Investment allows Midwest Engineered Products to expand sales and marketing
Indianapolis, IN – November 14, 2005 – Sometimes, a profitable product isn’t enough to sustain a company’s growth. That’s what financial partners are for. Consider Midwest Engineered Products Corp. Founded in 1982 with a $1,000 investment by Jim Beattey and his son Jeff, the locally based industrial centrifugemaker has grown since then on bank loans and its own profits. These days, it brings in annual revenue of $10 million, with sales as far away as Europe and New Zealand.
“We were having trouble keeping up with the calls coming in,” Jeff Beattey said. “There’s not enough time in the day.”
But the pair never brought in outside investors. And now Jim Beattey, 72, wants to retire. Jeff, 43, prefers to stay with the company, but lacks the financial firepower to buy out his father’s stake-let alone invest for expansion.
Enter Hammond Kennedy Whitney & Co., which recently acquired control of the company. The venture capital firm-with offices in Indianapolis, Chicago and New York-specializes in buyouts of Midwestern manufacturers.
The Beatteys liked that HKW was local. More important, they approved of HKWs investment philosophy, which concentrates on keeping management teams largely intact.
In exchange for a large stake in Midwest Engineered Products, HKW infused an undisclosed amount of capital. The cash allowed Jim Beattey to retire and Midwest Engineered Products to pay off all its bank loans-with money left over for expansion.
“It’s a clean balance sheet right now, as clean as can be,” HKW CEO Glenn Scolnik said. “There’s plenty of growth capital available. And that’s the first time that’s been true for this company.”
For years, the Beatteys had concentrated on improving their core product, the CentriSep, which separates industrial solids and liquids. They emphasized making a durable machine even more reliable, selling about 50 per year.
This endeared them to their core customers, but did little to expand their market. And that’s where HKW sees the upside. By creating a sales-and-marketing infrastructure for the company, Scolnik believes Midwest Engineered Products can grow to annual revenue of $20 million to $30 million within a few years.
Jeff Beattey remains the firm’s vice president of product development. HKW brought in Joe Muldoon, one of its longtime consultants, to be Midwest Engineered Products’ new president. Muldoon was president of Plainfield-based Brightpoint Inc.’s North American division. He also led Westfield-based broadband provider FirstMile Technologies.
What’s happening at Midwest Engineered Products is expected to become more and more common as the baby boom generation retires. Lots of buyout funds headquartered outside Indiana are eager to invest in established Hoosier manufacturing firms-and grow them elsewhere. It can be difficult to get stars aligned so a company like this remains local.
Indeed, in this case, HKW was having difficulty coming to terms with the Beatteys. Its offer wasn’t as high as they’d hoped, and the deal was in danger of falling apart. To bridge the gap, Muldoon suggested Indiana’s venture capital tax credit.
At first, the idea was dismissed. Nobody wanted to postpone the deal for a bureaucratic stamp of approval. But when the Indiana Economic Development Corp. turned the application around in less than a week, it solved everyone’s problems.
IEDC Director of Entrepreneurship Bruce Kidd hopes to make similar deals every day. “The bottom line is, companies need this money,” he said. “They can’t wait three to six months, or they’ll be out of business.”
About CentraSep Technologies
CentraSep Technologies develops, manufactures, sells and services the CentraSep liquid -solid separation centrifuge.
CentraSep is the gold standard for liquid-solid separating centrifuges, removing solids to the sub-micron level. CentraSep’s patented technology has made it the most RELIABLE and DURABLE high-efficiency, fully-automatic centrifuge available. The CentraSep performance superiority has been proven in the most demanding applications, in hundreds of installations across ten countries. CentraSep Technologies serves a variety of markets and a broad customer base that includes multinationals that have come to trust the company’s superior separation in production critical applications. The company’s greatest source of business continues to come from its already satisfied customer base & they invite you to learn why.