7 industrial manufacturing deals quenching PE investment appetite

PE Hub has seen several industrial manufacturing deals recently. These cut across a variety of end-markets such as aerospace and defense, mining, agriculture, automotive, utilities, power generation, electronic and tooling.

Today we are looking at seven deals announced so far this year, starting with the most recent.

In February, CORE Industrial Partners closed one deal and its portfolio company Cadrex closed another that we detail below. But since last year, the company has been scooping deals in this sector.

PE Hub caught up with CORE founder and managing partner John May, who stressed some of the factors that are drawing him to do more acquisitions. He said the domestic precision manufacturing market has compelling long-term growth trends.

“As the Industry 4.0 revolution accelerates and onshoring/nearshoring trends increasingly stress our domestic manufacturing capacity, smaller manufacturers are seeking to partner with growth investors to meet demand and sustain long-term growth,” said May. “These partnerships help accelerate innovation and support the development of a competitive cost structure through automation and labor base up-skilling, ultimately creating long-term value here in North America.”

May added that CORE has focused exclusively on domestic manufacturing and industrial technology and remains dedicated to supporting sustainable long-term growth in the US industrial base through continued partnership and investment.

1. CORE Industrial-backed Cadrex acquires manufacturer D&R Machine

Cadrex Manufacturing Solutions, a Romeoville, Illinois-headquartered portfolio company of CORE, late last month acquired D&R Machine Company, a Southampton, Pennsylvania-based provider of CNC precision-machining solutions for aerospace and defense market.

Founded in 1971, D&R Machine specializes in high-complexity CNC milling, CNC turning and assembly for aerospace and defense through a variety of applications, including auxiliary power units, starter generators, structures, rotor systems and control systems.

D&R’s differentiated, technology-enabled manufacturing capabilities and aerospace and defense expertise are compelling attributes that attracted Cadrex to acquire the company, said CORE partner Matthew Puglisi in a statement.

2. CORE Industrial acquires GEM Manufacturing

Based in Waterbury, Connecticut, GEM Manufacturing focuses on precision metal components and mechanical assemblies.

Founded in 1950, the company works with aluminum, copper, brass, stainless and carbon steel, among other metals and alloys, for customers across a variety of end markets including electric vehicles, mining, aerospace & defense and industrial, noted the company in a press statement.

GEM’s expertise ranges from CNC turning and milling, wire electrical discharge machining, and the ability to design and fabricate all tooling in-house together with other secondary services such as finishing and printing.

3. CD&R and Greenbriar acquire Whitcraft Group and Paradigm Precision to form Pursuit Aerospace

Clayton, Dubilier & Rice and Greenbriar Equity Group acquired and merged Whitcraft Group and Paradigm Precision, forming a new company called Pursuit Aerospace in February.

By combining these two companies, Pursuit Aerospace creates a scaled and diversified manufacturer of tight-tolerance components used in commercial and military aircraft engines.

With Whitcraft’s and Paradigm’s complementary exposures across platforms, manufacturing capabilities, geographies, skill sets and leadership teams, Pursuit Aerospace will be even more well positioned to support its original equipment manufacturer (OEM) customers around the world and pursue numerous growth opportunities, said the firms in a press statement.

4. HCPI-backed Prince Industries acquires precise machining company Precision Shapes

HC Private Investments’ portfolio company Prince Industries acquired Florida-based Precision Shapes (PSI), a provider of precise machining to aerospace and defense customers. HC Private Investments is based in Chicago.

PSI is strategically located in Florida’s “Space Coast,” only 10 miles from Cape Canaveral, and it operates an AS9100-certified facility providing complex material and tight-tolerance precision machining to its leading aerospace and defense customers.

“The acquisition of Precision Shapes significantly enhances Prince’s capabilities and penetration in the growing aerospace and defense market,” said Mark Miller, Prince Industries CEO, in a press statement.

PSI is a family-owned business that was managed by two sisters, Susan Palma and Cheryl Cleveland.

5. MiddleGround acquires machining shop Megatech

MiddleGround Capital, a mid-market private equity firm, acquired Megatech, a Québec-based manufacturer, in January.

Founded in 1992, Megatech focuses on computerized numerical control (CNC) for the machining industry.

“We think there is an attractive organic growth story in addition to the M&A strategy that we are planning to execute on,” Marty Sjoquist, a director on MiddleGround’s investment team, told PE Hub last month.

Sjoquist said MiddleGround will leverage its resources and expertise to build a larger platform organically and inorganically around Megatech, with Sjoquist citing strong revenue tailwinds driven by Industry 4.0 trends.

“We definitely see reshoring as a major trend especially for these type of complex, low-volume parts,” he said. “Re-shoring is a real thing that we see happening and benefiting domestic companies that are in advanced manufacturing.”

6. TSC recaps precision machining firm Swiss American Screw Products

Townsend Street Capital (TSC) in January recapitalized the Canton, Michigan-based Swiss American Screw Products (SASP), a precision-machining firm. TSC is based in Birmingham, Michigan.

“SASP possesses many if not all of the attributes we look for in our investments, including a strong leader and culture, focused and differentiated capabilities, long-term customer relationships in attractive end-markets, and exceptional dedication to quality and customer service,” said TSC managing director Peter Frankfort in a statement.

7. Delos Capital and Silverfern buy manufacturer Le Sueur

New York based Delos Capital and The Silverfern Group, which is based in Greenwich, Connecticut, acquired Minnesota-based Le Sueur, a provider of complex and pressure-tight aluminum castings and plastic injection molding components.

“We are excited to partner with Silverfern and the management team of LSI, a leading provider of complex precision aluminum casting and plastic injection molding components,” said Michael Rakiter, a partner at Delos Capital, in a statement. “We are honored to continue the legacy of a successful third-generation family-owned business created by the Mueller family.”