Private equity firm Arcady Capital Co. has selected injection molder and toolmaker Mountain Molding LLC as its first investment in a portfolio focused on specialty manufacturing in the Midwest.
Mountain Molding, based in Longmont, Colo., is a contract molder providing parts for the medical-device and security industries among other businesses, said Jared Sprole, managing director of Arcady, in a Jan. 9 telephone interview.
Arcady opened in Wichita, Kan., in 2011, but was looking for the right opportunity for its first acquisition, Sprole said.
“We’re patient,” he said.
While Arcady management has experience in managing business with other private equity firms in the past, they established the company in the Midwest specifically to focus on small to midsize firms in the region that may have been overlooked by other equity groups operating in more traditional private equity hot spots on the East Coast, he said.
The company sees opportunities to invest in niche manufacturers that may be in their third generation of family ownership, but looking for outside help to finance continued growth.
In the case of Mountain Molding, the company has been in operation since 1976. President Don Cheyne was a partner in the firm, but needed funds for capital investments. He remains with the company and will lead day-to-day operations.
Arcady will look at firms outside the Midwest, but the bulk of its work will be Kansas and its surrounding states.
“There are a lot of companies around here that need access to outside capital to expand,” Sprole said.
He expects Arcady will complete about two acquisitions per year. It will consider opportunities to invest with current management as well as deals that require new management. It is already looking at two other potential investments.
For Mountain Molding, Arcady partnered with management to complete the deal.
Arcady’s investment strategy is based on finding small to midsize manufacturers with revenues of between $10 million and $50 million. It will target businesses with specialty niche manufacturing or technology, those with energy-related products or those in the food processes, medical and business services and distribution industries.