Dakota Capital exists for one specific reason: The risk profile of shareholders does not align with the opportunities of a business. On the one hand, the shareholders seek to reduce risk by realizing all or part of the value created for estate or retirement reasons. Conversely, the Company’s prospects for acquisitions, equipment deployment and market entries require funding. This divergence creates many different complications. Dakota Capital, by being growth oriented long term, investors solves the risk/opportunity issue by providing all the capital for transactions under $50.0 million and all the junior capital for transactions over $50.0 million.

Our Approach

Priorities are the road map of a business. They ultimately determine the direction and the velocity of decisions and actions. At Dakota Capital, we strive to understand the priorities of a business with careful attunement to the seller’s needs and desires. With this knowledge and understanding, we craft solutions that address the emotional and economic issues that propel transactions.

The next step is to understand the desires of the Company’s customers. What are their priorities, how are those priorities changing and how does the Company align itself to fulfill the customer’s expectations.

Typically, it is a priority and expectation of the seller and Company to close a transaction in a timely manner with as little disruption as possible. Our ability to conduct smooth and timely transactions is a hallmark of Dakota Capital. Our complete provision of capital enables us to eliminate other institutions’ layers of due diligence; thus, expeditiously concluding the transaction.

After closing a transaction, we strive to build upon the Company’s success and implement world class operations. We encourage our companies to acquire operations, enter new markets, develop innovative products and deploy state of the art equipment to capture the opportunities at hand.

Dakota Capital specifically contributes to a Company’s success by providing valued added resources that facilitate competitive advantages. Many times, a middle market operation cannot afford a state of the art technology infrastructure. We utilize a high end technology platform for our operations in customer relationship management, financial software, web based application infrastructure and data mining. Another valuable resource is our intellectual capital that identifies, assesses, and solves problems that may impede the performance of a company.

Our concluding role serves as a facilitator to support and counsel the entire management team to optimal success. We create a partnership with management by providing substantial equity and offering steadfast support – listening to the problems and celebrating the successes.

Criteria

Sales: $10 – $100 million

Location: Continental USA

Earnings: Trailing twelve month Earnings before Interest, Taxes and Owners Compensation (EBITO) in excess of 10% of revenue and greater than $2.5 million

Type of Business: Manufacturing and service across a wide variety of industries

Situations: Recapitalizations, management buyout, generational changes of ownership and corporate divestitures

We do not invest in: Retail, oil and gas, apparel,  real estate (except as it relates to an operating company), natural resources, turnarounds, distressed companies or startups

Other items of interest: Quality leader in the Company’s segment, diverse customer base, largest player in an identified market

Transitions are significant steps in a company’s life cycle. At Dakota Capital, we feel it is important to continue the legacy of the founder by retaining the Company’s name and securing the Company’s independence.

Dakota Capital provides stability as well as flexibility through the transition process. In response to the emotional and financial desires of the owner, we spend considerable time to understand the needs of the shareholders. Our attention to detail while maintaining a larger perspective enables us to craft solutions to most arising issues.

In the business of transactions, capital is a differentiating strength of Dakota Capital. We enable liquidity in an all cash purchase price by providing all the capital under $50.0 million and all the junior capital in transactions in excess of $50.0 million. Confidence of closing and a strong balance sheet after the transition is assured. We do not utilize banks; thus, our transactions are very quiet and confidential.

As long term investors, we do not go into an investment with a predefined exit or time frame. We view every venture with a ten year horizon and structure it accordingly.

Transferring to Management

In many entrepreneurial businesses, the founders recognize the success of their business has been facilitated by dedicated management teams. Transferring the company through a “Management Buyout” or MBO is an opportunity to reward managers who have built significant value over the years.

Ensuring management has significant equity and operating control of the Company is foremost in Dakota Capital’s philosophy and approach. Providing the financial resources to make this type of succession a reality is a mandate we embrace with great enthusiasm. We provide both the liquidity and growth capital to continue propelling the company to new levels.

Family Succession

Family businesses are unique organizations. Each has their own culture and ideologies that has made them successful. We understand how these factors come into play and the importance of continuing the legacy that made the operation successful.

In dealing with a family situation we have many tools and structuring opportunities which can achieve an estate freeze for tax purposes and leave operating control with the family member charged with growing the business.

Recapitalizing

For rapidly growing operations, opportunity and owner risk profiles do not necessarily coincide with one another. For that very reason, some shareholders decide to “lock in” on the value already built. Dakota Capital, through its IPO Alternative ™, enables a “second bite at the apple” by providing liquidity and continued ownership in the present with growth capital for the future.

This tax advantaged structure provides for the highest value realization on a risk adjusted basis. Operating control remains with management and the company is positioned to capitalize on the opportunities at hand.

At Dakota Capital, we believe partnership with management is foundational to successful private equity investing. We focus on a strong relationship with management and attain our investment returns through growth, not financial engineering.

Buying a Company can be a defining moment in a manager’s life. It is one of the most exciting and rewarding journeys experienced in business. Whether it is acquiring the company you manage or another target in your industry, Dakota Capital provides the support to realize your dream of ownership.

As our current portfolio executives will attest, we leave day to day operational control with management. Our principal roles are to support management in the growth of the Company, to help establish corporate goals and provide strategic advice on business, financial, and management issues.

Life Afterwards

With Dakota Capital, management’s independence and control is maintained. It is not our desire or role to control the day to day activities of the Company. Our primary concern is for the Company to be attuned and meet the needs of the customers.

Our role with management serves as a facilitator to guide and counsel management to their optimal potential. Functionally, we facilitate an annual planning session in which a plan is developed by the management team and translated into specific goals and measures. Monthly management meetings are held to address concerns and issues that arise in the business. Planning, measuring, and open communication is the basis of our relationship with management and serves as a catalyst for growth.

We believe in growing our investments. Overwraps Packaging is a prime example of how we provided resources to grow the Company. Specifically, after closing a new eight color press was purchased for close to two million dollars. This investment provided the platform to grow into additional markets and capabilities that have driven a growth rate of over 50%.

Our patience and dedication to a firm’s growth is critical to our success. Dakota Capital is unlike other private equity firms, we do not enter a transaction with a predetermined exit strategy. Our preference is to hold a company for at least 10 years.

Resources

In addition to capital resources, our portfolio has access to our extensive information technology infrastructure for web based applications, Siebel Software, Hyperion financial software and data mining applications. This platform enables our management teams to drive performance from their operations, sales and marketing.

Great businesses may have more opportunities than resources. Dakota Capital brings resources to attack these opportunities. We provide additional resources to supplement management for special needs. Historically, these types of projects have ranged from mapping production processes to developing marketing plans for specific segments.

In addition to the technology and supplemental resources, Dakota Capital also acts as a sounding board for the organization, empathetically listening and talking through difficult issues that may impede a Company’s performance and growth.

Capital is a differentiating strength of Dakota Capital. We enable liquidity in cash purchases by providing the entire capital structure under $50.0 million and all the junior capital in transactions in excess of $50.0 million. Confidence of closing and a strong balance sheet after the transition is assured. As we do not use banks, our transactions are very quiet and confidential and small bases of assets are attractive to us.

Dakota Capital commits to what it knows it can deliver. Simply stated, we fulfill on our promises and confidentiality is assured. We provide flexibility and security through the transaction process. In order to deal with the emotional and financial desires of the owner, we spend a great deal of time understanding the needs of the shareholder to craft solutions to any issues that may arise.

In addition to our attunement with the shareholder, Dakota Capital strongly believes that partnership with management is a key foundation to successful private equity investing; as such we welcome Management Buyout (“MBO”) opportunities.

Investment Bankers

Accountant and Attorneys

We commit to treating your clients with care and understanding. The decision to enact a transaction is a substantial step in a Company’s evolution and a significant milestone in the life of the owner. History, emotions and economics can create many divergent objectives that can convolute decisions. In these circumstances, we provide stability as well as flexibility to aid your client through a successful transaction process with confidentiality assured.

In addition, we provide confidence in closing and with no financing contingencies. After the transaction, we ensure that the Company is able to maintain its independence and relationships with their service providers.

Estate Professionals and Financial Planners 

One of the primary issues in estate planning for entrepreneurs is monetizing a valuable non-liquid asset. Dakota Capital provides liquidity for those assets in various forms including an outright sale or its IPO Alternative ™ a recapitalization with continued ownership interests. Through the IPO Alternative ™, we can help minimize estate taxes by achieving an estate freeze under Chapter 14 of the Internal Revenue Code.

Investment Process

Our approach to investing is direct and deliberate. We realize that time is always of the essence. Shortly after preliminary underwriting and concluding that a proposed investment is highly attractive, we will draft a “conversational offer” which specifies the primary terms for a transaction. The next step is to visit the company and meet with management. A formal letter of intent is then issued with detailed specifics for completion of the transaction. Subsequent due diligence usually requires sixty days; the investment is completed as soon as legal documents are finalized.

Business Description: Orleans Group is a leading importer and distributor of cigars, cigar accessories, and other related products. The Company works with suppliers around the globe to design and produce the industry’s broadest product line. Customers of the Company range from local mom-and-pop retailers to large multi-national distributors.

Products: Cigars, humidors, cutters, travel cases, and other related products.

Website: www.orleansgroup.com

Seller’s Needs:

• Liquidity to pursue other interests;
• New management team to replace the shareholders.

Investment Thesis:

• Update product line through product development and product line acquisitions to fill in critical gaps;
• Integrate more deeply with key industry players to better meet their needs;
• Enter new product markets.

Solutions:

• Complete two product line acquisitions subsequent to the original investment;
• Deploy technology and restructure certain back-office processes to dramatically increase responsiveness to changing customer needs and market dynamics;
• Provide resources to expand into tangential product markets.

Business Description: C & C Cigars is one of the market leaders in providing premium cigars to everyday smokers, whiskey connoisseurs and retail operations under private label programs.

Products: Cigars

Website: www.CandCCigars.com, www.DramCigars.com, www.customcigar.com

Seller’s Needs:

• Liquidity to pursue other interests;
• Quickly transition business.

Investment Thesis:

• Create an ultra-premium cigar and increase product development to expand the line and fill in critical gaps;
• Build upon the Company’s private label success;
• Expand international distribution.

Solutions:

• Launch Dram Cigars for Whiskey, cigars specifically for pairing with whiskey;
• Create two additional product lines to round out the portfolio;
• Dedicate resources specifically to building the private label program.

Don Salvatore is one of the most recognizable cigar accessories brands in the market. The Company focuses on serving high-end cigar retailers across the U.S. Don Salvatore’s signature products blend high quality components and unique features/designs unavailable in other brands.

Products: Cigar humidors, cases, cutters, and other accessories.

Website: www.donsalvatore.net

Seller’s Needs:

• The corporate parent sought to spin out this division to focus on its unrelated primary business;
• Liquidity to support its core assets;
• Certainty of close.

Investment Thesis:

• Invest in additional inventory to better meet customer demand;
• Expand distribution network;
• Broaden the range of branded offerings.

Solutions:

• Completed due diligence and all documentation in 30 days;
• Filled in gaps within the brand’s existing product line to meet underserved customer needs.

Business Description: Cigar Classics is a leading manufacturer of premium cigar accessories.

Products: Premium cigar cases, travel humidors, and Paradigm humidification devices for use in cigar humidors.

Website: www.cigarclassics.com

Seller’s Needs:

• Liquidity to pursue other interests;
• Certainty of close.

Investment Thesis:

• Add additional distribution channels;
• Expand the Company’s primary brands into new markets.

Solutions:

• Leverage industry relationships to significantly increase the number of outlets carrying the Company’s products;
• Optimize production processes to more readily adapt to customer needs.

Business Description: Winslow Liferaft is the leading producer of life rafts s in the marine, and corporate aviation markets and service provider for aircraft slides

Products and services: Life rafts and the service of life rafts and aircraft slides

Website: www.winslowliferaft.com

Seller’s Needs:

• Transition the Company to its current management team;
• Realize liquidity for estate purposes;
• Support the expansion into new markets.

Investment Thesis:

• Build on the leading market position of the Company;
• Expand into new market segments;
• Add additional distribution channels;
• Enter new product markets;
• Capitalize on the installed base for service.

Solutions:

• Provide an all cash transaction;
• Enable the current shareholders to participate in future growth;
• Provide equity for management as a valued partner;
• Provide tools for expansion.

 

Business Description: Overwraps is a converter of flexible plastic film used for food, medical and industrial packaging applications. The Company’s value proposition is to provide turn key solutions for short run, quick turnaround, laminated packaging of up to eight colors.

Products: Company converts flexible film products such as potato chip bags, coffee bags, medical surgical masks and cookie packaging

Website: www.overwraps.com

Seller’s Needs:

• The founder desired liquidity for estate purposes;
• Retire two years after the transaction;
• Fund a $2.0 million capital expansion to maintain a customer.

Investment Thesis:

• Deploy new printing assets;
• Build on the Company’s strong reputation for quality and service;
• Recruit a new CEO and build a management team;
• Use technology to increase profitability.

Solutions:

• Provide an all cash transaction;
• Fund the entire transaction without bank debt;
• Fund a new $2.0 million press at closing;
• Recruit a CEO from an industry leading company.

Business Description: Sterling Foods is the leading innovator and supplier of “shelf stable” bakery products for government and commercial markets.

Products: Cookies, brownies, bread, pretzels and other baked goods that last up to four years.

Website: www.sterlingfoodsusa.com

Seller’s Needs:

• Liquidity for estate purposes;
• Retire immediately.

Investment Thesis:

• Leverage government business to expand into commercial markets;
• Fund R&D to create value added products.

Solutions:

• Purchase price in excess of other purchasers;
• Recruitment of new CEO;
• Backing current and incoming management in ownership.

LOFLAND COMPANY