Step2 also got a new owner in March, and Doherty, the acting CEO, said the Streetsboro, Ohio, company has initiated a search for a permanent CEO. Ares Capital Corp. of New York is now the majority owner, Doherty said in a telephone interview.
Ares Capital obtained the ownership stake when it bought investment firm Allied Capital Corp. about five years ago, Doherty said. Allied Capital had contributed $90 million to support the
buyout of Step 2 by Liberty Partners LP, a New York private equity firm, in 2006. Liberty bought the rotomolder of toys and home products like mailboxes from founder Tom Murdough.
The board of directors asked Doherty to join Step2 in an interim basis to replace Jack Vresics as president and CEO. Vresics left the company about a month after Areas Capital purchased the company.
Doherty is managing director of Argus Management Corp., a Boston firm that helps companies do turnaround management and restructure. He said that Step2 is a solid, profitable business that needed some focus.
“It is partially a turnaround from the standpoint that the strategy needed to be re-aligned,” he said. “It's basically a back-to-basics strategy that we have now. It's not like we lost our way, but it's more like we lost a little bit of focus.”
He said Step2, like other toymakers, faces challenges from commodity pricing, and needs to innovate with new products in its markets of toys and home and garden products.
“We're profitable and we'll continue to be profitable, and we'll look at ways to grow the business. We have a great team here that knows how to make a great product that kids love to play with,” Doherty said.
Doherty has led more than 200 companies on such interim assignments in a career at Argus Management that began in 1986. He said he has met Murdough — who also founded Little Tikes and is now retired from the plastics industry — and is enjoying his stint making toys.