Case Studies

Port-A-Cool, LLC

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Founded in 1990, Port-A-Cool, LLC is the industry pioneer and market leading designer, manufacturer, and seller of portable evaporative cooling units and evaporative cooling media. Port-A-Cool, through its extensive value-added distribution network and relationships with big box and specialty retailers, sells products that provide customers with versatile, efficient and lower cost cooling solutions. Port-A-Cool was sold in May of 2012.


Overview

Rick Campbell, the founder of Port-A-Cool (PAC) built his company into one of the largest employers in the east Texas town of Center. He faced an issue very common to entrepreneurs: he wanted to step back from running the day-to-day business and he cared deeply about his employees and the community but knew that he needed help to strategically address the complexities involved with running a larger organization. He had opportunities to sell the company to traditional private equity funds but was hesitant to do so due to fears that they may not share his values and that a win-at-all-costs attitude may, while benefiting him personally, damage the larger area. Alternatively, he could have sold the company to his employees but he knew that for the company to realize its full potential, an outside perspective was needed. As an institutionally sized family investment group, Rosewood had the business acumen combined with the long-term horizon that Campbell desired.

Rosewood was introduced to PAC in 2004 by a retained, buyside search firm. After visiting the company and touring the facilities, we told Mr. Campbell that although we liked what we saw and heard, we needed to see a more stabilized business and if he was able to execute on his near term strategy that we’d be interested in partnering with him to grow the company. Two years later Rick called Rosewood and said that he appreciated our honest approach and took our comments to heart. In the interim, Rick had executed on his plan and the company was now at a size and stage that fit Rosewood’s investment criteria. We commenced diligence, engaged an operating partner and closed on the purchase of PAC in the fall of 2006 with Mr. Campbell and the management team rolling over a portion of their equity to retain a significant minority interest.

Rosewood has built a successful model that utilizes operating partners to work with management teams of our portfolio companies. These operating partners, groups or individuals, are seasoned business executives who have specific experience. The partners we engage are situationally dependent and in PAC’s case, our operating partner had a background in industrial consulting and expanding sales channels. This partner provided the management team with a resource few companies of its size can afford. Working with the strategic direction as set out by the board of directors, our operating partner enabled the team to better understand their business. By identifying key performance indicators and utilizing data driven metrics, the management team gained greater visibility into the individual drivers of their company, allowing them to be more nimble and make sound data-backed decisions. Over the next six years the board of directors, operating partner and management team collectively tackled initiatives such as: new product development, penetrating new sales channels and expanding the markets for its products, and transforming manufacturing operations to reduce costs and improve product flow and inventory management. By bringing best-in-class processes and controls to a small business we were able to create an award winning organization that grew substantially during our ownership.

Thanks to having a conservative level of debt on its balance sheet, PAC was able to invest free cash flow into new product development and other strategic initiatives during the recession. These investments led to rapid growth as the company emerged from the recession. In 2011, our CEO notified the board that he intended to retire within the next couple of years. As we evaluated our options and reflected on the significant value that had been created, Rosewood elected to sell the company to a strategic acquirer in 2012.




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