Private Equity Investments for Lower-Middle-Market Companies

Private Equity Investments for Lower-Middle-Market Companies

Private Equity Investments for Lower-Middle-Market Companies

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RCP News | Industry Recap

Private Equity Recap

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Company Name
Longstreth Sporting Goods

Website
longstrethfieldhockey.com

Location
Philadelphia, PA

Categories
Active, Value-Added Distribution

Date of Close
August 31, 2023

Longstreth Sporting Goods

Longstreth Sporting Goods is a value-added, omni-channel women’s field hockey equipment distributor that carries impressive brand equity and name recognition in the sector. The Company employs 20 full time employees and has been committed to supporting the development of domestic field hockey for over 40 years. The Company’s omni-channel sales approach boasts revenue streams from E-commerce, Wholesale, Group Sales, and Retail customers. 

Investment Thesis

  • Incredibly strong business model boasting high margins
  • Impressive management team (including middle management)
  • Opportunities for expansion into other sports and internationally
  • Longstreth’s position as the key player in a niche market
  • A very strong risk-adjusted return profile  

RVA™ Approach

  • Investing in eCommerce infrastructure to facilitate continued eCommerce revenue growth
  • Fragmented market prime for inorganic growth
  • Enhancements to operational capabilities to drive further efficiencies
The Porch Swing Company

Company Name
The Porch Swing Company

Website
theporchswingcompany.com

Location
Tampa, FL

Categories
Active, Consumer Products

Date of Close
February 18, 2022

The Porch Swing Company

The Porch Swing Company is one of the largest ecommerce retailers of porch swings and outdoor patio furniture in the U.S. The company’s products are superior-quality, easy-to-assemble, Amish-crafted outdoor furniture, including porch swings, swing beds, gliders, rocking chairs, and more.

Transaction Dynamics
Partnership with the founder to recapitalize the business and position it for future growth. Additionally, RCP partnered with Cincinnati-based operating partners to bolster the day-to-day operational management function. Both the founder and the operating partners made notable investments in the company as part of the transaction.

Investment Thesis
  • Elegant business model and value proposition that enable the company to scale easily and rapidly, without being burdened by significant warehousing space or inventory constraints
  • First-mover advantage and strong barriers to entry given legacy relationships with high-quality, reliable, Amish craftspeople
  • Opportunity to easily expand product offering and optimizing sourcing

RVA™ Approach

  • Investing in R&D to expand product offering and reduce seasonality
  • Improving systems and processes through implementing new technologies
  • Bolstering management infrastructure with key personnel additions
  • Accelerating growth via meaningful investment in sales, marketing, and advertising

Company Name
Teron Lighting, Inc. (TLI, LLC)

Website
teronlighting.com

Location
Cincinnati, OH

Categories
Active, Light Manufacturing

Date of Close
April 16, 2021

Teron Lighting

Cincinnati-based TLI, LLC is a nationally recognized leader in manufacturing energy-efficient, environmentally friendly lighting products. With over 40 years of experience in the design and manufacture of commercial-grade lighting fixtures, TLI is positioned for substantial growth in product and market initiatives.

Transaction Dynamics
RCP provided a solution to the legacy ownership group whereby they could transition out of the business and retire. We partnered with new and existing management, who have notable equity consideration, to align interests and propel growth into the future.

Investment Thesis
  • Compelling value proposition given the TLI’s ability to produce bespoke, American-made products, which are increasingly rare in the sector
  • Strong national manufacturers’ representative network
  • In-house testing and engineering capabilities
  • Diverse end market and customer base
  • Multiple avenues of growth yet to be pursued
RVA™ Approach
  • Top-grading management
  • Improving systems and processes
  • Investing further in engineering capabilities
  • Pursuing add-on acquisitions
  • Initiating a full-scale, ongoing marketing campaign to bolster the brand
All Claims Repairs & Consultants

Company Name
All Claims Repairs, LLC

Website
allclaimsrepairs.com

Location
Deerfield Beach, FL

Categories
Active, Business Services

Date of Close
December 20, 2020

All Claims Repairs

All Claims Repairs is a licensed and insured general contractor specializing in water extraction, mold remediation, and water and fire damage restoration. The company also provides consulting services such as expert testimony and umpiring services to litigated claims. The company works with residential and commercial property owners, insurance companies, and insurance claims professionals to evaluate and restore damaged properties.

Transaction Dynamics
Partnership with the existing owners to recapitalize the business to accelerate growth. The owners/management made a significant investment in the company as part of the transaction.

Investment Thesis

  • Unique value proposition in the industry, providing a full-service offering including both consulting and restoration services to key markets in Florida
  • Strong brand equity in the market
  • Nimble, flexible operations that enable the company to provide a multitude of value-added services to a diverse array of customers
  • Recession-resistant, non-cyclical business model

RVA™ Approach

  • Meaningful investment in the sales and marketing function to further diversify end markets
  • Adding key management members
  • Adding valuable advisory board members
Chemlock Nutrition Logo

Company Name
Chemlock Nutrition

Website
chemlocknutrition.com

Location
Cincinnati, OH

Categories
Active, Value-Added Distribution

Date of Close
June 14, 2021

Chemlock Nutrition

Chemlock Nutrition formulates and provides high-purity, specialty feed additives for end-use in the livestock feed industry. Since entering the industry in 2013, Chemlock is one of the fastest-growing feed additive and ingredient companies in the U.S., having more than tripled its revenue in the last three years.

Transaction Dynamics
Partnership with the founders/owners to recapitalize the company and position it for sustained long-term growth. The founders made a significant investment in the company as part of the transaction and will continue in their existing capacity going forward. 

Investment Thesis

  • The company takes a chemistry-first approach, enabling it to possess a strong position in the market, primarily from a product quality and innovation perspective
  • Attractive growth story, value proposition, and management dynamics
  • Expansive and diverse end markets, some of which are untapped
  • Meaningful continued equity and operational participation from the founders

RVA™ Approach

  • Enhancing systems and inventory management
  • Expanding proprietary product offering through concerted, meaningful investment in R&D
  • Further diversifying customer and end-market base
  • Augmenting the sales and marketing function