Founded in 1929, Stock Equipment Company, located in Chagrin Falls, OH, was a subsidiary of SPX Corporation. Focused on designing and producing of volumetric coal feeders sold into the coal fired electric utility industry, Stock Equipment no longer fit its parent owner’s core growth strategy.
In the fall of 2003, after developing a close and trusted relationship with the Company’s leadership team as well as its parent/owner, SPX Corporation, Riverlake successfully completed the purchase of Stock Equipment Company. At the time, it was important that SPX Corporation find a buyer who it trusted to close the transaction and who could do so in a short period of time. Riverlake responded by completing the 100% carve-out, transaction within 90 days of formally entering into negotiations.
Riverlake saw a unique opportunity to develop a growth strategy around the combined strengths of a competent and capable existing management team with a large installed global customer base. Riverlake believed that the core competencies of the Company could be levered into other bulk material handling materials industries. Further, through a dedicated new product development effort, Riverlake believed that additional products could be sold into the Company’s key customer base. At the time, the electric utility industry was at a low point with investors, as the final acts of the Enron scandal were playing out and at a time when coal as an energy source was out of favor.
The purchase of Stock Equipment was complex. With operations in North America, UK, Japan, and China it was critical that Riverlake was keenly familiar with cross border transactions and the coordination of international resources. Further, as a carve-out transaction, it was necessary for Riverlake to have in place key corporate infrastructure such as insurance programs, banking systems, purchasing department, and IT. Riverlake responded by dedicating the necessary amount of resources to complete the transaction in a smooth and efficient manner without disruption in any internal function, without any customer issues, and within in a time period satisfactory to the seller.
Riverlake teamed with its strong financing partners to effectuate a financing structure that provided opportunity for management participation and allowed Riverlake to maintain control. Through the utilization of multiple levels of securities in the capital structure, Riverlake maximized its returns to investors while providing the necessary working capital to support the Company in its growth plans.
Over the course of Riverlake’s two and half year ownership period, Stock Equipment established itself as a completely stand-alone enterprise with world class operations on five continents culminating in the sale of the business to Schenck Process AG for four times Riverlake’s investment. Through the successful execution of its strategic plan Riverlake and management reorganized the Company from separate operating units into a singular global enterprise and completed several significant value-add initiatives, including: establishment of an India development, design, and sales operation; establishment of a new product development process and team; negotiation of three pending add-on acquisitions; new global marketing and branding campaigns; and implementation of new enterprise wide CAD and ERP systems.