Case Study - Acquisition from an Inactive Owner with a Creative Structure


WESTCON, INC.

Bismarck, North Dakota

Westcon is a specialized industrial construction company providing construction services for large scale process facilities. 

Seller Need: The founder sought liquidity for estate planning purposes and desired to participate in the growth of the future value of the business and to continue in his current role as President. He sought an investment partner who could provide strategic guidance to help execute a sustainable long term growth plan and who could also bring accounting and information systems expertise.

Transaction: In July 2008 in partnership with another private equity firm, Argenta Partners recapitalized this $100 million revenue industrial construction business. We provided liquidity for the seller while also providing him with a significant minority ownership position in the business. The seller continues to serve as the President of the business. We structured the transaction to provide, for the first time, ownership positions for other key existing and future members of management.

Role: Since the recapitalization in 2008, we have assisted in the recruitment of a new Chief Financial Officer and new Controller, and have also invested in the improvement of accounting and management information systems. We have also assisted in the recruitment and hiring of a VP of Business Development. We anticipate further additions to the organization to better position the business for future growth. Prior to the transaction, the business had grown rapidly during the preceding 5 years. Our joint objectives with the management will be to continue this rapid growth through investment in people, systems and competitive strategic initiatives.

Outcome: Argenta Partners completed the sale of Westcon to Bilfinger Berger SE (XETRA:GBF) on July 12, 2012. The successful exit generated a gain of 6.7 times the initial equity investment.

As viewed by the CEO:

“In 2006 I began doing some personal estate planning and in that process realized that the current structure was not ideal for the continuity of the company. I began exploring different options with both strategic buyers and equity investors and determined that my best option was to pursue an equity buyer that would allow me to have complete involvement in the company and continue my role as President. Through the process, I met Argenta Partners and liked them immediately. They were down-to-earth, interested in my vision for the company and importantly, our goals were in alignment. Westcon’s success has always been based on customer relationships and quality performance. I wanted partners who aligned with me on retaining this focus and implementing a growth strategy that would not compromise the business. I found that with Harry and John.

They have been great partners and allowed me to run the business without micromanaging, and yet they have been there when I needed them. Argenta Partners has been particularly helpful in bringing expertise to our financial and accounting areas and actually helped us source a Chief Financial Officer even before the deal was signed. I have been pleased with our relationship and with how well they have aligned with our business goals and my personal goals.”

Mark C. Peterson
President, Westcon, Inc.