Case study: Management Partnership
Linsalata Capital Partners Fund IV, LP’s investment in Alenco Window and Doors was a recommitment to an old friendship. Alenco is one of the largest manufacturers of aluminum and vinyl windows and doors serving residential new construction from the Southwest to the Southeast. Brian Redpath, Alenco’s CEO, had worked with LinCap earlier in his career as an executive with Care-Free Windows (a LinCap Fund I portfolio company). After Care-Free, Brian’s career progressed to engineering a turnaround of Alenco starting in 2001, following the bankruptcy of its parent company, to rebuild the brand and its leading position across the southern U.S. At the time of LinCap’s investment in May 2004, Alenco enjoyed sales of $85 million with manufacturing plants in Bryan, Texas, and Peachtree City, Georgia.
With the turnaround achieved, Brian approached LinCap with the opportunity to partner with his management team to provide resources to fuel the company’s growth. The acquisition was negotiated as a direct sale without an intermediary, appropriately rewarding those investors and management that had accomplished the turnaround. Management then partnered with LinCap and invested significantly in the continuing entity. LinCap was a logical choice for management given LinCap’s track record of success in building products and the proven working relationship with Brian.
Together, LinCap and management invested in multiple growth initiatives. The company entered the replacement/remodeling market with a stand-alone manufacturing operation in Dallas. Next, the company targeted the fast growing Phoenix market by opening a 150 msf fully scaled insulated glass and window assembly facility. In less than two years, sales were running at more than $130 million with even greater earnings growth. The Alenco brand was fully reestablished as a leading brand to the Sunbelt new construction market based on unmatched quality and delivery at competitive prices — a fundamental tenet of Alenco and the management team’s success.
LinCap and management enjoyed an “early” exit of the investment in February 2006. A large building products company approached Alenco/LinCap directly and offered a compelling case for the strategic fit. The acquirer had strong brands and distribution particularly across the northern and eastern United States, so Alenco offered an accelerated position to the southern markets. Further, as a combined entity, significant purchasing scale economies could be realized.