Case Study

Hi-Tech Rubber, Inc.

In our search for equity partners, we found lots of sources of money. However, we found few people who we wanted as our partners. From the outset, we felt a natural connection with Century Park. Years later, we couldn’t be happier to have had them as part of our team.

Bill Sherman

Former President, Hi-Tech Rubber, Inc.

Overview

Hi-Tech Rubber, Inc. is a leading custom molder of precision elastomeric components utilized primarily in the medical industry. Century Park Capital, management, and another private equity firm acquired a majority interest in the company to meet the personal needs of the seller and enable him to fund his estate plan. After completing four acquisitions significantly expanding the company’s product lines, the company was sold to a publicly traded acquirer.

Highlights

  • Key supplier of complex products
  • Strong barriers to entry
  • Well positioned in fragmented industry

Details

Headquarters – Anaheim, California
Industry – Specialty Chemical

The Situation

Century Park partnered with another private equity group and management to acquire Hi-Tech, a leading custom molder of precision elastomeric components for OEM suppliers to the medical and technology industries. Hi-Tech’s founder and majority shareholder wished to sell the business to obtain liquidity as he neared retirement. At the time, the company was also in need of capital as several of its larger customers were pressuring the company to build a second manufacturing facility to expand capacity. In addition, Century Park and management saw the opportunity to deploy additional capital into the business to make strategic acquisitions to expand the medical component manufacturing and to forward integrate into medical device manufacturing.

How We Helped

Through its investment in Hi-Tech, Century Park provided the liquidity that the founder and majority shareholder required while retaining the management team responsible for the day-to-day operations of the business. The company’s founder reinvested a small portion of his proceeds from the transaction and retained a seat on the Hi-Tech board of directors to assist in the future growth of the business. Joining the founder on the board was Neil Martin, a member of Century Park’s executive council. Century Park and Mr. Martin worked closely with the Company’s management team to develop a growth plan that included new product offerings, additional facilities and strategic add-on acquisitions. During Century Park’s investment in Hi-Tech, the company made four strategic add-on acquisitions that added capacity, broadened the product offerings, introduced higher value-add services and expanded the geographies serviced by the company. Hi-Tech’s considerable growth along with the complexity of managing multiple facilities and integrating the acquisitions required the company to add a seasoned CEO to the existing management team. After Hi-Tech completed its first acquisition in 2005, Neil Martin was appointed to serve as the company’s CEO and chairman of the board. Century Park also assisted the company in recruiting and hiring an experienced CFO that was capable of managing a substantially larger business and integrating the add-on acquisitions.

The Result

Century Park, along with management and the other investors, succeeded in transforming Hi-Tech into a leading medical device company with a diverse product base and multiple facilities. During Century Park’s four year investment in Hi-Tech, the Company’s revenue and EBITDA tripled. Century Park exited the business in April 2008 through a sale to a publicly traded strategic buyer. Some of the key initiatives that facilitated this growth include:

  • Provided the capital for facility expansion and add-on acquisitions.
  • Evaluated the feasibility of new markets and providing support in expanding facilities.
  • Recruited an experienced CEO and CFO to augment the management team.
  • Assisted the Company in identifying and expanding distribution into new channels.
  • Evaluated numerous potential strategic acquisitions and assisted in obtaining financing for the acquisitions.
  • Implemented a management incentive stock option plan for the then existing and new management.