PS Capital Partners LLC, a Milwaukee-based private equity holding firm, recently purchased a majority share in Cardinal Packaging Products LLC, a Crystal Lake, Ill.-based distributor of retail and industrial packaging products.
Cardinal Packaging Systems has 19 employees. Terms of the acquisition were not disclosed.
A team of four managers had owned Cardinal Packaging Products since 2001. PS Capital Partners purchased its portion of the company from the four managers, amounting to a recapitalization of the company, said Paul Stewart, a principal with PS Capital Partners. The four managers have retained a significant ownership share and will stay in their roles with Cardinal Packaging Products, he said. The managers had several offers from other private equity buyers, Stewart said, but elected to work with PS Capital Partners because of the firm’s longer-view approach.
“Their philosophy of acquiring, building and holding fit our model here as far as building Cardinal,” said Julie Wancket, president and chief executive officer of Cardinal Packaging. “We wanted to find a partner that would bring capital that would allow us to grow without turning around and selling it right away.”
PS Capital Partners operates differently than most private equity investors. Instead of raising a fund with which it purchases companies, PS Capital Partners has a pool of investors that it taps into each time it wants to make an investment. Most private equity investors need to return money within a 10 year period, but PS Capital Partners operates with a buy and hold philosophy, allowing for a sale when the time is right, Stewart said.
“Over time, we may buy down our investors,” he said. “Management may participate. And we may elect to sell (the company) down the road. We have a high amount of flexibility and our legal documents reflect that.”
The acquisition also allowed the four managers to take some equity out of the company, Stewart said.
“The four (managers) also had different ownership levels (previously),” he said. “We’ve leveled that now.”
Debt financing for the acquisition was provided by Associated Bank. Reinhart Boerner Van Duren S.C. handled legal documents, and Virchow Krause provided accounting due diligence.