Interview – Carrie DiLauro, Hamilton Robinson Capital Partners
We recently interviewed Carrie DiLauro, Director of Operations at Hamilton Robinson Capital Partners, a lower middle market private equity firm located in Stamford, CT. Carrie shared her thoughts and her firm’s strategies for generating deal flow, navigating higher valuation multiples, creating value and building businesses to weather the storm of macroeconomic or industry specific downturns.
The text below are Carrie’s comments, organized by topic.
The most effective form of business development for private equity firms operating in the lower middle market involves the whole firm, and not just a single point of contact. Hamilton Robinson specifically targets regionally-focused M&A intermediaries and develops those relationships over years so that when a well-matched deal in the industrial space comes along, our firm is top of mind.
Historically, we have averaged 5.5x EBITDA on the buy-side, but we are now adjusting to EBITDA ranges that are 6x or 7x for deals that don’t have a distressed component. With the higher multiple expectations, due diligence efforts have further increased. Hamilton Robinson, as a firm, heavily relies on executive affiliates with tribal knowledge in specific sectors to help guide us in choosing attractive companies in which to partner.
Building Business Value
At Hamilton Robinson, we build strong business foundations, by pulling three levers of value creation:
- Culture – We find a solution for the business owner’s transitional needs and then hold on to the management team by spreading positive cultural buy-in down through the organization. This often includes giving very broad equity incentives to help align everyone.
- Lean Processes – We begin by engaging and soliciting ideas from the employees. Utilizing a great deal of teamwork, we then breakdown each production process and ferret out incremental improvements that sum to build-up tremendous value over time.
- Add-On Acquisitions – We expand the company’s geographic reach, customer base and product offerings by acquiring smaller companies that aren’t commanding high multiples. This strategy offers a quick boost of growth that is accretive.
Weathering the Storm
At Hamilton Robinson, it’s all about finding genuinely good companies and improving them from the foundation up, this then provides a strong and resilient platform for rapid growth. This approach has allowed us to weather the storm of macroeconomic and industry specific downturns.
For example, in October of 2006, we recapitalized Black Clawson Converting Systems in conjunction with the add-on acquisition of Davis-Standard LLC. Both companies were leaders in the design and manufacturing of capital equipment and machinery for the plastics extrusion industry. Then the industry took a 35-40% hit with the start of the recession in 2008. Many residents in the small towns of Fulton, NY and Pawcatuck, CT relied on these businesses for employment. They were important pillars of their communities and could not afford mass lay-offs or factory closings.
Hamilton Robinson worked with the management teams, employees and union to ensure a focused culture prevailed. Everyone knew they were critical to the team, and they knew what the game plan was. It was especially important to hold on to their engineering talent by enacting furloughs instead of lay-offs and cutting Hamilton Robinson’s management fees.
The team did not stagnate during the recession, instead they took advantage of the downturn to perform R&D and ultimately, the company took a huge step ahead of the competition. It was incredible how much passion and team work was brought to the table to make sure the company not only weathered the storm, but came out the other side stronger and more competitive.
At the time of Hamilton Robinson’s original acquisition, revenues were $30 million. When the storm was over and the company was sold in 2010, it was a $300 million business. The best part is that when the company was sold on December 23rd, 80 management shareholders in small towns in New York and Connecticut were sent $120,000, $200,000, or $400,000 checks! That was life changing money for a lot of hard working people. Money that went towards sending children to college, paying for weddings and funding retirement accounts.
About Hamilton Robinson Capital Partners
Started in 1984, Hamilton Robinson is a lower middle market private equity firm that seeks to provide first institutional capital to promising companies with $3 – $20 million in EBITDA and $20 – $200 million in revenue. The firm is solely focused on the industrial space – US manufacturing and value added B2B service or distribution.