Riverside Decorates Its Portfolio
With Acquisition of Hardware Resources
Wood You Believe, HR is Riverside's
12th LBO of 2004 and 29th Platform?
October 8, 2004 | New York,
NY; Cleveland, OH; Dallas, TX; San Francisco,
CA - The Riverside Company - the leading
private equity firm specializing in
investments at the smaller end of the
middle market, with offices in New York,
Cleveland, Dallas and San Francisco
- has constructed its 12th acquisition
of 2004 with the purchase of Hardware
Resources (HR). HR designs, manufactures,
and distributes functional and decorative
hardware and specialty wood products
for the cabinet and furniture markets.
This acquisition represents Riverside's
29th platform company and the seventh
by its most recent fund, the $750 million
2003 Riverside Capital Appreciation
Fund (RCAF '03).
Founded in 1990, Hardware Resources
is located in Bossier City, LA, a suburb
of Shreveport. The Company supplies
functional and decorative hardware and
specialty wood products that appeal
to the "mass affluent" consumer who
is interested in a high-end custom look
at moderate prices. HR's functional
hardware product line includes European
hinges, drawer slides, support brackets,
shelf supports, and screws. Its decorative
hardware line consists of a wide variety
of knobs and pulls. The Company designs
and imports a line of hand-carved specialty
wood products that includes corbels,
onlays, posts, and columns. HR also
manufactures and assembles a broad array
of rope, dentil, and crown moulding
products in its Bossier City plant and
designs and markets a line of high-quality,
innovative bathroom vanities.
Riverside's decision to invest in HR
was based upon these strengths:
• Strong core management team.
Jeff Lowe, CEO, and Don Goldman, EVP,
have built a rapidly growing little
leader that has earned a reputation
for innovation, customer service, and
responsiveness.
• Strong Asian presence. HR is
well-established in the Asian market.
The management team has been actively
sourcing product in Asia for 20 years,
including direct sourcing relationships
with more than 20 Chinese vendors. The
Company is currently greenfielding a
manufacturing facility in China that
will be in production by the end of
2004.
• Focus on innovation. HR has more
than 2,600 active SKUs, and has introduced
more than 700 new SKU's per year over
the past two and a half years. With
HR's design and manufacturing capabilities
and close vendor relationships, the
Company is able to quickly get new products
into the marketplace.
• Robust historical growth. Between
2000 and 2003, HR's revenue increased
at a 26% average annual growth rate.
This strong growth has continued in
2004, as revenue increased 44% on a
year-over-year basis.
• Industry dynamics. Between remodeling
projects and new home construction,
cabinet manufacturing has exhibited
solid, steady growth that is expected
to increase at 6.8% CAGR through 2006.
• Growth opportunities. Management
expects to increase revenues through
product line expansion, geographic expansion
and new account development.
"Hardware Resources provides Riverside
the opportunity to partner with an outstanding
management team that has built an organization
highly focused on innovation, Asian
sourcing, and serving customers' needs,"
said Steve Dyke, a Principal in Riverside's
Cleveland office. "With these core tenets,
HR is poised to capitalize on attractive
growth opportunities and we look forward
to working with Jeff and Don to take
the Company to the next level."
"The Riverside Company is well known
for providing the capital and professionalism
necessary for accelerated growth," said
Jeff Lowe, CEO of Hardware Resources.
"This partnership will create an environment
to transform our company from good to
great. The synergy generated by this
alliance will benefit our customers,
employees and vendors."
Equity financing for the transaction
was provided by Riverside's $750 million
fund, RCAF '03. KeyBank National Association
will serve as agent for the senior debt
financing and National City Equity Partners
and New Canaan Funding are providing
the subordinated debt financing. Hardware
Resources was represented by Chris Haymons
and Patrick Seese of Headwaters MB,
Denver CO.
The Riverside Company
The Riverside Company, with offices
in New York, Cleveland, Dallas and San
Francisco, is the leading private equity
firm investing in premier companies
at the smaller end of the middle market.
The firm has nearly $1.3 billion of
capital under management. In addition
to four pre-1995 acquisitions, Riverside
has brought to market The Riverside
Capital Appreciation Funds of 1995,
1998, 2000 and 2003, attracting investors
from pension funds, endowments, funds-of-funds,
insurance companies and banks. Since
its inception in 1988, Riverside has
invested in 90 acquisitions - 43 platform
companies and 47 add-ons - across a
variety of industries through its four
funds and other investment vehicles.
The firm is known as one of the industry's
most active acquirers, having bought
12 companies so far in 2004 and 13 in
2003. Riverside's current portfolio
numbers 29 companies.
