The march of private equity in the family business world continues with the recent announcement that the Canadian family-owned manufacturing group, Canam, is to delist under a private equity-led restructuring deal.
American Industrial Partners, which specializes in the mid-market sector, led the restructuring, which will also become the biggest shareholder of the Quebec-based business. Canam was started in 1960 by Roger Dutil and has been owned by the Dutil family ever since. It specializes in the design and fabrication of customized products for the North American construction industry. Canam was listed on the Montreal stock exchange in 1984.
“The proposed transaction is a win-win for all of Canam’s stakeholders,” said Marc Dutil, Canam’s CEO. “The transaction provides shareholders with a significant cash premium for their shares, while ensuring the long-term success of the business for its employees, business partners and other stakeholders.” The family, along with some institutional groups, will own around 40% of the newly structured private company.
Private equity groups appear to be more emboldened than ever to do family business deals, and families look like they are becoming less wary of private equity funding. Traditionally, family businesses have been sceptical of private equity groups, given their reputation for pursuing short-term profits above everything else. But that attitude appears to be changing as some private equity groups become less predatory and are willing to lock in their investment for longer time periods.
Earlier this year, Lladró, the iconic Spanish maker of porcelain figurines, sold a majority stake to the Madrid private equity fund, PHI Industrial Acquisitions. The Lladró brothers - Juan, José and Vicente - launched the business in a village just outside the city of Valencia and started making the famous figurines in 1956.
Other recent deals include Kenafric Industries, a family-owned conglomerate based in Kenya, which sold a minority stake to two private equity funds, Paris-headquartered Amethis Finance and South Africa’s Metier. Second generation owned Guardian Alarm in the US was recently acquired by two New York private equity groups, Certares and Vanwall Holdings. One of the biggest deals done in the family business sector in recent years was the sale of Belk, a 128-year-old family-owned, and US based department store group, to Sycamore Partners at the end of 2015.
And since 2015, buyouts of family-owned companies facing succession issues - which is often the catalyst for family businesses doing deals with private equity houses - have become the single biggest category of private equity deals in Japan.