Heritage Partners Inc., Boston, a private-equity firm focused on family-owned businesses, has completed the recapitalization of One Source Distributors Inc., Oceanside, Calif., giving it a 49 percent stake in the company.
The transaction was structured as a Heritage Partners Private initial public offering (IPO), allowing the shareholders to receive liquidity, capital for growth and retain control of the firm.
Bob Zamarripa, OneSource’s CEO and president, will continue to own 51 percent of the company. The company will now have a five-member board, which will include two partners from Heritage Partners.
With annual sales of approximately $175 million, 11 locations and 280 employees, OneSource, a family-owned business, ranks as the nation’s 35th biggest electrical distributor, according to Electrical Wholesaling’s 2006 listing of the Top 200.
Heritage Partners, with $1.4 billion in capital under management, is a private-investment firm specializing in the acquisition and equity-based recapitalization of private, family-owned businesses. Since 1987, the partners have assembled a diverse portfolio of 48 investments with aggregate revenues approaching $3.5 billion. Heritage Partners typically invests $15 million to $75 million per transaction.
“We are excited to invest in OneSource Distributors, which is a terrific fit for our private IPO structure,” said Mark Jrolf, a general partner at Heritage Partners, who will be joining the OneSource board of directors with general partner Peter Hermann. “The company has non-cyclical and predictable revenues in a growing market, differentiated services and capabilities, excellent and long-standing customer and supplier relationships and a strong management team geared for growth. Additionally, OneSource will generate compelling opportunities for select acquisitive growth in this large and fragmented industry.”
“Heritage’s investment provided an ideal mix of liquidity and continued ownership,” said Zamarripa. “Heritage’s expertise in investing in closely held businesses and their private IPO structure made them compelling potential partners. We look forward to leveraging their financial and strategic guidance as we service and expand our existing customer base.”
The company operates through three regional California sales divisions: San Diego, Orange County, and the greater Los Angeles area. OneSource Distributors was wholly owned by its two founders, Zamarripa and Executive Vice President Paul Judge. Judge hopes to retire in the next two to three years and was looking to begin phasing out of the business, according to a spokesperson for Heritage Partners.
Heritage’s fundamental objective is to invest preferred and common stock, on a minority or majority basis, in mature, successful companies with revenues greater than $40 million. Typically, these businesses operate in industries undergoing consolidation. Industries of particular interest include health care, consumer products, food and beverage, distribution, light manufacturing and media.
Its diverse portfolio includes a manufacturer of carpet maintenance equipment, and supplier of fresh and processed strawberries. It already has one other company with electrical interests. AmerTac Holdings, Monsey, N.Y., is a designer, marketer and distributor of consumer products for do-it-yourself (DIY) and mass merchant channels including decorative wall plates, night lights, utility lights, undercabinet halogen lighting and other electrical products. The company sells its products through home centers and mass merchants such as Home Depot, Lowe’s, Wal-Mart, K-Mart and Target Stores.