December 1, 2004
As we near the end of 2004, we would like to update you on
the recent activities of Penn Capital Group and our outlook for
2005.
We are pleased to announce that Larry Blake has become a Partner.
Prior to joining Penn Capital Group, Larry had 33 years experience
in various senior sales and marketing management positions at
Bethlehem Steel. As many of you know, Larry focuses on the sales/marketing
end of our business, and is most responsible for bringing us
sale candidates and matching them with potential buyers from
his vast network of business contacts.
Now to the 2004 transactional activities of Penn Capital Group.
The Challenge:
This forty-year-old company that leases steel deck barges and
sectional barges to the bridge construction industry had limited
management depth and the owners wanted to retire. We received
this referral from New York investment bankers who were close
with the owning family. Penn Capital was engaged to maximize
value through the sale of the business.
The Solution:
Penn Capital identified roughly 20 potential buyers on a national/regional
basis and refined that list to three strategic buyers through
an orchestrated bidding process. After additional negotiations
with the bidders, a successful buyer emerged. The sale was to
a joint venture group. One entity was a 120-year-old major barge
leasing company in the New York metropolitan area. The other
entity was a $150 Million construction company from the Boston
area who was looking to expand their equipment leasing business
into the New York market.
Closing was held in May, 2004.
The Challenge:
This East Coast company is a highly respected manufacturer
of wooden stairs who was referred to Penn Capital by a regional
accounting firm. The company needed additional working capital
to grow sales and increase production. Penn Capital was engaged
to sell all or a portion of the assets for the company’s
continued success.
The Solution:
Penn Capital identified five potential financial buyers to
purchase a majority interest in the company. Three buyers walked
away fairly early in the negotiating process with the other two
remaining highly interested. As events and negotiations unfolded,
the seller chose the buyer that maximized his expectations. He
received a larger percentage ownership position; he became Vice
President of Sales and a true business partner; and the new owner’s
capital infusion provided the best solution for sales growth
and profitability.
Closing was held in June, 2004
The Challenge:
This Mid-Atlantic structural steel, sheet metal, and steel
plate custom fabrication company has been producing industrial
and commercial products since 1945. The two major shareholders
wanted to retire, but had no succession management in place to
operate the company. This project was brought to us by a senior
business leader who has a close relationship with a Penn Capital
partner. Penn Capital was retained to maximize value of the assets
through the sale of the business.
The Solution:
Penn Capital brought in six qualified buyers and narrowed that
to one who best suited the needs and compatibility of the sellers.
The buyer comes from a fabrication and machining background as
a general manager in a large national manufacturing company in
the Middle Atlantic area. A definitive agreement is signed, due
diligence is proceeding, and we expect a year-end closing.
The year 2005 looks to be another busy one for Penn Capital.
We are working with a number of owners on pending sale engagements
which should become official in the 1 st Quarter 2005:
- A $3.5
Million custom foundry (aluminum and brass)
- A
$4.0 Million garage door manufacturing and installation
business
- A $2.5 Million structural fabrication business that
is tied to the metal building industry
- A $3.5 Million decorative
sign business
All of these businesses are located in the Eastern/Middle Atlantic
states.
Penn Capital is a middle market investment banking firm that
provides merger and acquisition advisory services to closely
held businesses with transaction values from $1 Million
to $15 Million. Our focus is on manufacturing and distribution
businesses in the Middle Atlantic states. We do not have a “standard
model” solution to business owner challenges in the sale
transaction process. With thirty years experience closing transactions
and listening to what the owner (your client) wants to achieve
personally and financially, we craft a customized financial structure
which incorporates their liquidity and control desires, as well
as the future capital needs of the business. Our experience and
expertise in working with closely held businesses allows us to
speak their language, and it gives us an uncommon understanding
of how to walk them through the intricate sale process and maximize
value.
To learn more about Penn Capital and how we can be of service
to you and your client, please visit our web site at: www.penncap.com or
call us at 717-626-1127.
We wish you and your family our best wishes for a happy and
healthy holiday season and a very prosperous 2005.
Sincerely,
PENN CAPITAL GROUP, L.L.C.
R. Dennis Hollinger
Managing Partner
Direct: 717-626-1127
E-Mail: hollinger@penncap.com
Lawrence N. Blake
Partner
Direct: 610-388-7119
H. Binney Beale
Partner
Direct: 610-347-6840
