Why does Capstreet invest in manufacturing?
Capstreet believes a re-shoring trend is driving a resurgence in U.S. manufacturing and will persist. It has significant experience with the suppliers and service providers that serve manufacturers.
Capstreet states its view this way on its What We Do page:
We believe the U.S. manufacturing industry is experiencing a resurgence driven by a re-shoring trend that Capstreet believes will persist. We have significant experience investing in component suppliers and service providers to the manufacturing industry and are actively seeking new investments in this industry.
Look at the phrase “actively seeking.” Capstreet does not use it for every industry. Here it says outright that it wants new investments.
The focus is supply and service. Capstreet says it invests in the businesses that sell components to manufacturers and the businesses that service them. That matches its broader industrial products and services focus, which includes manufactured products, consumable products, and tools and safety products.
What kinds of manufacturing businesses fit Capstreet?
A fit is a component supplier or a service provider to U.S. manufacturers. The company should be entrepreneur-owned, with solid financials and untapped growth.
| Area | What Capstreet describes |
|---|---|
| Component suppliers | Companies that supply parts and inputs to manufacturers |
| Service providers | Companies that service the manufacturing industry |
| Product types | Manufactured products, consumable products, tools and safety products |
| Industrial work | Value-added distribution and critical maintenance |
| Trend | Re-shoring to the U.S. |
The last three rows draw on Capstreet’s wider industrial focus, not only the manufacturing paragraph. Read the firm’s thinking in its post on industrial tech investing, then check the criteria.
How do Capstreet’s criteria apply to manufacturing companies?
Capstreet publishes five criteria, and they apply to manufacturing owners the same way they apply to every other industry. Each one is listed below.
- Entrepreneur-owned businesses services companies
- $3 to $15 million of EBITDA
- Primarily majority investments
- Entrepreneurs reinvest alongside Capstreet
- Ability to apply the Capvalue Framework®
The firm also says it looks for “a tenured team of owners or managers seeking a majority capital partner, with solid financials, a defensive business model, untapped growth potential, and competitive advantages within their market niche.” A supplier with long customer ties and engineered products can have the competitive advantages in a niche that Capstreet describes. A service provider to plants may also hold a defensive position. These are our readings of the criteria, not Capstreet claims.
Its $3 to $15 million EBITDA range sits in what many call the lower middle market. EBITDA means earnings before interest, taxes, depreciation and amortization. It is the profit measure Capstreet’s range uses. In a buy and build plan, the first business is the platform company, and later purchases are added to it.
Which manufacturing companies has Capstreet backed?
Capstreet lists one portfolio company whose description clearly places it in supply to manufacturing. It is a realized investment. Status is shown as Capstreet publishes it on its portfolio pages.
- American Packing & Gasket (APG): Past, Fund IV. A distributor and manufacturer of gaskets, packing material, O-rings, industrial hose couplings and other items used in manufacturing and process industries for maintenance and repair of industrial equipment. Founded in 1943 and headquartered in Houston, TX.
What does Capstreet do after it invests?
Capstreet applies its Capvalue Framework® in three steps: Research, Build Scalable Platform, and Drive Business Transformation. Across its history, the firm reports 50+ Platform Acquisitions and 200+ Add-on Acquisitions.
- Research. Perform deep research to identify markets and build relationships with key entrepreneurs.
- Build Scalable Platform. Invest in top talent and technologies, and provide functional expertise for scale.
- Drive Business Transformation. Develop a long-term strategic roadmap and execute a buy and build strategy.
Other industrial portfolio companies also mention manufacturing among their markets, such as GHX. Capstreet has no manufacturing-only case study.
There can be no guarantee that Capstreet will be successful in applying its Capvalue Framework®.
Next step
If your company serves manufacturing, read the full deal criteria, then start a confidential conversation through the contact page. You can also call 713-332-2700 or email connect@capstreet.com. See all industries Capstreet lists.
Frequently asked questions
What manufacturing companies does Capstreet invest in?
Capstreet invests in component suppliers and service providers to the U.S. manufacturing industry. It is actively seeking new investments there. Owners should also meet the firm's criteria, including $3 to $15 million of EBITDA and a team that wants a majority capital partner.
Does Capstreet buy manufacturers directly?
Capstreet's published thesis names component suppliers and service providers to manufacturers. It does not describe buying manufacturers themselves as the focus. If you run a factory, contact the firm and ask whether there is a fit.
What is the re-shoring trend?
Re-shoring means moving production back to the U.S. Capstreet says a re-shoring trend is driving a resurgence in U.S. manufacturing and that it believes the trend will persist. This is the firm's view, not an independent forecast.
Is Capstreet seeking new manufacturing investments?
Yes. Capstreet says it has significant experience with component suppliers and service providers to manufacturing and is actively seeking new investments in the industry. A confidential call through the contact page is the way to start.
