Corporate Carve-Out Case Study

GRT Rubber Technologies

The Business

GRT Rubber Technologies is a leading manufacturer of engineered rubber products, including an extensive line of conveyor belt products constructed from polyester and nylon fabrics to meet the most demanding bulk haulage applications. GRT also manufactures a full line of sheet rubber products for sealing, protecting, and cushioning and serves as the only North American company that manufacturers both conveyor belts and sheet rubber products.
Main Street’s strategic support coupled with their approach to promote senior management’s operational autonomy have helped shape our growth trajectory. David Brown, President and CEO, GRT

The Transaction

GRT was introduced to Main Street by an investment bank representing the business for sale. Preceding the transaction, GRT was a non-core division of a subsidiary of a large, publicly-traded manufacturing company. Undercapitalized and receiving limited strategic oversight from its parent company, GRT’s management team sought a financial partner who could help steer the company’s transition to a standalone entity and support its ongoing growth efforts. GRT’s ownership group sought a buyer who could offer a high certainty of close and valued Main Street’s transaction experience and one-stop financing solution.

Main Street’s initial investment, a senior secured term loan and equity investment, provided 100% of the capital to facilitate the transaction and position the balance sheet for growth initiatives. Previously lacking a path towards ownership in GRT, several members of senior management invested equity alongside Main Street and Main Street further sought to align interests with management by establishing an equity incentive plan. In conjunction with the acquisition, Main Street assisted GRT in building out its corporate infrastructure and established a formal Board to provide the company with ongoing strategic support.

The Results

Before Main Street Partnership

  • As a stable but non-core division, GRT was capital constrained and unable to pursue organic or inorganic growth
  • GRT lacked both oversight and strategic support from parent company
  • As a part of a larger, public parent company, no path existed for management to pursue equity ownership
  • Limited corporate infrastructure was inplace

After Main Street Partnership

  • Main Street was able to provide flexible capital support for GRT to pursue organic and acquisition related growth initiatives
  • A formal Board of Directors was established facilitating ongoing dialogue between management, Main Street and an independent director
  • Main Street provided the opportunity for several members of management to obtain equity ownership
  • Main Street assisted GRT to build out the requisite standalone corporate infrastructure and internal processes

Transaction Summary

Company

  • Market leader with over 100 years of operating history
  • Manufacturer of mission-critical products serving a diverse customer base
  • Recurring revenue stream with established market position

Transaction Type

  • Corporate carve-out
  • One-stop financing

Original Investment

  • $44,500,000 (debt and equity)

Investment Structure

  • Senior secured debt
  • Majority equity investment