RFE Investment Partners

The DelStar deal was simultaneously a public company corporate carve-out, a merger and a management buyout. In terms of buyers, we were pursuing a couple of options and sponsors, but none of these seemed to fit right and we invited Jim Parsons to come take a look at the company. So RFE came in at the last minute, but Jim has an ability to build relationships very quickly. RFE’s experience enabled them to fast-forward the due diligence process – they understood what they could trust and what they needed to verify. Because the transaction was a merger of two companies, there were two potential management teams to run the company. Jim and RFE made the decision right away that our Delaware management team would control the company after the merger. Jim’s decisiveness ended up driving the process. He brought reason and order to the process.

It wasn’t easy at the beginning, because there were two major hiccups during the initial negotiations. We had lost a portion of one of our bigger customers, about three months before the deal. RFE knew about it, and we were certainly up front about it, so they knew that going into the deal, a portion of our business was not going to be there. But we found out a week after the deal closed that we lost a portion of another major customer, a fact that had never been disclosed prior to the deal, which didn’t make any of us feel very good. RFE was absolutely professional about it when we broke the news. They said, one way or another, we’ll all deal with it. They didn’t panic; they didn’t say, oh my God, you’ve got to cut everything to the bone. The guys at RFE had faith and they believed that we would eventually do the right things, and, a few years later, we got double the business back.

At the beginning of the exit process, RFE did come to us and say, look, it’s time. They brought people in that they felt were the right groups to help us sell the business. RFE worked with us all along in the early stages. But once we decided which bidders we were going to let come in and see the books, RFE did not participate in the business presentations to bidders. They literally said, “You guys need to have a relationship with the new buyer.” I think this was the absolute correct way to do it. When we finally narrowed it down to two, RFE’s attitude was, “if there’s a huge difference in the offers, don’t be naïve, but for a million or two million dollars either way, we’re not going to sway which way you think is best for the business.” During the final negotiations, RFE stepped back in. Mike and Jim truly tried to help us look after our interests in the process – as well as RFE’s interests – because they wanted us to be successful with another group. We had developed a good relationship at that point and knew that it would go on for many years to come.

They’re very down-to-earth people. They’re not some pompous investment group that thinks they have all the answers to life. They’re going to give you advice that they think is prudent from a business standpoint. When we asked to expend capital on growth projects – such as our Greenfield project in China, as I look back, they said no at the right times, and I think now, as a Monday morning quarterback, yes at the right times. They challenged us and questioned us, but also trusted us. RFE truly cares more about the people and more about the organization and its future than the average investment group. The mark of a great investment group is that when they’re done with a deal, they don’t disappear. With these guys, they would help us out and we would help them, still to this day.