Deal of the Year, Turnaround, 2016: Sun Capital Partners

SNAPSHOT:

  • Company: Point Blank Enterprises
  • Legal advisor: Kirkland & Ellis
  • Financial advisor: BlackArch Partners

WHY THEY WON:

  • Sold company to JLL Partners for more than 3.5x multiple
  • Took EBITDA from a loss to a profit
  • Improved EBITDA by more than 600 pct
  • Won contract to supply NYPD with armor

In February 2015, the New York City Police Department announced it was awarding a contract to a company called Point Blank Enterprises Inc for 13,000 protective vests.

The prestigious contract award was the culmination of a multi-year turnaround undertaken by Sun Capital Partners that garnered the firm more than 3.5x its invested capital when it sold Point Blank to JLL Partners in May 2015.

But it wasn’t easy. Sun Capital had to work through bankruptcy court to pour the foundation for what it would eventually build into a global provider of armor for military and police forces around the world.

The keys

Government budget cuts were having a direct impact on body armor manufacturers, including two companies that went bankrupt: Protective Product Enterprises and Point Blank Body Armor.

Sun Capital bought Protective Product Enterprises and Point Blank Body Armor out of bankruptcy in 2010 and 2011, respectively. Sun merged the two companies with a corporate carve-out, Paraclete Armor and Equipment, in 2012, forming Point Blank Enterprises.

The firm identified three keys to complete the turnaround: unify three struggling companies into one integrated whole, improve operations, and develop new products.

To build a unified organization, Sun brought in a new management team, led by Daniel Gaston, a chief executive officer the firm had worked in the past. “A lot of this was creating this company with a positive culture and a team environment,” said Scott Edwards, managing director and head of investor relations at Sun Capital. Part of this included training programs for employees.

With the team moving in one direction, management worked on improving operations. Those effforts included improving the supply chain, which helped reduce costs by 30 percent; streamlining the order process; and organizing production by product and end market, which improved productivity by 5 percent.

The company made the manufacturing process more efficient by splitting its armor into two lines: one for military and one for law enforcement. The two processes differ because the military needs volume, while law enforcement vests are ordered in smaller quantities, Edwards said.

“Separating the lines created a lot of efficiency,” he said.

Significantly, Point Blank also reduced delivery times to its law enforcement customers from 60 days to 21 days.

With two goals met, the company moved to its third: developing new products and expanding its reach.

The future

Point Blank was highly focused on the military, so the natural move for an expansion was into domestic law enforcement. As part of this expansion, Point Blank created a new product called Alpha Elite based on special forces armor, which is the lightest, thinnest body armor in the world, Edwards said.

“That’s a special combination,” he said. “We launched that product in 2014 into the law enforcement community. It really took off after we launched it.”

Point Blank also developed body armor for women. “There’s a number of women in the police force and military, and up until recently a vest was a vest,” Edwards said. “But now we have a vest much more tailored to a woman’s physique.”

Point Blank now supplies body armor to the NYPD as well as police departments in Miami, Seattle and Chicago, as well as the Texas Department of Public Safety. It also expanded geographically and secured contracts around the globe.

All of the efforts paid off, with EBITDA going from a loss to a profit and growing by more than 600 percent.

By early 2015, Sun Capital decided it had accomplished everything it wanted to with the company and it was time to exit. It sold Point Blank Enterprises to JLL Partners in May 2015 for more than 3.5x multiple

“This company was really special, we got a lot of satisfaction out of what the product did,” Edwards said.

Photo of Alpha Elite body armor courtesy of Point Blank