Management-Led Buyout Case Study

Kickhaefer Manufacturing Company

The Business

KMC manufactures ~5,000 unique precision metal parts and components using a variety of manufacturing processes including stamping, slide forming, laser cutting, press braking and forming to produce a wide array of complex, precision metal parts and components. KMC serves customers primarily in the heavy equipment, automotive, on-highway trucking and general commercial industries through a combination of direct sales and industrial distribution channels. In addition to the company’s core manufacturing operations, KMC offers its customers several value added services, including design and prototyping, tool and die design and build capabilities, assembly, welding and a variety of finishes and coatings.
Main Street has provided KMC’s team with a long-term strategic partner that is well aligned with the core values and growth plans for the business while allowing additional members of management to invest in the business, strengthening our team’s alignment and focus on future growth. Gerry Schwarz CEO, KMC

The Transaction

KMC was introduced to Main Street by an intermediary that is well-known in the precision metal parts and components industry. The Company’s ownership group was comprised primarily of a group of independent individual investors and a private investment fund who were seeking liquidity after a 10+ year investment hold. KMC’s management team sought an investor with the ability to be a long-term financial and strategic partner and ultimately chose Main Street based upon the operational autonomy offered to management and the perpetual nature of Main Street’s capital.

Main Street’s initial investment consisted of a senior secured term loan and majority equity investment which provided 100% of the capital necessary to facilitate the buyout of the Company’s existing owners. Main Street’s unique debt and equity structure allowed the existing management owners the opportunity to significantly increase their ownership in the Company and afforded other members of management, who were not previously equity owners, the opportunity to co-invest alongside Main Street’s equity investment and participate in the benefits of the Company’s future growth.

The Results

Before Main Street Partnership

  • KMC was seeking a long term financial partner after having been a family-owned business for three generations and subsequently held by a disparate investor group for 10+ years
  • KMC’s management team desired the ability to participate in the future growth via direct equity ownership
  • KMC’s management team sought a partner that would provide them with operational autonomy and a long- term potential hold period

After Main Street Partnership

  • Main Street’s permanent capital made us the ideal partner for the Company and its management with no pre-defined exit requirement
  • Management had the opportunity to co-invest alongside of Main Street’s equity investment and thereby participate in the benefits of the Company’s future growth
  • Main Street’s investment thesis focuses on investing alongside strong management teams that desire to maintain control over the Company’s day-to-day operations

Transaction Summary

Company

  • Experienced and committed management team
  • A one-stop, strategic partner for customers
  • Entrenched, blue chip customer relationships

Transaction Type

  • Management-Led Buyout
  • One-stop financing

Original Investment

  • $59,500,000 (debt and equity)

Investment Structure

  • Senior secured debt
  • Majority equity investment