3 minute read
In the early 1980s, the Wilt family acquired C&P Enterprises, a construction attachment manufacturer, with a one-room dirt floor shop, five employees, and a rusty pickup truck for deliveries. Jack Wilt was a second-generation owner-manager with a depth of experience running manufacturing and distribution businesses, but no one in the family knew a thing about construction attachments. Jack’s son, Terry, joined him in this new adventure and their entrepreneurial spirit led them to some early successes. Terry himself was an entrepreneur at heart, having already owned and run several service businesses, and would turn out to be a skilled Operator and Operations Manager.
With Jack, Terry, and Shirley Wilt (Jack’s wife / Terry’s mom, who became C&P’s CFO) all working together, it was only a matter of time until they convinced Terry’s older brother, Gary, to come join the family endeavor. Gary was building his career in industrial sales in Atlanta and took a leap of faith to return home to Chattanooga to “help out” the family business. Tragically and unexpectedly, soon thereafter, Jack Wilt passed away. It was a trying time for the brothers and the entire family, but Gary, Terry, and Shirley found the courage and strength to press ahead.
And did they ever. After ten years of solid growth, overseeing three plant expansions and the construction of a brand new 100,000 sq. ft. state-of-the-art manufacturing facility, the brothers sold a controlling interest in C&P to a private equity partnership called Metapoint Partners. The Wilts didn’t engage an M&A advisor, there was no interviewing of multiple investors or choosing the right one; rather, Metapoint showed up and there was mutual agreement that it would be a good partnership. Now in their early 40s, Terry and Gary decided to stay on board after the transaction to continue running the Company with their new partners.
The partnership with Metapoint was a success. Metapoint was executing a strategy of building a platform company in the construction attachment field, and added four additional companies into the mix, branding the holding company, Attachments Technology, Inc. (ATI), based in Delhi, Iowa. By 2003, the investment had grown to the point that it was larger than what Metapoint wanted to continue to fund. They decided it was time to find a new majority owner for ATI and engaged Bigelow to assist in finding the best next majority investor. During this engagement, we had the privilege of meeting two passionate leaders within ATI, Gary and Terry Wilt. Norwest Equity Partners acquired ATI, brought in a new management team with experience from John Deere, and renamed the holding company Paladin. Like many owner-managers do, Terry & Gary stayed on board for a short period of time, then ultimately decided they were ready to go back to work for themselves.
By 2005, Gary and Terry had been approached by construction equipment friends about when they were going to enter the business with an innovative new series of products. Their first order was entered via a cocktail napkin at a trade show in Las Vegas. TAG Manufacturing was born, and success came fast. The name of the business was artfully discovered when Gary dropped his daughters off at gymnastics practice at the Tennessee Academy of Gymnastics…also a convenient acronym for “Terry And Gary”. Some customers from the C&P days had come looking for the same level of sales and support they were used to receiving when Terry and Gary ran the company. At TAG, they were able to supercharge the customer-driven sales culture that the industry needed.
Bigelow stayed in touch with our friends Terry and Gary over the years, including attendance at a Bigelow Forum where they spoke with other Entrepreneur Owner-Managers about their challenges and experiences. After 15 years of long weeks, significant investment, and tremendous outcomes, they mutually decided it was time to consider some outside investment to support the growth of TAG Manufacturing well into the future.
The Wilt brothers, now both in their early 60s and thinking about how to balance the requirements of growing TAG with their personal desires and their families, were both looking to step back from their day-to-day operational roles. There was a realization that they had now built two very successful companies but had never grown a business as big as TAG, and they would benefit by operational help and access to capital to continue the growth of the business well into the future. There was no “next gen” coming into the company and with over 300 employees and their families to consider, there was a lot on the line when thinking about their legacy.
As leaders and managers, Terry and Gary were excellent. So excellent, in fact, that they were able to run TAG with profit margins and a long-term growth rate both more than 2x the industry average. As we prepared to speak with investors, we knew we were going to have to translate everything that Terry and Gary knew into data and stories to give investors confidence there was a bright future for TAG. Terry and Gary wanted to “do it right” this time around and understood the value of proper preparation.
How could we explain the market to investors? How could we validate the company’s sustained superior performance? Given the lack of financial controls and oversight, how could we organize the financial statements in a way that would properly show the profitability and growth of the business? What were the growth levers that Terry and Gary saw in the future? How would TAG’s strategy of holding lots of quick turn finished goods inventory be perceived by investors? How would the deeply loyal and long-tenured management team react? How were we going to help facilitate Terry and Gary finding the freedom they desired?
Before Bigelow became engaged by TAG, Bigelow recommended that Terry and Gary engage RSM to do a Quality of Earnings Study that properly characterized the impressive margins. We also recommended they engage the strategy consulting firm STAX to perform a Market Study. Bigelow helped TAG to build a growth story by analyzing customer and product opportunities, while allowing TAG to maintain its customer-centric strategy. Most importantly, we brought the senior management team into the "circle of trust" about a possible transaction and worked hard to build trusting relationships knowing how important the team was to the future of TAG. Nearly all the managers had worked for Terry and Gary for multiple decades, some even back to the C&P era; they remembered some of the difficult transitions when C&P was acquired nearly 20 years earlier.
Bigelow held conversations with a wide range of financial and strategic investors. TAG’s strategy to build the “Amazon of buckets” with their quick-turn inventory was truly differentiated and resonated well with multiple types of investors. To facilitate this strategy, Terry and Gary had recently built a second 230,000 sq. ft. manufacturing facility only months before going to market – interested parties saw this investment as a vote of the Wilt’s confidence in the market. To highlight the management team’s talents, we crafted a unique architecture for investor meetings which allowed the team to shine in their best light; building their confidence and showcasing the unique strategic advantages within TAG.
Ultimately, the Wilt brothers chose to recapitalize TAG with Center Rock Capital Partners. Center Rock brought a positive partnership attitude and wanted to work with Terry and Gary to help them transition out of the business on their own appropriate timelines. Gary agreed to stay for a couple of years to help recruit a new CEO, while Terry was on a path to reduce his involvement more quickly. Additionally, TAG’s management was given the opportunity to make personal equity investments alongside Terry, Gary, and Center Rock, giving the managers upside into the future.
Jack and Shirley would be proud to see what Terry and Gary were able to build together and thrilled with the legacy they’ve been able to leave in place for their employees and customers.
Note: You may also be interested in listening to the podcast we did with Gary Wilt titled Digging Into a New Chapter, where Gary Wilt and Pete have an entertaining rapid-fire 45 minutes session in Chattanooga, TN talking about the recapitalization of TAG Manufacturing, Inc. by CenterRock Capital Partners, LP.
What I am Reading / Listening to
Rock Paper Scissors (2021)
By Alice Feeney
Contributed by Marisa B. Lister
What I loved most about Rock Paper Scissors is how it kept me guessing right through the very end. It is a story about damaged individuals, deception, and the effects lack of trust can have on a relationship. Amelia and Adam Wright win a weekend getaway to a remote area of the Scottish Highlands. Their accommodations, the Blackwater Chapel, is not what they expected. Alternating between both their viewpoints we quickly learn this trip will either mend or break their 10-year marriage. Interweaving the first-person chapters, are letters to Adam written on their anniversary through the years providing us insight to how and why the Wrights’ marriage ended up where it is.
Misdirection plays a huge role in this thriller. Let’s just say, Mr. and Mrs. Wright are not who you think they are.
Entrepreneur Owner-Manager Quote
“We interviewed other investment banks and they were all about EBITDA, candidates, and valuation. I had previous experience as a CEO going through a sale process and believed we also needed family guidance. Bigelow was equally experienced on the ‘soft side’ issues as on the deal points.”