During the pandemic time, although the healthcare industry has been getting a lot of attention from PE and VC firms, manufacturing is a sector that they don’t overlook. Manufacturing in its simplest form used to mean assembly lines comprised of humans creating and piecing together components to produce an end product. But now, it seems to be much more, which encompasses humans with technologies to make the process more efficient. Here comes the term of advanced manufacturing where today investors take attention to.
With automation, processes are made more efficient in many different sectors such as technology, aerospace, automobile, and medical devices, making manufacturing companies an attractive prospect for private equity firms as they can utilize the technology in their portfolio companies and it is a good investment. Within the manufacturing landscape, there are significant opportunities for PE firms with an interest in the sector.
If you are a business owner looking to take your company to the next level, a strategic partnership with the right investor would come with plenty of benefits. It has been the catalyst for sustainable growth and prosperity for countless companies. There are several ways an investment firm can create value and efficiencies in the manufacturing industry. In this golden age of PE and VC backers, new firms are opening and growing at a rapid pace.
On one side, there’s a truth that not every relationship between an investment firm and its portfolio companies would turn out to be beneficial and worth the efforts. But on the other side, don’t let prevalent misconceptions prevent you from exploring your options. Our list below recommends some of the most trusted PE and VC across the U.S that entrepreneurs within the manufacturing industry should be aware of and take into consideration.
#1. Anzu Partners – The Manufacturing Tech of the Future Backer
Founded in 2014 and headquartered in Washington, D.C., Anzu Partners is a venture capital and private equity firm investing in companies focused on breakthrough industrial and life science technologies with the potential to transform their industry. Among its four key investment sectors, manufacturing is considered an important one that mainly includes 3D printing, robotics, and nanoscale production. The firm has a robust team of investment, technical, and operational professionals to drive results for its portfolio companies and investors.
As advances in biology, biochemistry, sensors, and automation have the potential to reshape the ways manufacturing in America is done, Anzu Partners has raised hundreds of millions of dollars to invest in companies turning these scientific achievements into new products and services. The firm teams with entrepreneurs to develop and commercialize technological innovations by providing capital and deep expertise in business development, market positioning, global connectivity, and operations.
“We want to invest in technologies that have been proven breakthrough technologies,” said Haring-Smith, Managing Partner at Anzu Partners. “We take on the engineering risk and commercial risk.” In his opinion, manufacturing and materials production are ripe for innovation, concepts like precision manufacturing are becoming much broader and in increasing demand, spurring changes in aerospace and automotive engineering, and creating even greater need for innovative materials and industrial processes.
The firm continues to focus on identifying and supporting next-generation manufacturing teams pioneering innovations that address major global challenges. Portfolio companies in the manufacturing sector include GelSight, which makes 3D imaging systems to improve quality control in manufacturing; Sofregen, which makes tissue support and regeneration products based on a novel process for manufacturing silk proteins; and Solchroma Technologies, which uses a unique manufacturing process to make digital displays, and many others.
“Innovations in life sciences and industrial technologies continue to proliferate since the launch of our first two funds, and we see an even greater opportunity to work with early-stage companies and commercialize their scientific breakthroughs,” said David Michael, Managing Partner at Anzu Partners. “Not only do we provide capital, we also utilize our technically-oriented team of investment and operational professionals to offer support on financial management, operations, talent development, global connectivity, strategy, and more, to truly serve as a partner.”
#2. Blue Wolf Capital Partners – A Value-Generating and Values-Driven Partner
Founded in 2005, Blue Wolf is a New York-based private equity firm that makes transformational investments in middle-market companies in North America. It is a generalist firm with a broad interest in specialty sectors including niche manufacturing, industrial & engineering services, forest & building products, and healthcare services. The firm builds strong businesses by combining financial and operational discipline with Environmental, Social, and Governance (ESG) principles.
Leading by experience and a commitment to excellence, Blue Wolf manages challenging situations and complex relationships, transforming companies strategically and operationally. Working hand-in-hand with management teams, the firm takes a collaborative investment approach that is both value-generating and values-driven, which has translated to its proven track record of transforming businesses to create sustainable value for stakeholders and investors.
Within the niche manufacturing sector, the firm’s investments target manufacturers and distributors of capital equipment, specialty ceramics, paper, lumber, and a variety of specialty building products, with strong franchises. Its portfolio companies include Petrosmith, which is dedicated to designing and manufacturing products for the oil and gas industry; Snappy, which manufactures galvanized steel pipe, duct, and fittings; Colson Group, which is a leader in caster and wheel product solutions, and many others.
“Entrepreneurship is at the heart of Blue Wolf and we are proud to partner with innovative leaders to transform their businesses, bring key stakeholders together and generate value,” Adam Blumenthal, Managing Partner of Blue Wolf. “We are honored to be recognized and believe it is a reflection of our outstanding team and their ability to work collaboratively with founders and management teams across our portfolio companies.”
#3. Gen Cap America – A Middle-Market and Lower-Middle-Market Player
Founded in 1988, Gen Cap America is a private investment firm headquartered in Nashville, Tennessee. Having a strong indigenous management team, the firm narrows its scouting to opportunities among middle-market and lower-middle market businesses and divestible corporate divisions that have substantial market shares in focused niches within manufacturing, distribution, and basic service. Its primary objective is to partner with owners and management teams who have a willingness to operate and grow successful businesses.
As part of its capital investments, senior management is involved in equity ownership to give a meaningful stake in the success of the business. Beyond the buyout, Gen Cap America assists in areas such as strategic planning, growth, financial management, and add-on acquisitions. Its role is supportive and typically includes involvement in day-to-day operations.
Capital investments from its fund are made in established businesses with a demonstrated history of strong cash flow. It also seeks to partner with quality management teams that have a proven record of success and who wish to become co-owners with GCA. Its portfolio companies include Lab Products, which is a manufacturer providing an extensive line of laboratory research model housing and care equipment; Frontier, which manufactures and distributes quality packaging materials; Griffin Gear, which specializes in the manufacture of quality replacement gearing and gearbox rebuilds, and many others.
“We couldn’t be more excited to have been recognized as one of the top founder-friendly private equity firms in the country,” said Lamar Stanley, Director, Gen Cap America. “We believe that this validates our 30-year culture of supporting founders by being good partners,” he added.
#4. NewSpring Capital – A Prominent Investor with the ThreeM Philosophy
Founded in 1999, NewSpring Capital is a private equity firm headquartered in Radnor, Pennsylvania. The firm seeks to provide growth equity, acquisition financing, recapitalization, control buyout, and mezzanine investments in companies based in the U.S. The firm has considerable momentum with investments in sectors where it has significant experience, like niche manufacturing and business services. With deep relationships in the lower-middle market, it has the operational advantage to deploy capital in all economic environments.
The firm tends to invest in dynamic companies and its team of seasoned private equity investors and operators have partnered with management teams to provide them the financial resources, strategic guidance, and a powerful network to assist them in achieving their goals. Its experience has enabled NewSpring to stand by the companies as they launch new products, expand into new areas, and ultimately realize their full potential.
NewSpring has a ThreeM philosophy that informs how it invests across all strategies and helps companies reach their goals. Within Market, it pursues industries that are large and growing with passionate entrepreneurs who have developed flourishing businesses. Within Management, it backs proven leaders and operators to empower and support management teams as they pursue their goals. Within Model, it focuses on businesses that consistently deliver value to customers on a foundation that is scalable and capital efficient.
That philosophy has been a key tenet of NewSpring Capital’s approach to investing, and the success of its current and former portfolio companies demonstrates the commitment to offering consistent advice and support through any economic cycle. Its portfolio companies include Beacon Manufacturing Group, which is a custom plastic molded products and services company; Cellucap Manufacturing, which manufactures and distributes disposable protective apparel and related products; Bulova Technologies, which is a contract electronics manufacturer, and many others.
#5. Shorehill Capital – A Trusted Partner for Unprecedented Times
Founded in 2013, Shorehill Capital is a Chicago-based private equity firm utilizing its expertise and focus on lower middle-market companies that are well-run but still have opportunities for improvement, where the team’s experience and resources could be a differentiating factor in a company’s success. The firm focuses on control investments in industrial, precision manufacturing, and value-add distribution companies in North America.
The firm has a proven approach that is anything but one-size-fits-all. It works with its executive advisors to implement customized investment strategies utilizing the best resources. In its 100-day plan, the firm works alongside management teams to better understand the key value drivers of the business and create a tailored strategy designed to accelerate growth, expand profitability, and increase asset efficiency.
Shorehill has spent our careers cultivating relationships with an extensive network of executives and seasoned industry experts. These visionary leaders have direct experience building businesses, many of them entrepreneurs and business owners themselves. As the pandemic hits, the firm has held multiple virtual meetings with management teams related to prospective investments, and it looks forward to continuing this type of engagement.
Given the technology platform, Shorehill has adapted quickly and is focusing its time on supporting our portfolio company executives as they navigate this new reality in the safest, most effective means possible. Its portfolio companies include CII Technologies, which is a manufacturer of high-performance relays and solenoids; Dura-Line, which manufactures protective conduit solutions for telecommunications, datacom, energy, and infrastructure applications; Functional Devices, which is a leading manufacturer of electronic devices, and many others.
“We look for secular trends that we believe we can capitalize on through our investment model. For example, technology is transforming the factory floor with the accelerated adoption of automation, industrial electronics, and robotics,” saidRob Hogan, Managing Director of Shorehill Capital. “We see factory-floor automation as a unique and attractive market. The distribution network for these products and technology solutions is highly fragmented, and as automation installations grow, we expect demand for aftermarket components and related services to grow at a faster rate.”
The Bottom Lines
Technological breakthroughs in manufacturing have also been leading to more manufacturing jobs being created in the country. The reality is that like most businesses, PE and VC firms are certainly interested in making money, but they are not looking for a quick profit at the expense of the companies they invest in. They naturally want those companies to be successful as that’s how they succeed in turn. For that reason, if a manufacturing company partners with the right investor, both sides win.