How David painted circles around Goliath
Your competitors and suppliers have always thought of you as that “little” company from Minnesota. Your business flies under the radar. Now you’re about to buy the Goliath of the specialty coating paint world. So how do you go from a tiny speck of a company to a major player in six months? If you’re Master Coating Technologies, you do it quickly and seamlessly.
An opportunity arose for co-owners, Thomas Schaefer and Jim Sippl to purchase an “archrival” company, the owner of Zolatone®, a paint brand considered the “Coca-Cola®” of the commercial interior world and four times the size of Master Coating. “Oh, you’re that tiny speck from Minnesota,” was the reaction Master Coating got when they approached their financially struggling archrival. There was no time to shop around for buyers, the acquisition had to happen quickly. If successful, it would take Master Coating from speck to major player and make it a manufacturer overnight. (Which meant finding four times the commercial space.)
Enter Fidelity Bank. Because of Jim Sippl’s long-term relationship with Fidelity, the bank was quick to respond. He approached Fidelity seeking creative financing: an asset purchase with a royalty structure based on future sales. Although Master Coating itself was in good shape, it needed additional financing to purchase the company—with four times the receivables and three times the inventory. Then there was that little matter of purchasing a new manufacturing facility. Master Coating was motivated to get the deal done quickly to consolidate production at their local facility—another boost to their bottom line. So while most commercial real estate deals take 6-12 weeks, lender Jeff Campbell got it done in a matter of days.
As head of finance, Jim put it best, “It was easy because Fidelity already knew us. There was no learning curve. Transactions were quick and effortless. Once they understand your business and do their due diligence, you come out on top of the deal.”
For Thomas Schaefer who oversees operations, Fidelity made it a non-event. “Never had to think about the finances. Fidelity put together the deal. This allowed us to focus on the reorganization and the move. In the end, everyone shook hands and broke bread. It was that simple.”
Fast forward six months: this under-the-radar company had grown from 20 to 60 employees and consolidated production into a 50,000 square-foot manufacturing facility. Thanks, in part, to the Intellectual Capital™ of Fidelity, this David no longer gets the brush off from his peers.
All registered trademarks are property of their respective owners.