 |
||
|
|
||
|
Founded in 1951, Crenlo is a leading manufacturer of cabs and rollover structures for construction, agriculture, and commercial equipment markets serving manufacturers such as Caterpillar, Deere & Company, and Case New Holland. Crenlo's cabs are highly engineered, custom designed, steel frame enclosures which attach to and become an integral part of an OEM's specific equipment. Cabs range in design complexity from simple shells to totally equipped cabs which would include seats, controls, air-conditioning, etc. In addition, Crenlo builds a proprietary line of modular electronic enclosures under the trademark of EMCOR Enclosures, servicing varied markets, including the defense, datacom, telecom, security, test & measurement and broadcast industries. Crenlo also provides expertise in the design and manufacture of high volume, build-per-print requirements for major customers such as Siemens, Hewlett-Packard, and Agilent Technologies. We were approached by the three senior members of Crenlo’s management team to see if we could help them with the acquisition of their company. They were also interviewing other private equity firms in New York City to see if any of them would be a fit for them. Crenlo was part of a New York Stock Exchange listed parent company, GF Corporation, whose other major business was commercial office furniture and wanted to divest Crenlo to focus their energies on growing the office furniture business. We immediately liked the management and their straightforward, pleasant midwestern style and clear competency in running Crenlo. They were truly seasoned, and we felt we could do things together. The chemistry gelled, and we began the negotiations with the parent company to buy Crenlo with management. This situation was a bit different than normal as the three senior managers wanted to eventually own all of Crenlo. We liked these men a lot and felt we could craft a “win-win” structure for them and us, but they did not have much capital to invest. We worked out a way, through performance incentives and puts and calls over a five-year strategic and financial plan, to put them in a position to own the business if they met or exceeded the plan in the fifth year, our targeted exit year. What ensued proves the power of aligning interests to facilitate these men achieving the American dream. Crenlo’s trailing twelve month revenues were $35 million and operating income was $3.5 million. By the end of the following year, we grew revenues to a $43 million annual run-rate and because Crenlo had a high fixed cost structure at these sales levels, most of the increased sales dropped to the bottom line. As a result, operating profit soared to $9 million and was sustainable. We found ourselves ahead of schedule on meeting the fifth year plan by three to four years, and we were able to make the management’s dream come through early. We enlisted J.P. Morgan and its private investment arm, as a result of our long relationship with them, to help. They financed the purchase of our securities and provided bank financing for Crenlo while receiving a minority equity stake in Crenlo for their equity investment. Management now had majority ownership of Crenlo with a right to buy out J.P. Morgan in the future. A few short years later, J.P. Morgan’s loan was paid in full, and they sold their equity ownership to management. Management now owned 100% of Crenlo. The company continued to grow over the next several years to well over $100 million in revenues with no debt. Management continued to run the business until it was sold to Dover Corporation, when they retired. We could not be happier for their success and ours with this journey.
Testimonial – After J.P. Morgan had its bank loan repaid in full and received a substantial profit on their equity investment in Crenlo, Sandra Payne, a senior officer, said “It was one of our best investment experiences ever, and we value the leadership of THE HARDING GROUP.”
For a full history of Crenlo, please see its current website at: http://www.crenlo.com/history.html
|
||
