Target: Innovative Folding Carton
Sponsor: Bear Stearns Merchant Banking
Seller: ICV Capital Partners LLC, 21st Century Group LLC
Financial Adviser: Sponsor: Mesirow Financial
Legal Adviser: Sponsor: O’Melveny & Myers, LLP; Seller: Kirkland & Ellis LLP
Return Multiple: 2x
No add-ons? No problem. Despite not being able to execute a business plan that called for bolt-on acquisitions for portfolio company Innovative Folding Carton,
The New York-based lower mid-market shop and
The South Plainfield, N.J.-based Innovative Folding Carton, which employs about 200 people, provides a variety of packaging products for customers such as Bausch & Lomb Inc. and Bobbi Brown Cosmetics.
When ICV Capital teamed up with 21st Century Group to buy Innovative Folding Carton in 2004 from Impaxx Inc., a company owned by Los Angeles-based buyout shop
“We looked at a few acquisitions and ultimately decided none of them made sense,” he said.
Still, ICV Capital bought the business in 2004 on the belief that its sole New Jersey location would deliver a good return on its own, Metz said. Add-on acquisitions would have been icing on the cake, perhaps earning the firms 3x or 4x their investment. Even without the add-ons, the company performed well, and its owners didn’t see opportunities for expansion, prompting the decision to exit, Metz said.
With expansion plans off the table, the firms looked inward and focused their efforts on streamlining the sole production plant. Assisted by CEO Shawn Smith, who has a sales background, the LBO shops boosted the sales force from six members to 10 and retooled the sales department’s incentive structure to drive new accounts. They instilled greater discipline in the company’s purchasing practices and cut waste by, for example, using less paper and ink. “It became a more efficient operation,” Metz said.
ICV Capital is currently looking for deals with its $313 million second fund, which closed 2006. Metz said the fund has about $250 million left to deploy. It invested in Innovative Folding Carton with its first fund, a $130 million vehicle it closed in 2001. ICV Capital has exited five of the six companies acquired with the first fund.
21st Century Group did not return calls requesting comment.—B.V.