CIT Group's Equity Investments Division is backing a new mergers and acquisitions firm to buy medium-size polymer and compounding businesses. The new company, Nextep Equity Partners LLC, wants to separate itself from the pack of financial buyers through experience and strong financing.
Bob Jackson, a lawyer, is a managing partner in the group along with Dan Clark, who has experience at Shell Chemical Co. and Dexter Corp., and Peter Rohman, who had worked at Owens Corning.
"What sets them apart is the vast experience of the three individuals and how they complement each other," said Ken Walters, vice president for CIT's Equity Investments.
"We have a major investor and sponsor. We go in and we know the finances are available," Jackson said.
Cleveland-based Nextep is looking at companies with sales between $25 million and $100 million with private owners who either want to leave or need more capital investment for growth.
"We're not interested in projects," Rohman said. "We're interested in successful companies."
Nextep will invest capital and work out any management problems, Walters said. Primary focus markets will be automotive, electronics and aerospace, according to a news release.
Equity Investments' parent, Livingston, N.J.-based CIT, is willing to invest in the venture because it will be dealing with successful companies instead of speculative ones, according to Rohman. Walters said CIT will be the "primary source for equity," although other lenders may be used.
Although the industry's mergers and acquisitions pace may have begun to cool off, Clark and Rohman said there still is room for consolidation.
"I think there will be a new wave of mergers and acquisitions in Tier 2 suppliers, because Tier 1 has gone as far" as it can, Rohman said.
He added that composite truck beds are fueling massive growth and the potential for consolidation, even though the automotive industry is very tight.
"The start-up companies who innovate well — even more than the larger, better-funded companies — will remain the source for us for further acquisitions," Clark said.
The company was conceived when CIT separately approached Rohman and Clark to deal with acquisitions of smaller companies, a business both men already were involved in, Rohman said. CIT also brought in Jackson, who had worked with CIT before.