Dynamic Duo: Pilot and Air Traffic Controller

Chad and Kim are life partners and business partners, a pair that Bigelow soon learned to call our “Dynamic Duo.” After meeting in college, unexpected events led them to invest over 20 years building Marco Rubber & Plastics, LLC into an industry disruptor.

Chad grew up interested in technology—playing video games and learning about computers on his own. He is an adventurer with a strong sense of purpose as shown by him earning his private pilot license before he was old enough for his drivers license. In college, Chad trained to become a commercial airline pilot while Kim studied to be a professional air traffic controller. After graduating from college in the mid 90’s, their future was put on hold. It turned out Chad’s mom was terminally ill. He returned home to help his dad, Leon, with the family business for a while. Chad knew the business well working in the warehouse many summers, initially as a young child alongside his grandfather. The single location business was a small distributor of O-rings, rubber seals, and gaskets to a wide range of industrial customers (Marco stands for Marine Aerospace Rubber Company). Within a two months period, Kim’s employer shutdown, Kim and Chad married, and Kim joined Marco to handle a side website project that led to managing finances, administration, and human resources. Both thought they were on a temporary tour of duty.

Leon had created a clear strategy for Marco—focusing on being an independent supplier (not bound to any one manufacturer the way most distributors at the time were) with the highest level of quality products, customer service, and rapid delivery. Chad layered in his love and knowledge of technology so that by 1997, he was selling O-rings directly on the internet.

In 2004, Chad and Kim acquired the business from Leon as his health began limiting his capabilities. Over the next 15 years, Chad and Kim grew the business 10x into the go-to supplier for hard to find, “mission critical” or specialty performance elastomer seals, frequently requiring small or rush orders for thousands of customers. Chad’s exceptionally detailed and organized mind naturally began recording every “custom” solution that Marco found for its customers. By digitizing this information, each “custom” order then became an easy to find “digital standard” based on their unique, differentiating performance characteristics. They added their own brand of high end perfluoroelastomer material called Markez™, expanded their global supply network, and—the single most distinguishing factor—their relentless improvement of Marco’s unique technology platform.

Chad and Kim were introduced to Bigelow in 2016 by the CEO of a former Bigelow client in the elastomer sealing industry. Over the next several years, a strong relationship emerged as Bigelow worked with Chad and Kim to build the Enterprise Value of the business in advance of a planned capital gain transaction someday. Bigelow met with the company’s existing attorneys to update entities, and introduced new accountants, tax advisors, and wealth advisors to round out their advisory team. We talked a lot about their industry opportunity, company strengths, and growth strategy. Collectively, we refined their technology tactics, with a decision to bring more software development in-house. Chad and Kim attended several annual Bigelow Forum’s which helped educate them on the breadth of emotional issues that come with any potential “someday” transaction.

Ultimately, Chad, and Kim called for an inflection point meeting, with new direction emerging from it. There was a clear recognition by Chad and Kim that personally they were not as excited about hiring additional layers of management in order to scale the business. They had tremendous fun creating a highly profitable niche business, but the complexity of growing the organization seemed burdensome. As we looked to the future together, it was clear that much more of Chad’s time was going to be spent on the administration and general management, and away from the technology innovation he loved. We discussed the possibility of bringing in a new CFO and CEO, but Chad and Kim were appropriately and professionally skeptical about the chances of success. In addition, Marco had been approached by several strategic acquirers and private equity firms. Chad and Kim started to think more seriously about beginning a conversation with one of them.

Would it make sense for Bigelow to lead an effort to find a new partner/majority owner now? Would this partner appreciate and value the company’s industry disruptor potential? Could Chad quickly transition his role to focus exclusively on technology enhancements? Could Kim exit the day-to-day operating responsibility altogether? Could teaming up with a new investor help accelerate the company’s growth and provide potential liquidity for the owners? Collectively, we decided that the time was right to proactively seek a new majority owner.

With Bigelow’s guidance, Marco hired a nationally recognized third-party consulting firm to perform a market study to provide validity to the company’s reputation, strategy, competitive dynamics, and growth potential with an emphasis on the voice of the customer and shifting technology requirements. It was also time to bring the senior management team into the “potential new investor” conversation. After many strategy meetings, a strong consensus on the strengths of Marco was built, and importantly what was indispensable for the future. This led to constructing a management growth plan representing the future vision for Marco, including the resources required and a multi-year financial projection. This intensive planning also solidified the management teams wish list of resources and strategic support an investor should bring to help execute the growth plan.

Bigelow initiated discussions with the best potential acquirers and financial investors worldwide, including all those who previously approached Marco. Due to Marco’s strong historical growth, consistent financial performance, and low capital requirements there were many highly interested investors. Bigelow, Chad, and Kim worked through more than a dozen initial offers to down select to a handful they felt comfortable inviting to visit and meet the senior management team. Through a final offer negotiation with multiple interested parties, Marco chose to partner with Align Capital Partners (ACP) a growth-oriented private equity firm. ACP simply hit all the “must haves” for Chad and Kim, and their management team.

Because Align had unique experience with a very similar industrial component business, they were quickly “all-in” on the technology investments needed to further enhance the Marco proprietary technology platform. They were supportive of significant investments in more sales and marketing resources and, based on their know-how, ACP would take the lead in scaling the organization. They were supportive of Chad moving from the CEO seat into a tightly defined technology role. ACP would recruit a new CEO and CFO quickly relieving Kim from her administration duties. The ACP team built a very strong rapport with the senior management team in a very short time, making them a great chemistry choice. As part of the transaction, the Marco senior management team became owners of the company alongside Chad, Kim, and ACP.

Many Bigelow client success stories stem from a family-owned business where the next generation added a new skill set into the equation. This is what happened at Marco Rubber & Plastics. Chad’s drive and technology expertise complemented by Kim’s energetic and detailed air traffic controller mentality, put Marco on a flight path that no one expected back in 1980.