de visscher, olson & allen llc raises $21.75 million …family capital growth partners l.p. de...

Family Capital Growth Partners L.P. Raises $21.75 Million in First Closing

de V

issc

her,

Ols

on &

All

en L

LC

Financial Advisory

Investment Banking

Private Equity

Summer 2000

de Visscher, Olson & Allen LLC is pleased to announce that its first Private Equity Fund, “Family Capital Growth Partners LP,” has had its initial closing on commitments totaling $21.75 million. This Fund is uniquely positioned to fulfill the growth capital and shareholder liquidity needs of family-owned and closely-held businesses. It has the flexibility to provide minority or majority capital across a spectrum of investment structures including common eq-uity, preferred stock and subordinated debt. In support of the Fund’s investment mission of “Families Investing in Families,"SM the initial commitments came pri-marily from prominent family offices including the Pitcairn family, de Visscher, Olson & Allen’s strategic partner. In addition to their high profile and capital, these families plan to have an active role in the investment process from their principal geographic areas - Northeast, Midwest and Pacific Northwest. Other investors in the first closing in-cluded several individuals, as well as the partners of Vestar Capital Partners of New York City and members of the Fund’s Advisory Board. The Fund is an attractive financing source for family-owned and closely-held businesses as it avoids public market scrutiny and disclosure; it allows families and owners to partner with investors familiar with family business issues; and it provides long -term capital to satisfy the needs of family businesses in two broad areas: Business capital

• Growth capital • Strategic initiatives • Globalization

Shareholder liquidity • Ownership and generational transitions • Immediate liquidity • On-going liquidity

Supported by a talented and experienced Advisory Board (see insert) the principals are presently reviewing transac-tion opportunities within the Fund’s investment focus – family-owned and closely-held businesses in industries where the principals have experience and where there exists good growth/value creation potential. Manufacturing, natural resources, paper and packaging, food and consumer products, and distribution and services are of particular interest to the fund. (see insert for investment criteria). de Visscher, Olson & Allen is one of the country’s leading financial advisors and investment bankers to family-owned and closely-held businesses. Over the last 10 years the firm and its principals have advised in excess of 200 owners of closely-held companies in North America, Europe, and Latin America. The firm’s new private equity ini-tiative complements its existing consulting and investment banking activities. Family Capital Growth Partners plans a second closing this autumn, with additional commitments from selected fami-lies and financial institutions.

A man we’ll call Harry Dobbs had given no thought to selling his family’s business. But recently he received a phone call from a lawyer who said he had a client interested in buying the company. Dobbs Hardware is a very successful distributor and Harry enjoys being its CEO. However, the call made him stop and think: “Maybe I shouldn’t just say, ‘Sorry, not interested.’ Maybe I should at least look at what this guy has in mind.” It’s not unusual these days for business owners to get calls or letters inquiring about their interest in selling or recapitaliz-ing their companies. Two factors have stepped up such queries: an abundance of capital that has financial people scrambling for good businesses in which to invest, and the need for consolidation in today’s global market. If someone approaches you about sell-ing part or all of your business, you can just say no. However, your family or your business may be facing some issues that make it timely to explore financial options. For example, does your company’s need for growth call for an injection of capital? Are shareholders raising ques-tions about liquidity? Is there a need to diversify the family’s wealth? Does a lack of successors make it necessary to consider the future well-being of the business? Without making a commitment to go through with a deal, you can give a suitor’s query serious consideration. But keep in mind that there are other options besides “to sell or not to sell.” There’s consider-able flexibility in the kinds of transactions that are taking place today– from outright, 100 percent sales to deals that provide capital for growth and liquidity in which investors take a minority position. What’s more, with so much capital chasing after good deals, you’ve probably never been in a better negotiating position. So don’t be shy about asking for what you want. It’s important to look at your suitor’s query as a signal of what’s going on in the marketplace. The person who is approach-ing you is probably also approaching your closest competitor. Even if you say no, you may be facing a change in your com-petitive landscape if the suitor buys your rival. If you decide to explore the query, you

If the suitor is still interested, you should now expect a letter of intent. The letter will outline in more detail the transac-tion that the suitor is proposing and should address financial terms, intentions related to the business itself (such as a commitment to retain existing management), and matters of process and timing. If you decide to go forward, negotiate the contract and close the deal. But don’t do the negotiating yourself. Your advisers should handle this for you, with you playing the decision-maker of last resort. During this period, the suitor will be con-ducting due diligence on your company. As late in the process as possible– when all the issues of the contract are ironed out– you can let the suitor contact suppliers and customers. Ultimately, your board or shareholders will make the final decision to approve the agree-ment, depending on your company’s charter. During the process, it is important to keep relevant parties informed at the appropriate times. Advisers, board members, sharehold-ers, and family need to be informed early in the game and kept up to date throughout. Senior managers should be told once you receive the letter of intent, so that you can make them a part of the team and assure them that you will protect their interests. Tell other employees when you inform cus-tomers and suppliers– late in the negotiation stage. Keep in mind that you can approach oth-ers– your bank, for example– while you are going through the exploration process. You might find that someone else will make an offer that better meets your objectives. Re-member, too, that you bow out of the process at any time before the contract is signed. But don’t burn any bridges. You may want to reopen negotiations later. Even if you decide not to go through with a deal, exploring the opportunity will make you more educated about your business, your industry, and the financial option available to you. So you haven’t wasted your time– you’ve become a much more informed busi-ness owner. François M. de Visscher Reprinted from “Family Business Magazine,” Winter 2000

should control the process, not the suitor. Here are the steps you need to take: Don’t respond alone. Bring in your closest advisers at once, particularly your lawyer and your financial adviser, and keep them involved in all contacts with the suitor. Ask them to lay out all the options available to you– such as selling the busi-ness versus an employee stock ownership plan; a recapitalization; or doing nothing at all. Use your advisers and independent board members to educate you about the pluses and minuses of each option as well as the potential consequences. Determine your objectives before you have any discussions with the suitor. Enlist the help of your family, advisers, shareholders, and board in clarifying the goals. You might decide, for example, that you’d like an infusion of capital but want the family to retain a controlling owner-ship. If selling is an option, you might want to think about what value you would place on your business. You might also decide that a requirement in any deal is that the business stay in the community, or that the family retain the right to put its name on a new business. Ask your advisers to have a “just-listen” meeting with the suitor. Don’t attend yourself, unless the suitor insists. Without revealing your objectives or other information, your representatives should find our what the other party wants so you can determine how closely their objectives match yours. Your advisers should inquire about the other company’s history and what other investments or acquisitions they’ve made. Following the meeting, ask your attorney to conduct a due diligence investigation of the other company to de-termine its financial viability and learn more about the principals and their history. If you want to continue, begin a con-trolled, step-by-step exchange of infor-mation. Start with the execution of a non-disclosure or confidentiality agreement. Then divulge an outline of what your ob-jectives are for the transaction. Follow that with just enough information– company brochures, a financial statement– for the suitor to evaluate your firm’s financial pic-ture. (Do not provide an organization chart at this point, or the names of employees, customers, or suppliers.)

de Visscher, Olson & Allende Visscher, Olson & Allende Visscher, Olson & Allende Visscher, Olson & Allen

Family Business Advisor: To talk or not to talk to a potential buyer?

-2-

de Visscher, Olson & Allen de Visscher, Olson & Allen Selected Recent TransactionsSelected Recent Transactions


February 2000

Members of its senior management have acquired

with funding provided by:

Argosy Investment Partners, L.P.

in the form of equity and subordinated debt

The Bank of New York in the form of revolving and term credit facilities

The undersigned served as exclusive financial advisor to

Union Pen Company in this transaction

de Visscher, Olson & Allen LLC

Family Capital Growth Partners

“Families Investing In Families” SM

L.P.

First Closing$21.75 million

June 2000

Majority and Minority Capital for CorporateGrowth and Shareholder Liquidity


Family Capital Growth Partners

“Families Investing In Families” SM

L.P.

First Closing$21.75 million

June 2000

Majority and Minority Capital for CorporateGrowth and Shareholder Liquidity


-3-

In the form of a revolving credit facilityand a mortgage term loan

The undersigned served as exclusive financial advisor to ND Industries, Inc.

ND Industries, Inc. has completed a shareholder recapitalization with funding provided by


In the form of a revolving credit facilityand a mortgage term loan

The undersigned served as exclusive financial advisor to ND Industries, Inc.

ND Industries, Inc. has completed a shareholder recapitalization with funding provided by


Current Projects


F. Y. I.F. Y. I. We are pleased to announce the promotions of Chris Craley and John Willert to the posi-tion of Vice President effective July 1.

A warm welcome to Jason Junge who joined as an Associate on May 1, and to David Lee who joined as an Associate on July 31.

Congratulations to Kim and Chris Lemone on the birth of their daughter Madison Olivia on July 3.

Congratulations to Richard Allen and Tina Aron on their marriage August 11.

Richard Allen and François de Visscher chaired the recent Family Investment Work-shop Conference held June 20-21 in Lausanne, Switzerland.

James Murphy spoke on a panel discussing “Investing in Family Businesses” at the New England Region Association of Small Busi-ness Investment Companies on May 18.

de Visscher, Olson & Allen would like to encourage you to attend the Family Firm In-stitute Conference on October 26-28, 2000. The conference will be held at the Hilton in Washington D.C. For registration and infor-mation please contact: The Family Firm Insti-tute at (617) 789– 4200, or visit the website: www.ffi.org.

Richard Allen will be speaking at the annual conference for Attorney’s for Family Held Enterprises. The topic is “Private Equity.” The conference will be held in Tempe, AZ, November 2-4. For more information contact AFHE at (305) 358-0495.

The second European Family Office Confer-ence will be held November 14-15 in London. As he did last year, François de Visscher will be chairing this event. For more information contact John Learmonth at (011) 44 207 214 0500.

Consulting – Designing and structuring capital and li-quidity solutions for family businesses and their share-holders. ► Agriculture and Food Conglomerate ► Norwegian Shipping Company ► Web Design Company ► Specialized Engineering and Service Company ► Full Service Media and Communications Firm Investment Banking – Assistance in raising the debt or equity financing for continued growth and liquidity achievement. ► Technology and Engineered Products Company ► Environmental Construction Company ► Specialty Automotive Components Supplier ► Venture Leasing Company ► Oil and Gas Producer ► Information Technology Consulting and Training

Firm ► Distributor of Petroleum Products

Recently Completed Transactions We are pleased to notify you of the successful management transition and constructive change of ownership at Union Pen & Pencil Company, Inc. The Company is a leading direct mail and catalog marketer of promotional products. de Visscher, Olson & Allen LLC acted as the exclusive financial advisor to the Company and its shareholders in arranging a management buyout using outside capital. This provided substantial liquid-ity to its majority shareholder and allowed a long-time executive to assume leadership of the Company and management to increase its ownership of the Company. We are also pleased to notify you of the successful management transition and construc-tive change of ownership at ND Industries, Inc. The Company is a leading provider of fastener coatings and adhesive solutions based in Michigan. de Visscher, Olson & Allen LLC acted as the exclusive financial advisor to the Company and its family share-holders in arranging a shareholder recapitalization using outside capital sources and vesting increased equity ownership with its active family management.

is an independent financial advisor to family-owned and closely-held companies specializing in designing and implementing successful finan-cial solutions to the liquidity needs of shareholders and the capital needs of their businesses.


de Visscher, Olson & Allen Family Capital Growth Partners LLC website: L.P. 104 Field Point Rd. www.devisscher.com 104 Field Point Rd. Greenwich, CT. 06830 Greenwich, CT. 06830 Tel: (203) 629-6500 e-mail: Tel: (203) 629-1760 Fax: (203) 629-6547 [email protected] Fax: (203) 629-6547

-4-

Board Member Company/Affiliation

Fredda Herz Brown, Ph.D. Founder and Managing Partner The Metropolitan Group LLC Leading family business consultant

W. Michael Brown Former Chief Executive Officer and Deputy Chairman of The Thomson Corporation

Charles G. Davis President, Montclair Group Limited Chairman, Family Board of Foster Farms Past International President of the Young Presidents Organization

James E. Hughes, Jr. Law offices of Hughes & Whitaker Prominent legal advisor and consultant to wealthy families

James F. Junge Former Chairman and Director Emeritus The Pitcairn Trust Company Retired Director PPG Industries

Ivan Lansberg, Ph.D. Senior Partner, Lansberg, Gersick & Associates Leading family business consultant

Edward A. Lapekas Chairman and Chief Executive Officer American National Can Group, Inc.

James W. Lewis Chairman, Geometry Group Former Partner of Morgan Stanley

Patrick L. Macdougall Chairman Arlington Securities Plc Former Chairman and Chief Executive of West Merchant Bank, London

James M. McTaggart Chairman, Marakon Associates Leading Management Consultant

John A. Morgan Morgan Lewis Githens & Ahn, Inc. Former Vice Chairman of Smith Barney

J. Arthur Urciuoli Retired Chairman Merrill Lynch International

Lewis S. White L.S. White & Co. ; Consultant Former senior executive of Union Carbide and Gulf & Western

Family Capital Growth Partners L.P.

Advisory Board In order to achieve its investment mission, Family Capital Growth Partners L.P. has assembled an Advisory Board comprised of highly successful individuals, whose expertise and experience are most relevant to the Fund’s ongoing success. In addition to its many other contributions, the Board will be instrumental to the in-vestment process of the Fund because of its family business experience, its entrepreneurial and business oper-ating experience and/or its financial and private equity experience.


Family Capital Growth Partners L.P. 104 Field Point Road

Greenwich, CT. 06830 (203) 629-1760

Investment Criteria

Family businesses have long sought patient capital and financial expertise to address their growth capital and family li-quidity needs. We are very pleased to announce the debut of Family Capital Growth Partners L.P. (“FCGP”), a private equity fund led by family offices dedicated to partnering with business-owning families. In cooperation with its broad network of family business advisors, FCGP brings to family-owned companies an understanding of the unusual charac-teristics of family-owned business. FCGP provides flexible financing solutions including both minority and majority control capital and the ability to structure investments in the form of common and preferred stock, subordinated debt with warrants, or a combination.

Business Characteristics:

▪ Family-owned or closely-held businesses; ▪ Established companies with a history of growth and profitability; we will consider “undermanaged” situations but avoid deep turnarounds, real estate and venture stage opportunities;

Preferred Industries and Geographical Focus:

▪ Niche manufacturers of industrial and consumer products, value-added distributors, specialty service companies and natural resource enterprises; ▪ Primary focus on North America

Management: ▪ Partner with strong current or next generation family managers or non-family managers/ industry executives; ▪ Provide substantial equity incentives and co-investment rights to management teams;

Flexible Structures: ▪ Flexibility to customize investment structure: ◦ Minority investments as well as control positions ◦ Common or preferred stock or subordinated debt with equity (warrant) position, or a combination of each; ◦ Customized exit strategies

Investment Size: ▪ FCGP can provide $3 million to $20 million in equity in combination with its core group of family limited partners

Typical Transactions: ▪ Growth Capital for: ◦ Acquisitions, domestic and international ◦ Internal Growth: capital expenditures, balance sheet enhancement ▪ Shareholder Liquidity for: ◦ Shareholder or management buyouts ◦ Ownership recapitalizations ◦ Ownership or generational succession plans ◦ Equity to complement ESOP transactions

Value Added for Family Owned Companies:

▪ Provide seasoned advice and capital to expand market participation through internal growth and acquisition ▪ Bring value-added industry board members and contacts ▪ Augment management teams with proven industry experts ▪ Increase marketing effectiveness ▪ Explore e-commerce opportunities ▪ Create family boards to effectively administrate family ownership issues ▪ Incentivize next-generation family managers and non-family management team members


de visscher, olson & allen llc raises $21.75 million …family capital growth partners l.p. de...

Documents