Plexus Perspective
Transcription
Plexus Perspective
Plexus Perspective SECOND QUARTER, 2012 Welcome to the Plexus Capital Newsletter The partners at Plexus Capital value the relationship we have developed with each of our industry partners. To further deepen this relationship, we plan to author a newsletter for your education and enjoyment, share our thoughts with you, and provide you with content that will inform and be of interest. We will publish the newsletter several times per year, keeping our information fresh and relevant, and promise to keep our content brief in order to be mindful of your time. I hope you enjoy our first edition and find it beneficial. We welcome your feedback and comments. Bob Anders Managing Partner Our History Plexus Capital was founded as a Small Business Investment Company (SBIC) by Bob Anders, Mike Becker, Robert Gefaell, Kel Landis, and Michael Painter during the summer of 2005. Each of the founding partners had worked together for RBC Bank, f.k.a. Centura Bank – Kel as CEO, Bob as Head of the Capital Markets Group, and Mike, Robert, and Michael for Centura Capital – RBC’s bank-owned SBIC mezzanine fund which began investing in 1995. Following the early retirement from RBC of both Kel and Bob, the five partners came together to form Plexus. Having worked together for many years, it was a natural fit and the continuation of a successful partnership. Fund I was $81MM in size and saw its first investment closed December 30, 2005. On July 2, 2010, the 28th and final transaction was closed in Fund I. Plexus subsequently raised $175MM for its second SBIC fund – Plexus Fund II. To date, Plexus Fund II has invested $105MM in 17 companies. With approximately $70MM in capital remaining to invest, the partners are planning on kicking off fund raising efforts for Plexus Fund III in Q4 of 2012. Thought Leaders Speak: In the spirit of sharing interesting articles, our keynote speaker at the 2012 Plexus Annual meeting, Dr. Douglas Ready of the UNC Kenan-Flagler Business School, recently published a piece in the Harvard Business Review. We hope you find the following excerpt from the article, “The Power of Collective Ambition”, insightful and helpful. If you would like a printed copy of the complete article, we have a limited number available and will be glad to mail one to you. Please send requests to [email protected]. …The Glue and the Grease Shaping a collective ambition isn’t simply about crafting an inspiring story. The point is to build engagement as a means to an end: to make the purpose personal. In other words, shaping your collective ambition is an opportunity to build or strengthen the organizational glue. It’s also a chance to launch enterprise-wide change initiatives, which require disciplined execution—the grease. Glue and grease exist in parallel…. GETTING TO KNOW US Meet Founding Partner and Principal of Plexus Capital – Kel Landis Plexus Capital Fund II Surpasses $100 Million Milestone Over the past two years, Plexus Capital has made investments totaling more than $100 million in high growth, lower middle market businesses from its $175 million Plexus Fund II. Specializing in providing growth capital in the form of mezzanine, subordinated debt, or preferred equity, Plexus launched Fund I in 2005 and followed with Fund II in 2009. The Plexus team currently manages approximately $255 million of investable capital and has closed 45 investments between its first two Funds. Kel was born in Rocky Mount, NC on Dec 15, 1956 and proceeded to spend the majority of his life and career there, having only recently moved to Raleigh, NC in 2008. In 1975, Kel left home to begin his educational endeavors at The University of North Carolina at Chapel Hill where he ultimately earned his BS in Business Administration in 1979. After beginning his banking career with Wachovia Bank, he returned to Chapel Hill in order to continue his educational pursuits where, in 1982, he received his MBA. Upon graduation, he accepted a position with First Union Bank in Winston-Salem, NC in its commercial lending department. Ultimately, Kel joined what became Centura Bank in 1988 where he held various positions, including Regional Executive, Head of Mergers and Acquisitions, Chief Risk Officer, and Vice Chairman. He ultimately rose to the rank of President before its sale to RBC Financial Group in 2001. Post close of the acquisition, Kel was named the first CEO of RBC Centura, an $18 billion bank holding company, where he served until he took early retirement in 2004. Upon retirement, Kel turned his focus toward economic development initiatives and educational involvements in the state of North Carolina. As a North Carolina native, Kel has a special place in his heart for the Tar Heel state, especially the Eastern portion which has suffered economically for several years following the demise of the furniture, textile, and tobacco industries which were the backbone of the state’s economy. Subsequently, he took the position of Senior Advisor to the Governor of North Carolina for Business and Continued on page 3 in sidebar 2 “Plexus conducts exhaustive due diligence, employing the most current technology and maintaining close contact with our portfolio management teams. We strive to build a mutually beneficial relationship with each of our constituents — always with the long term in mind. What distinguishes Plexus is our desire and willingness to serve as a valued strategic financial partner to each and every one of our portfolio companies,” said Bob Anders, Plexus managing partner. Plexus focuses on providing growth capital to healthy businesses located in the Eastern United States with revenues between $20 million and $100 million. The private firm is a Small Business Investment Company (SBIC) and provides funding from its private investors in collaboration with the Small Business Association. Case Study Plexus’ First Ever Investment Overview Transcription Relief Services, LLC, (“TRS”), headquartered in Greensboro, NC, is a medical transcription company specializing in quality healthcare documentation services. TRS was founded by Mary Harvey in the mid-1990’s to provide an avenue for people desiring to improve the quality of their family life to be able to provide medical transcription services out of their homes. In 1999, Bob Harvey took over the business and continued TRS’ growth by bringing on new transcriptionists and pursuing new customers and business opportunities. In 2002, TRS began to outgrow its current capitalization. In an effort to help fund the company’s rapid growth, Mr. Harvey brought in DataMax Corporation to invest equity dollars for a 51% ownership position (Harvey retained 49% ownership). With the new capital in place, TRS continued its strong growth trajectory through 2005. Exit In response to its strong track record of predictable growth, its increasing profitability, and declining debt balance, TRS was able to secure additional senior bank financing in July 2008. This capital was used to refinance Plexus’ outstanding debt and to redeem its warrant position, leaving Mr. Harvey with complete ownership of the Company. Summary This transaction illustrates how Plexus Capital is able to provide solutions to small business owners seeking to grow their business with debt, therefore avoiding the dilutive effects of raising pure equity. In TRS’ case, Mr Harvey started out with 49% ownership in his business when he first met Plexus and subsequently used Plexus’ capital to increase his ownership to 100%. Other Highlights of Kel’s Career Board Involvements: •Board of Trustees at the University of North Carolina at Chapel Hill •Board member of the UNC-Chapel Hill Foundation Board that oversees the investment management and deployment of investment proceeds of the University’s $2.5B endowment •Trustee of the Kenan Institute for Private Enterprise housed at the University of North Carolina-Chapel Hill. •Board member of the NC Community Foundation with assets exceeding $100MM. •Member of the UNC-Chapel Hill Kenan-Flagler Business School Board of Visitors and previously an adjunct professor of finance •Board Member and Executive Committee member of Live Oak Bank, Wilmington NC. •Past Trustee for the NC Supplemental Retirement Board that oversees $5B in 401K assets. •Chair of the UNC-Chapel Hill Board of Visitors in 2005 •Past Board member of the Golden Leaf Foundation, a $700MM economic development foundation in the State of NC. Chair of the Audit Committee, appointed by the Governor for 6 year term. GETTING TO KNOW US Continued from page 2 sidebar Economic Affairs from 2004-2005. He later furthered the cause when he founded and served as Chair of the Foundation of Renewal for Eastern North Carolina. Kel remains a major advocate for the state and continues to give a portion of his time toward ensuring its economic stability and growth. Outside of his professional endeavors, Kel has a passion for running, having completed 5 marathons over his lifetime (NYC twice, Boston, Marine Corp, and Big Sur) with a personal best time of 3:07. In addition to running, Kel also has a love/hate relationship (as most of us do!) with the game of golf, currently sporting a 9 handicap. In his down time, he prefers to spend time at Wrightsville Beach, NC with his wife Nina who founded a media and communications consulting firm call Circled Square Media, having gotten her start in the industry as a TV reporter for WRAL in Raleigh. Nina is also involved with the state of North Carolina currently serving as a board member of the NC Department of Transportation. Kel has two children, Dorsey who works for PNC Bank and is a graduate of the University of North Carolina at Chapel Hill, and HK who is currently a student studying at the University of North Carolina at Chapel Hill. ➦ Transaction In mid-2005, having experienced continued strong growth, Mr. Harvey sought to buy out DataMax’ ownership position and approached Plexus as a potential investor. After spending time with Mr. Harvey and helping him understand the different financial instruments available to him, Mr. Harvey and Plexus signed a term sheet to provide $2.15 million of subordinated debt. The subordinated debt security was an attractive solution for Mr. Harvey as it allowed him to leverage his balance sheet and regain majority control of his business (100% voting rights on a going-forward basis). The transaction closed in late 2005 with the combination of Plexus investing $2.5 million of subordinated debt with detached warrants and Mr. Harvey’s personal investment in the form of common equity to buy out DataMax’ ownership position, thereby regaining 100% control of his business. •Past Trustee of Elizabeth City State University for 7 years, one of the 16 member campuses of the University of North Carolina Public University System •Past Board member of Nash Healthcare Systems, a 200 bed hospital in Rocky Mount, NC. •Past Director of the NC Citizens for Business and Industry (NC Chamber of Commerce) •Past Chair of the Rocky Mount Area Chamber of Commerce in Rocky Mount, NC •Past President of the Rocky Mount, NC Family YMCA •Past Young Presidents Organization (YPO), Treasurer Significant Contributions and Accomplishments: •Chair of the North Carolina Bankers Association •Senior Advisor to the Governor of North Carolina for Business and Economic Affairs 2004-2005 •Founded and served as Chair of the Foundation of Renewal for Eastern North Carolina •Boy Scouts of America-Eagle Scout 3 Plexus Puzzle What We Look For: Industry • Business Services • Consumer Services • Manufacturing • Healthcare Services • Value Add Distribution • Other General Industries Use of Proceeds • Leveraged Buyouts • Management Buyouts • Change of Control/Ownership • Acquisitions • Organic Growth • Recapitalizations Company Characteristics ACROSS DOWN 4 a double tap 6 Brookline’s boy wonder 9 2011 PGA winner’s aunt 10 WFU green jacket choker 14 in your life shot maker 15 please alternate 16 fear the stache 3 time winner 18 a cold plunge 19 rarest of shots 21 hole in one 24 just a wie bit 27 comedian George’s sister 32 Beth Black’s creator 33 Carnoustie’s clown 34 makes it fair 35 a golfer’s favorite hole 36 Titanic sinker 38 wooden mine 40 a type of hazard 41 lemonade with tea 43 never leaves the deck 1 pizza by the _____ 2 music to the matchplayer’s ear 3 number one ball in golf 5 sea dwelling mammal 7 an eight 8 Aussie or Great White 11 Hoffman in Peter Pan 12 Scotland lard 13 Saturday 17 the mechanic 20 pencil whipper 22 Buckeye legend 23 Bobby slammed it here 24 She’ll never wear the green jacket 25 a chiropracter’s dream patient 26 General Lee owner 28 Sir Nick 29 green mile locale 30 hosel rocket 31 plugged in the sand 37 the dreaded snake • Minimum Revenue of $15MM • Minimum EBITDA of $2MM • Experienced Management Team • Management with “Skin in the Game” • Sustainable Business Model Investment Instrument • Senior Subordinated Debt • Junior Subordinated Debt • Unitranche Debt • Equity Co-Invest About Us Overview Team Mezzanine Fund Portfolio Contact Please click here for puzzle solution. I hope you will call on us any time to discuss ways we might partner with you to provide capital for your growing business. You can reach me directly at 704.927.6246 or via email at [email protected]. Thank you. — Bob Anders CHARLOTTE, NC 200 Providence Road, St 210 Charlotte, NC 28207 RALEIGH, NC 4601 Six Forks Road, St 528 Raleigh, NC 27609 Not on our email list? Click here to subscribe. Bob Anders Principal 704.927.6246 [email protected] Robert Gefaell Principal 704.927.6247 [email protected] Mike Becker Principal 919.256.6342 [email protected] Kel Landis Principal 919.256.6343 [email protected] Visit us at www.plexuscap.com Michael Painter Principal 919.256.6341 [email protected]