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» Raabe Corp.
Falls company attracts 'tremendous' interest from bidders
After more than 50 years of family ownership, Raabe Corp., Menomonee Falls, has been sold to a New Hampshire specialty chemicals holding company. Quest Specialty Chemicals L.L.C. of New Milford, N.H., announced Dec. 1 that it had acquired Raabe, a manufacturer of custom-matched touch-up paint and a provider of private label aerosol and liquid filling services. Terms of the deal weren't announced.
Quest purchased the company from Kent and Daryl Raabe, whose father, Richard, founded the company in 1951.
We are very pleased to find a buyer that shared our commitment to employees and exceptional customer service," Kent Raabe said. "We're confident that Raabe Corp. will continue to prosper under the direction of the new shareholders."
Huron Capital Partners L.L.C., Detroit, provided equity capital through an investment in Quest.
"Raabe has a great reputation and great margins," said Brian Demkowicz, Huron's managing partner.
M&I Marshall & Ilsley Bank, Milwaukee, provided senior debt financing. Harris Nesbitt Capital, a New York City-based investment banking firm, provided subordinated debt for the transaction. A posting on the firm's Web site indicates that Harris Nesbitt provided $6 million in mezzanine financing for the transaction. Senior debt in transactions of this type tends to be about 2.5 times the level of mezzanine financing.
Grace Matthews Inc., a Milwaukee investment banking firm, represented the Raabe family in the deal, while Tom Myers, a partner at the Milwaukee law firm of Reinhart Boerner Van Deuren S.C., provided legal counsel.
"The Raabes invested heavily in the people and the facility and as a result they got a premium value for the business," said John Beagle, managing director at Grace Matthews.
The Raabes plan to use a large portion of the proceeds from the sale to fund their philanthropic interests, Beagle said.
The sale occurred through a competitive bid process overseen by Grace Matthews.
"There was a tremendous amount of interest from both strategic and financial buyers," Beagle said.
The Raabes chose to sell the business to Quest because of the industry knowledge of its management team. Quest is led by Frederick Quinn, a 30-year industry veteran, and Gerard Loftus, who has extensive operational experience in running specialty chemical businesses. Carol Bramson, who serves on Quest's board, led Banc One Equity Capital's investment in a specialty chemical business.
Founded in 1951, Raabe has about 80 employees at its 170,000-square-foot plant in an industrial park along Anthony Avenue in Menomonee Falls.
"Raabe's strong market share and talented management team are critical assets on which Huron and Quest plan to execute a specialty coatings growth strategy," said Quinn, Quest's chairman and chief executive officer.
Good financials
David Wacker, 40, who has served as president since January 2002, will continue to serve in that role. He served as the company's sales manager from 1995 to 1998 before becoming vice president in a move geared toward him taking over the day-to-day leadership of the business from the Raabe brothers.
Although Wacker declined to provide sales figures for Raabe, he said the company has performed "reasonably well" over the past few years.
"The Raabes chose this particular time to sell because the financials are good," Wacker said.
Huron Capital Partners used funds it raised through The Huron Fund II L.P. to back Quest's purchase of Raabe. Huron Capital has closed on more than $90 million in commitments to the fund, which has a targeted size of at least $150 million.
Huron Capital typically invests between $5 million and $20 million in equity in lower middle-market companies.
The acquisition of Raabe fits well with Quest's strategy to acquire businesses that hold strong positions in the specialty coatings market, Quest management said.
"The Quest initiative allowed us to partner with a strong management team first and then be focused on creating investment opportunities in specifically identified companies," said Michael Beauregard, a partner at Huron.