17Sep/18

Center Rock Capital Partners Acquires American Piping Products

Center Rock Invests in Leading Global Distributor of Steel Pipe CHICAGO, IL and BLOOMFIELD HILLS, MI – September 17, 2018 – Center Rock Capital Partners, LP (“Center Rock”) is pleased to announce that it has acquired American Piping Products (“APP”), a leading global distributor of steel pipe, fittings and valves.  APP marks Center Rock’s second platform investment out of its inaugural investment vehicle, Center Rock Capital Partners Fund I, LP. 
 
Founded in 1994 and headquartered in St. Louis, Missouri, APP is a specialized distributor of seamless and welded pipe and tubular related products.  The company serves international customers in a variety of end markets including energy, refining, petrochemical, power generation and diversified industrial.  With a large in-stock inventory of niche products and easy access to shipping channels in North America, APP quickly meets customers’ demands in a complex supply chain and is recognized for its world-class customer service.   
 
“We are excited to embark on this next phase of our growth with Center Rock,” said Al Rheinnecker, CEO of APP.  “Center Rock understands the importance of investing in our employees, suppliers and systems to provide the highest level of customer service and responsiveness.  We look forward to working with the Center Rock team to expand our product offering and pursue growth opportunities in the steel pipe market.”  
 
“Al and the team at APP have built an exceptional organization.  With a unique position in the supply chain and diverse end markets, APP has performed well through all industry cycles,” said Ian Kirson, Partner at Center Rock.  “We admire APP’s leadership in the markets they serve.  Al and his team have created a business with a culture of operational excellence that continually provides unsurpassed customer service and value-added solutions to its customers,” added Terry Theodore, Partner at Center Rock.  
 
 
ABOUT AMERICAN PIPING PRODUCTS
 
American Piping Products is a leading global distributor of specialized seamless steel pipe, fittings and related products to customers in the energy, refining, petrochemical, power generation and diversified industrial end markets.  For more information, please visit www.amerpipe.com.
 
ABOUT CENTER ROCK CAPITAL PARTNERS
 
Center Rock is a Midwest-based private equity firm focused on building leading industrial companies in the lower middle market.  Center Rock seeks industrial manufacturing, industrial services and industrial distribution companies headquartered in North America, often with multi-national operations and locations that serve both domestic and global markets.  With substantial expertise working constructively with management teams to drive both operational and strategic improvement, Center Rock’s investment professionals have the flexibility and tools to invest in a broad array of transactions and build value in lower middle market industrial companies.  For more information, please visit www.centerrockcp.com.

  
08Sep/18

CEO Adventures – 2018

Kevin Fechtmeyer, CCCM Managing Partner (with his son on Kilimanjaro)
Doug Koch, CEO of QK Holdings (Morocco)
John Wilson, CEO of VMC Group (Everest Base Camp)
21Aug/17

Family Offices Bypass Private-Equity Funds – They turn to direct investments in private companies in the hopes of earning market-beating returns.

June 9, 2017  By: Sonia Talati

Now it’s the private-equity industry’s turn to get disintermediated. That at least is the conclusion of a study by the Family Office Exchange, one of the nation’s leading family-office research outfits that in the past Barron’s Penta has exposed as having conflicts of interest. FOX says most family offices today are increasingly bypassing private-equity funds and their 2/20 fees, and investing directly in private companies. In fact, 81% of the 118 family offices surveyed by FOX this year have hired staff to invest directly in private firms.

It’s easy to see why. These direct investments returned 8% on average in 2016, compared to the private-equity industry’s 6% return for the same period. FOX says this trend to invest directly has picked up speed in the last three years and is likely to stick around. The research firm currently estimates that family offices have 5% of their private-equity allocation invested via funds and 7% directly, the reverse allotment of just a year ago.

Liesel Pritzker Simmons extracted $500 million of inheritance in 2005, after winning a lawsuit against her family’s trust. Her family office, Blue Haven Initiative, is now entirely dedicated to earning market-rate or better returns while investing in firms that have positive social and environmental impact. So she is investing directly in private companies. Like many other family offices starved for superior returns and wanting to trade on their competitive advantage—the ability to invest for the long turn—Pritzker Simmons believes that direct investing in private companies with a similar mission is the preferred route.

In many ways it makes sense. Instead of paying the 2% management fee and 20% of profits to a private-equity firm, family offices can cut their costs by investing directly in a private company. Furthermore, unlike private-equity firms which rely heavily on leverage, family offices typically prefer an all-cash deal, massively improving the odds of success—and their chances of earning above-market returns.

True, there’s a lot of sweat equity involved in doing this right, but many family offices are run by individuals who built their own businesses and are comfortable interacting with private management. The approach in fact raises confidence levels and lowers risks because it gives the family-office management a chance to “have full transparency as direct owners of that business,” says Jeremy Swan, principal and National Director of CohnReznick’s private-equity and venture-capital advisory firm.

Of course, not every family office is ready for prime time. There is considerable internal family-office capacity that has to be put in place to do this effectively. “They need the right team and processes in place,” Swan says. If a family office is going to act like a private-equity firm, it in effect needs to become a professional operator itself, from conducting proper due diligence and screening to managing its ongoing portfolio risk. “While private-equity deal flow has picked up, it’s very hard for family offices to generate a deal flow as well as general partners [or private-equity firms]. They’ve been at it for a long time,” says Rob Elliot, vice chairman of multifamily-office Market Street Trust.

But family offices are clearly and increasingly climbing up the direct-investing learning curve, and it’s a boon for smaller, family businesses seeking funding or exits. Families who have reached the point where it’s time to sell or cede ownership, but are still emotionally attached to the businesses they have built, often feel more comfortable selling to another family than they do an impersonal private-equity fund, which is often determined to make dramatic changes to the business so the fund can get its money in and out in a tight, five-year or so time frame. In contrast, they often feel that family-office buyers are invested in their business for the long haul, says Swan.

Some family offices, poorly executing their portfolio of direct private-equity investments, will undoubtedly be disappointed by their results. But for a family office prepared to roll up its sleeve and do this messy work right—deep satisfaction and above-market returns are likely to be its result.

Source: Barron’s

21Aug/17

Why Does a Savvy Public Stock Fund Manager Choose Private Equity?

I have encountered a wide range of investors over my 25 years in the investment management industry. While they often differed in their investment philosophies, time horizons, and risk preferences, they agreed on the importance of diversification, transparency and growth when investing for the long term.

From a public investing standpoint, the goals of diversification and transparency can be relatively easy. The investments are typically in publicly traded equities with daily pricing. I was an investment manager of a fund focused on public growth equities, where the primary objective was capital appreciation. The fund provided transparency and liquidity while generating significant capital appreciation over a long term time horizon.

I utilize the same philosophy in my personal investing. Hence, the traditional “blind pool” private equity funds held little allure to me, as I often didn’t know what I was investing in, the potential return and the specific time horizon.

However, one of the major trends in private equity today is that more individual investors are eschewing the traditional “blind pool” funds, and are engaging in direct investment in Private Equity deals. As a direct investor in several private equity transactions as well as a career money manager in a public equity fund, it is interesting to note that the advantages of the direct investment model in Private Equity can mirror some of the advantages of investing in public stocks as highlighted below:

  1. Better control over each investment

Unlike the committed funds, where individuals are bound to participate in all investments of the fund, irrespective of the risk profile and personal choice, direct investing allows the investors to understand each investment on its own merits. Thus, they are able to invest a higher or lower dollar amount depending on their knowledge of the industry, risk profile of the particular transaction, and their personal capital management.  This allows investors like me to be in control of the decisions such as; a) Where to invest (specific company) and b) What to invest (debt/equity).

  1. Diversification

Committed funds often choose to invest in a particular industry, geography or size. While that may work for some investors, it may not work for others who may be looking to invest a limited amount of capital across a wide range of criteria.

Conversely, a direct investment allows the investors to choose and invest based on the sector, business life cycle (growth, acquisitive, mature, etc.), and capital needs (growth, turnaround, acquisitions and/or financial restructuring), balancing the current risk and return of their portfolio.

I have found this to be particularly helpful as it encourages me to take a deeper look into a variety of industries and sectors, encouraging a more thoughtful approach to my overall investment portfolio.

  1. Current income and future growth

As mentioned earlier, individuals can invest in various levels of the capital structure thus providing for capital appreciation (equity) and/or current income (interest/dividends). The flexibility in investment structures with both debt and equity components provides another method of diversifying one’s investment portfolio.

 

All the above also leads to greater transparency since the individual investor has a lot more say over how and where their money is invested.

Important aspects of direct investing include trust, competency of the financial sponsor, and the ability to communicate regularly and honestly. The sponsor needs to identify appropriate investments and be clear about what would make the investment successful as well as what could go wrong. Regular, periodic communication is key to ensure that the investors are aware of how the investment is performing – during both positive and challenging periods.

As an investor in several transactions of Cave Creek Capital Management (CCCM), I find that well-structured and competent managers like Cave Creek Capital Management, work hard through active involvement on the Board and provide additional support through sales introductions, team augmentations, business planning as well as other skills to grow an investment and mitigate potential losses early. They also provide me with regular updates on all my investments so I stay informed. The team at CCCM is always available to answer questions.

Ideally, a direct investor should be very familiar with the investment manager over an extended time period before investing. I’ve known Kevin Fechtmeyer and CCCM for several years, and the average investor in his group has been investing with CCCM for over 15 years. This is vital to proving a track record of performance and communication, which gives me greater comfort in my investment decisions.

Meighan Harahan has more than 25 years experience in the investment management industry. Ms. Harahan managed the Driehaus Mid Cap Growth Strategy with over $1 billion in assets generating a top 1% rating among peers over a 10 year period. Driehaus Capital Management, LLC, an institutional investment management boutique in Chicago, Illinois focused on small and mid capitalization growth companies utilizing fundamental and technical analysis.

The views expressed are personal. As told to Vibhuti Nayar

 

14Dec/16

Denny’s staff donates time, tips to surprise needy families

SCOTTSDALE, AZ (3TV/CBS 5) –

The wait staff, managers and cooks at a Scottsdale Denny’s canceled their own Christmas party, and instead threw a party for four struggling families.

“We normally do a white elephant for $20 each, but we don’t need a gift from each other,” manager Elizabeth Cervantes said. “We decided to get presents for other people.”

They agreed to help one family, but the number quickly grew to four.

Cervantes found the families on Facebook.

One is struggling financially, two are victims of crimes, and the fourth is dealing with medical issues.

Together with some of the restaurant’s regular customers and others, the Denny’s staff arranged an early Christmas for the families Wednesday night at the restaurant near 7000 E. Mayo Blvd.

Each family was treated to dinner, a Christmas tree, presents and more. Each child received a new bike.

One mother wiped tears away, telling the Denny’s staff that her family was unable to celebrate Thanksgiving. She said without their generosity, they would not have been able to have a Christmas either.

“It touches my heart to know we helped these people,” Cervantes said.

Single mother Tisha Morgan, of New River, came with her kids, including her 1-year-old, James. He uses a feeding tube and requires care 24 hours a day.

“I’m so thankful and grateful for this. I don’t know what we would’ve done without their help,” she said.

The Denny’s staff members looked on, proud of their contributions.

“It’s so neat to see something we just thought about doing two weeks ago become so beautiful,” said Shere Baker, an overnight waitress.

Copyright 2016 KPHO/KTVK (KPHO Broadcasting Corporation). All rights reserved.

Source: AZ Family

13Dec/16

Cave Creek Capital Closes Investment in Air Waves LLC

October 24, 2016

Cave Creek Capital (“CCCM”) is pleased to announce its investment in Air Waves LLC (“Air Waves”), a leading provider of on demand garment printing and fulfillment services. Air Waves services several major online retailers, including Amazon, Zulily and Walmart.com by offering thousands of creative, high quality apparel products with rapid turnaround time and “mass customization” capabilities unmatched by competitors. As apparel sales move online, Air Waves is uniquely positioned to offer products and services that enable E-tailers to improve their quality, selection and turnaround time for end customers.

CCCM’s recapitalization funded a repurchase of shares from Management, in conjunction with a strong team of investment partners, including Stewart Capital, C3 Capital, and Northwood Ventures. “We are looking forward to expanding our business with the help of our new partners.” said Kyle Kantner, CEO of Air Waves.  “Our new partners can provide the financial resources and strategic and operational assistance we need to continue our 30% annual growth” states Dan Kaiser, Air Waves CFO.

Cave Creek Capital has an extensive track record of successful investments where Founders can gain personal liquidity, add growth capital and continue to run their companies. CCCM offers the best of a Family Office combined with an institutional investor’s resources.

06Dec/16

Airwaves Case Study

Recapitalization allows AirWaves’ to gain institutional support, and “deep pockets” to fund Growth

Overview

  • Air Waves is a leading provider of on demand apparel fulfillment for the ecommerce channel.
  • The company has developed a proprietary process for managing the complexity of “mass customization” of decorating apparel in single unit quantities.
  • The current owners bought Airwaves in 2009. By expanding offerings, investing in technology, and developing new processes Air Waves revenues grew by 500%
  • Owners desired partial liquidity, a strong Board of Directors and Funding to continue their sales growth of nearly 30 % per year.

 

 

Results

  • Recapitalization with CCCM and its affiliates completed in October 2016
  • Owners achieved their liquidity goals from the transaction
  • Management Team retains a significant minority stake with representation on the Company’s expanded Board of Directors
  • Management continues to run the Company with same leadership roles
  • Substantial investments planned in new personnel
  • Now executing their strategic plan to grow revenues by 5x through customer diversification, organic growth, and acquisitions