarily focused on providing ongoing opportunities for employees,” according to Geerts.
“That was really important to us and the other key was Mason Wells doesn’t get involved in operations,” he said. “A lot of public companies, a lot of family offices, a lot of PE groups like to take over operations. These guys don’t want to get involved in the operations. They let the managers manage.”
Mason Wells targets Midwest-based manufacturing companies that make engineered products or consumer packaged goods, which also aligned with Structural Concepts.
Before the sale, Geerts did his “own due diligence” by reaching out to a handful of companies that Mason Wells had bought or sold.
“Every single company did well under Mason Wells’ ownership, and interestingly and importantly, they’re doing well under the new owners that Mason Wells sold them to,” Geerts said. “They just checked all the boxes.”
The value of having a buyer that understands the unique environment of family-owned businesses was also a determining factor in selecting the firm from among the pool of offers, Geerts said.
“The cultural fit is not the same, but it’s closer than anyone else,” Geerts said. “Yes, they’re going to be more profit-sensitive than the family was, but their focus is more on maintaining the positive aspects of the culture. That really, really appealed to us.”
The sale and integration process was “shockingly non-controversial,” thanks to some particular best practices, he added.
“We had audited financial statements back to day one,” he said. “That was a huge blessing. The other thing I would advise is to watch your contracts. Make sure you have all your contracts in a central location and make sure that only strictly pre-approved officers are allowed to approve.”
Because of its size and the oversight requirements and rigidity of the sale, Structural Concepts — formerly an S-Corporation — was structured with an F-reorganization during the transaction, an uncommon move that required the help of Grand Rapids-based law firm Warner Norcross + Judd LLP.
“I was told horror stories and I experienced none of those here. We had the right law firm in Warner,” Geerts said. “Steve Waterbury is a freaking legend.”
In a testament to their confidence in Mason Wells and the continued growth of Structural Concepts, all of the former shareholders, including the 85-year-old founder, reinvested in the new company, according to Geerts.
“We weren’t even asked,” he said. “We just did it because we believe in our future and we believe in their management style.”
FINALIST: Medbio sells stake to Graham Partners, acquires AIM Plastics
Grand Rapids-based Medbio LLC in July 2018 sold a majority stake to Philadelphia, Pa.-based Graham Partners, a private equity investment firm that targets industrial technology and advanced manufacturing companies.
In the 15 months since the deal, the manufacturer of injection moldings, assemblies and packaging for the medical device and biotech industry has invested in a $3.5 million expansion project in Cascade Township and acquired AIM Plastics Inc.
The partnership with Graham Partners came after record year-over-year sales acceleration and a “big growth spurt,” Medbio President and CEO Chris Williams said at the time.
Williams continues to hold a substantial interest in Medbio after the deal with Graham Partners, which cited the company’s leadership team and operational history as a reason for the investment.
Two months after the sale, Medbio announced plans to renovate a facility across the street from its Cascade Township plant, an expansion that could create up to 43 jobs. The new 25,000-square-foot facility, adjacent to Medbio’s existing 65,000-square-foot building, provides additional capacity for medical device and diagnostic assembly as well as packaging operations.
Then in February 2019, Medbio acquired AIM Plastics in Clinton Township, 20 miles north of Detroit, which specializes in the niche of prototype-to-production molds and complex injection molding, according to a statement.
In a statement at the time, Graham Partners Managing Partner Joe Heinmiller said the acquisition of AIM will be a “truly transformative” step forward for the company.