Fresh Profile: Independent sponsor Borgman Capital eyes midwest industrials

  • Why is this important: Borgman Capital focuses heavily on industries that drive the economy in the Midwest

Sequoya Borgman was no stranger to the world of private equity before he formed Borgman Capital, a Milwaukee-based independent sponsor, in 2017.

He spent 20 years as a certified public accountant at some of the largest accounting firms, including Deloitte and KPMG, helping private equity firms with their acquisitions.

“After doing it on that side of the table for almost 20 years, I really saw an opportunity to form a firm and do that in Milwaukee,” said Borgman, who also serves as managing director of the firm.

Borgman Capital considers itself a value investor that invests in well-established, lower-middle market, founder-led businesses in the midwest. Borgman Capital focuses on the industrials sector, something that makes sense for it since the industry is the “economic driver throughout the midwest,” said Borgman.

The firm targets businesses with Ebitda ranging from $2 million to $10 million with revenues of $5 million to $75 million, according to its website.

The company sources capital from high net worth individuals and family offices. It also invests “personal equity” in its deals, said Borgman.

Borgman Capital has four companies under its portfolio: Derco Manufacturing, which makes industrial equipment; Lift Products, which also manufactures industrial equipment; Solution Dynamics, a distributor of warehouse and storage equipment; and Gilman Cheese Corporation, which processes and packages cheese. Gilman was Borgman Capital’s latest and biggest deal to date.

“They had some phenomenal, historic growth,” said Borgman on the deal, which closed in February. “Their compound annual growth for those last 10 years has been 10 percent-plus year-over-year for 10 years straight.”

Investments in the industrials sector have worked well for Borgman Capital, but it’s open to investing in other industries, such as business-to-business services. The firm, however, has no interest in deviating from it’s tried-and-tested blueprint of acquiring well-established businesses,  Borgman said.

“As long as an established business has been around for 20-plus years with a proven business model those are the types of businesses that we’d look at,” he said.

Borgman is joined by managing directors David Bartelme and Michael Pepke. Bartelme joined Borgman Capital in 2018 after spending 11 years at Shell Oil Company, according to LinkedIn.

Pepke is a shareholder at the law firm Reinhart Boerner Van Deuren and provides “advice to clients regarding complex legal and business matters,” according to the website.