You’ve been with Linsalata since 1990. Which industries have you led deals in during that time?
We went through a very strong building products phase, and I actually left Linsalata from 1993 to 1998 to run a portfolio company, Care-Free Windows. Linsalata has also owned three other window companies: PGT Windows, Eagle Window and Door and Alenco Windows. Other deals I’ve led include Alpha Shirt Company, which provides imprintable apparel to companies that put logos on them; we sold the company to Bain Capital in 2003. I also led Fasteners For Retail, which makes plastic sign holders and shelf systems; Hospitality Mints in 2009, our first food & beverage deal; and our most recent deal, Manhattan Beachwear, our third apparel deal.
What was the most difficult window deal you’ve done?
Most of our deals were done in the ’90s and early 2000s; they were pre-bubble, which made them easier than they would be today. Even so, they were all a little bit difficult because banks would ask, ‘Is this market going to stop; is there a bubble?’ That was the tough question every time we considered buying a window company. As it turns out, we were either lucky or visionary because we got in and out before the bubble burst—over the course of 15 years. In 2001, when we bought PGT, which makes hurricane-code windows in Florida, the question was: ‘My gosh, how can you buy a window company in Florida? That market is not sustainable.’ We owned it for four years, and it turned out to be just fine, although after the bubble burst, the company did suffer along with the construction market there.
What industries seem attractive today?
We’re thinking we’ll get back into building products pretty soon. You couldn’t invest in it during the past two years because you had to make sure you were past the bottom. Even if we had wanted to, the banks wouldn’t have let us. But now we’re seeing improved performance at Royal Bath, which makes bathtubs. The feeling is we are at the bottom and growth will resume, so we’re looking to get in again. It will be hard to convince the banks, but every day it becomes a little easier. We don’t have anything on the table right now, but we’re starting to actively look. As long as the economy doesn’t get worse and the company performs, you have a chance of convincing the banks it’s a viable deal to be loaning to.
What kind of opportunities will you be looking at in building products?
We like windows. There are unique aspects we find attractive. Everybody needs them; they can be differentiated because some windows are better than others; and they are pretty hard to put together, so we view that as an opportunity. We’ve done it four times, so we understand what it takes to be successful: delivering great product on time at a good cost. Plus we know management we can bring in to help us.
Which of your window deals was most successful?
They’ve all been very successful, but the one that created the biggest multiple was Carefree; when we bought it in 1992, you only had to put 15 percent equity in the deal, so we got the most bang back then. We did return nearly 10x the equity to our investors. Ah, the good ole days.