BUYING A SMALL BUSINESS

To Sell or Not To Sell?

In November 2006, we wrote about the lucrative offer Gary Delman received. But did he really want to sell his company to a private equity firm?
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The Problem Gary Delman loved running the family business, Sunrise Windows, which he founded with his uncle, Elliott, and a family friend, Larry Van­De­Velde. He relished the independence of being his own boss and loved the fact that he could be home at 6 for dinner with his family. But Delman was worried. Despite revenue of $30 million, Sunrise Windows seemed to be falling behind many of its competitors, which were rolling out new products at a much more rapid pace. Delman also wanted to see the Temperance, Michigan-based business expand out of the Midwest. To grow, he needed capital--and help. So in the fall of 2004, Delman began meeting with private equity firms. One outfit, FdG, stood out. Promising to boost profits through expansion, not by slashing jobs, FdG made an offer that seemed too good to pass up: $50 million for a 70 percent stake. In March 2005, Delman did the deal--and hoped it wouldn't mean surrendering control.

What the Experts Said William Shull, a counselor with the Service Corps of Retired Executives in Toledo, called it a bad move, arguing the private equity firm's partners were "telling Delman things that they know he wants to hear." Brian Opiel­ski, owner of Apex Management Group in Malvern, Pennsylvania, warned that Delman would have to make "hard decisions" to satisfy the investor's expectations. But Paul Aran, a vice president at Moody's Investors Service in New York City, called the deal an "excellent opportunity" that would pump in needed capital and possibly allow for a merger down the road.

What's Happened Since "The relationship with FdG has been phenomenal," says Delman. He speaks with senior managers at FdG weekly; they also join in the monthly conference calls and attend off-site strategy meetings.Delman's focus has shifted from day-to-day operations to long-term planning. He hired a CFO, doubled the sales force to 12, and spent some $2 million on new facilities and products. Last year, revenue reached roughly $36 million, and Delman expects it to top $40 million in 2007. He no longer gets home at 6 every day, but he is comfortable with the work-family balance he has struck.

What's Next Delman wants to double the size of Sunrise in the next four years. To do that, he plans to tap new markets, and he's seeking acquisitions. Delman says the quarterly board meetings with FdG at Sunrise headquarters have been great and overall, "the entrepreneurial spirit and philosophy exists today at an even healthier level."

Last updated: Dec 1, 2007




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