MCM Capital Partners II Acquires Dexmet
MCM Capital Partners II Acquires Niche Specialty Materials Manufacturer Dexmet and Plans Aggressive, Top-Line Growth
New Company Chairman Sets Sights on Doubling Revenues Within Five Years
September 2006
CLEVELAND, OH – MCM Capital Partners II (“MCM”), a Cleveland, Ohio-based private equity firm and a leading investment firm dedicated to investing in small cap leveraged buyouts and recapitalizations, is pleased to announce its acquisition of Dexmet, a Connecticut-based niche manufacturer of specialty expanded foils and polymers.
Founded in 1948, Dexmet’s products are used in a wide variety of applications, including specialty batteries, aerospace, filtration and electromagnetic interference and radio frequency shielding. With annual sales falling within MCM’s target range of $15– $75 million, the Company is widely regarded as the world’s pioneer and technical leader in the development and production of specialty and thin-gauge expanded metals and plastics. The manufacturing processes developed by Dexmet efficiently and cost-effectively create open area, screen-like materials possessing unique physical properties. Furthermore, Dexmet is sole source to virtually all of its nearly 400 customers, including market leaders such as Boeing, 3M, Samsung, Pall Corporation, Lockheed and Ultralife. That, combined with the Company’s high value-added margins and enormous potential for top-line organic growth in complementary applications, made it an attractive target for MCM.
MCM acquired Dexmet with senior financing provided by Cleveland, Ohio-based Key Bank. Minneapolis, Minn.-based GMB Mezzanine Capital provided junior capital and co-invested alongside MCM in Dexmet’s equity. The transaction provided liquidity for Dexmet’s founding shareholders, the majority of which were not active in the management of the business. Financial terms of the transaction are not being disclosed.
Moving forward, MCM appointed Harry Shimp as chairman of Dexmet. Shimp, who possesses more than 25 years of success in the general management of high-technology and material science-based manufacturing companies, will actively guide the efforts of Dexmet’s management team in nurturing top-line organic growth. Such growth, according to Mark Mansour, Managing Director and Principal of MCM, will occur by broadening the Company’s sales geographically and finding new applications – and ultimately new customers – for its unique technology. “Dexmet has conducted business with most of its largest customers for 20 years or more,” said Mansour. “Being named sole source recently to Boeing for lightening strike protection on its new composite 787 Dreamliner speaks volumes about Dexmet’s technical capabilities, customer loyalty and overall market reputation. We intend to leverage the Company’s expertise in other markets with the goal of doubling revenues within five years.”
“Dexmet maintains a very strong position technically, as well as with the customers it currently serves,” said Shimp. “Therefore, we see tremendous opportunities to better serve those customers with new product applications, as well as pursuing sales within previouslyuntapped applications such as filtration, lightening protection, and wind and solar power.”
Currently, Dexmet maintains a 25,000 square-foot headquarters facility in Branford, Conn. and a 40,000 square-foot manufacturing facility in Naugatuck, Conn. Future plans may call for consolidating operations under one roof within the same geographical area, according to Shimp.
Dexmet is the third platform company acquired within the last year by MCM’s Principals using funds raised through MCM Capital Partners II, L.P. (“Fund II”), the Firm’s second institutional fund and third pool of investment capital. Capital committed to Fund II is being used to identify and acquire controlling equity interests in North American small cap manufacturing, distribution and service businesses with annual sales of $15 million to $75 million. MCM’s Principals anticipate investing Fund II capital in seven to ten companies over a period of three to five years.
