Graham Partners Makes a Connection on the Factory Floor
April 7th, 2008
Graham Partners has closed its ninth platform investment for Graham Partners II with the acquisition of B&B Electronics Manufacturing Company. Headquartered in Ottawa, IL, B&B is an engineering and manufacturing company that produces devices to network machines in rigorous industrial and commercial environments. The Company’s principal end customers are middle market manufacturers and utilities that employ legacy industrial equipment that has not been networked or that operates on disparate technologies — a market comprised of millions of machines. Graham Partners led the acquisition of B&B, partnering with Inverness Graham Investments on the transaction.
Graham Partners is a Pennsylvania-based private equity firm specializing in buyouts of middle market manufacturing companies. The firm’s strategy is to acquire industrial businesses that are benefiting from product or technology substitution trends and raw materials conversions in their industries, where Graham can utilize its extensive operating resources and industrial network to add value during its holding period. B&B is benefiting from the ongoing shift of isolated manufacturing equipment to a fully-integrated and networked manufacturing environment – manufacturing companies are in the midst of an ongoing migration whereby networking devices are being installed on this vast base of legacy machinery, requiring products such as those manufactured by B&B.
B&B’s networking products are designed specifically for rugged industrial environments, and allow multiple technology interfaces (Ethernet, USB, wireless, serial, etc.) to operate within a network. According to a market research firm engaged by Graham Partners in connection with the acquisition, B&B’s addressable market within the industrial networking sector totals approximately $600 million, with the major product niches B&B serves projected to grow at compound annual rates over 20%.
“The opportunity in the manufacturing industry to retrofit the large installed base of legacy machines with networking devices is significant. We can attest to this as many of our middle market manufacturing companies are either contemplating or currently in the process of converting their equipment to a networked environment,” stated Rob Newbold, Managing Principal of Graham Partners. “This trend, coupled with B&B’s unique direct marketing approach, should sustain the Company’s leading position in its market niche and propel it to new sales levels.”
Don Wiencek, President and CEO of B&B Electronics, said, “B&B has experienced uninterrupted growth for the past 20 years and has emerged as a premier communication solutions provider in its industry. I am confident we will continue to deliver impressive financial performance and excel at servicing our customers. We are enthusiastic about the financial and operational partnership with Graham and the opportunities that lie ahead of us.”
Although terms of the transaction were not disclosed, Madison Capital Funding LLC led the senior debt financing and Golub Capital provided the subordinated debt to support the transaction. Lazard Middle Market served as financial advisor to B&B and the seller, Fidelity Equity Partners.
About Graham Partners (www.grahampartners.net): Graham Partners is a leading, lower middle market industrial private equity firm based in suburban Philadelphia with over $1.3 billion under management. Graham Partners is sponsored by the privately held Graham Group of York, Pennsylvania, an industrial and investment concern with global interests in plastics, packaging, machinery, building products and outsource manufacturing. Graham Partners seeks to acquire industrial companies with revenues between $30 million and $500 million that participate in manufacturing niches where it can leverage its unique combination of operating resources and financial expertise.
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