The Middle Market Review Insights on the Middle Market.

Subscribe Subscribe

Subscribe Today

Please provide valid email address

I want to receive:

Thanks for subscribing!

Dealmakers: When you Need Capital Creativity

Not everyone is a visionary, but Jon Parker knew exactly where he wanted his company to go. As the co-founder and CEO of RōBEX, a robotics and automation integrator in Perrysburg, Ohio, Parker saw an industry ripe for consolidation, and an opportunity for his business to be an acquirer, on a massive scale. 

“We had created a vision of a billion-dollar robotics company within 10 years,” Parker said. “But in order to run a sizable M&A campaign, we needed a capital partner. It was absolutely difficult to do on our own.”

In early 2021 Parker reached out to The Peakstone Group, a Chicago-based investment bank focused on M&A advisory and capital raising for middle market clients. The match was obvious, since one of Peakstone’s managing directors “had deep knowledge of the automation industry and spoke our language,” Parker said. “It was clear that they were the right fit for us and there was no reason to look elsewhere.” 

Peakstone prides itself on its investment banking skills, its buyer and investor relationships, its deep bench of industry experts, and its ability to think outside the box to structure deals that stray from the norm. Its three co-founders — Managing Directors Alex Fridman, Stephen Sleigh, both former bankers at Lehman Brothers, and Jeff Temple, previously a management consultant for private equity clients — have completed hundreds of transactions throughout their careers and know the highs and lows of deal making. But numerous other senior bankers at Peakstone have worn the shoes of entrepreneurs in a variety of industries. Managing Director Nick Clementi, for instance, was CEO and Chairman at paper and plastics company InnoWare, LLC. He was also a  group president at American Greetings, Inc., and CEO of Contempo Colours and Beach Products.

“He’s a great example,” said Fridman about Clementi and the firm’s industry expertise. “Here’s someone who has been a CEO of numerous companies and can really build a relationship with buyers and sellers because he understands the operating ins and outs of a business.”

Similarly, Peakstone’s Managing Director Jim Breen was previously the CEO of Winterlink, an IT services firm. Managing Director Tom Juedes founded and led Hub Group Distribution Services, a transportation and logistics company. Managing Director Cathy Jaros spent 19 years in the food-and-beverage industry with Kraft Foods and The Quaker Oats Company. And Managing Director Martin Johnson was the Regions Bank President of Central Louisiana. The list goes on. These seasoned executives can empathize with clients and offer them some comfort, “and importantly it enhances the probability of success of closing a deal,” Sleigh added.

Peakstone typically takes on middle market clients with revenue of $10 million to $200 million, though can veer from that range. Most of these clients are entrepreneurs and business owners, either looking to sell or to gain capital to grow their companies. Occasionally Peakstone represents buyers in M&A transactions, but its sweet spot is working with company founders who are seeking savvy advisors to chart them through the sale or capital-raising processes. 

“We don’t lose patience with folks; we take our time,” Fridman said. “That’s our DNA.” In addition, Peakstone helps clients “get the right capital” and avoid bad deals, he noted. 

The firm finds clients through numerous channels, including in databases and at trade shows, the latter of which its industry specialists tend to enjoy. But the majority of Peakstone’s business comes through referrals: attorneys, accountants, wealth advisors, previous clients. The investment bank also retains some clients for follow-up transactions, as their respective plans evolve.

In mid-2021, for example, Peakstone advised family-owned Flexo Converters USA, Inc., a Meriden, Conn.-based maker and distributor of stock, custom, and recycled paper bags and sacks, on its sale to packaging company Novolex, part of Carlyle’s investment portfolio. Flexo’s original owners then went on to create Vidya Holdings, Inc., which has since acquired two companies in the packaging and printing space, with Peakstone as its advisor. 

“Speed is important,” said Sleigh, about mitigating transaction risks and representing both sellers and buyers. “Once we get signed up with a client we establish a regular communication cycle with that client to stay on track. We run a very disciplined process that is oriented to getting in the market quickly, getting feedback from investors quickly — and moving toward the close as quickly as possible.”  

Since its founding in 2008, Peakstone has completed more than 150 M&A deals, including 25 in 2021 and seven this year thus far, among them the creative RōBEX transaction constructed by Peakstone. The firm expects 2022 to be equally busy. 

Today Parker, still at the helm of RōBEX, is well on his way to achieving his dream to be an industry consolidator. While Parker tapped Mid-State Engineering, LLC, a Tipton, Ind., electrical and mechanical engineering business, for his company’s first acquisition, Peakstone suggested he market RōBEX as a packaged deal with Mid-State, to garner more investor interest. 

The novel strategy paid off. Peakstone helped RōBEX sort through a long list of potential investors (about 300 expressed interest, Parker said), facilitated meetings, and then advised RōBEX on its acquisition of Mid-State and on its collaboration with Angeles Equity Partners, LLC, of Santa Monica, Calif. The private equity firm took a majority stake in the combined entity and can provide capital to RōBEX for further acquisitions. 

The deals closed simultaneously on February 28 and RōBEX is now “ramping up the M&A pipeline and looking to sign more add-on acquisition letters of intent,” Parker said.

Learn More About Joining Axial

Request Information

Subscribe to Middle Market Review

Subscribe to Middle Market Review

Please provide valid email address

I want to receive:

Subscribe

Thanks for subscribing!