DeAngelo Brothers, Inc. (“DBi”) is headquartered in Hazelton, PA, and is a provider of transportation infrastructure services serving government DOTs, railroad, industrial, oil and gas, homeowner associates and golf course clients. Tecum was first presented with this investment opportunity in December 2014 after DBi incurred operating losses following an international expansion initiative which forced the Company to recapitalize in order to maintain sufficient bonding levels. BNY Mellon-Alcentra, KCAP Financial, and Tecum Capital were selected as the capital providers to lend $35.0 million of subordinated debt facilities to the Company. During the first year of Tecum’s investment, DBi completed a complex add-on acquisition which gave DBi a large footprint in the state of Texas. The acquisition was a challenging integration for Management, but ultimately ended up being a tremendous success that added significant value to the overall company. After only two and a half years in the investment, Tecum had a full realization when DBi was sold to Sterling Partners which is a Chicago based private equity firm. Although it was a challenging investment at times, Tecum and the other capital providers were supportive of the strategic vision of DBi Management, which ultimately allowed Tecum to achieve a very strong return.
Tecum Capital partnered with Ninth Street Capital Partners in March 2014 to acquire Raleigh, NC-based Kitchen Cabinet Distributors (“KCD”). At the close of the transaction, KCD had 14 employees. By year-end 2017, KCD had grown to 61 employees and more than doubled the size of its Raleigh headquarters. This growth was fueled by significant investments in both human capital and capital expenditures. Sales and earnings at the company have grown rapidly since closing, with consistent trailing-twelve-month revenue and earnings growth from March 2014 through December 2017. Ninth Street Capital Partners has recruited a world-class management team that is poised to further accelerate this growth. Future expansion plans include a new distribution center in Houston, TX. Additionally, KCD is initiating company-sponsored community outreach activities in 2018.
Tecum Capital made an initial investment in Bolts and Nuts Corporation through our SBIC Fund I in November 2013, with the investment partially returned in November 2016, and fully realized in January 2017. In August 2017, Tecum Capital invested a second round of debt and equity via SBIC Fund II in B&N’s to facilitate an add on acquisition, Challenger Component Services. Tecum’s continued relationship with B&N’s remains strong. Not only evident with our continued financial support, is also supported by our relationship with Dave Hadani, CEO of Bolts & Nuts. According to Dave, “From the moment we met the Tecum Capital team to support our strategic investment at Bolts & Nuts, we knew we had a great cultural fit and a team of financial professionals who would be every bit the partner that we could hope for. In the years since, they have met and exceeded all our expectations of what a partner could and should be.” In 2018, Tecum has additionally reviewed several add on acquisitions for B&N’s, continuing to support them to become a nationwide leader in the commercial fastener, MRO, and VMI market across all industries.
In December of 2017, Tecum funded a management buyout, providing capital for Rob Guidarelli to buy out his partner and another stockholder to retain ownership of Tier1, an enterprise technology consulting company in the Pittsburgh area. This scenario was much more favorable for both Mr. Guidarelli and employees of the company, as a more traditional private equity sale may have resulted in a significant portion of work being transferred out of the Pittsburgh region. Today, Mr. Guidarelli owns 100% of the business and the entire job force remains in Pittsburgh. His previous partner currently operates another business, and the two provide support for each other under managed services agreements. Tier1 is planning for growth in 2018, and anticipating twelve new hires as a result. They also expect a strong financial year in 2018, continuing its trend of more than doubling in size since 2009. In addition, the company is also actively searching for add-on acquisitions to expand its geographic presence and technology offerings.