With additional financing from American Capital, Starcom Holdings, Inc. (formerly ConStar International) acquired a leading electrical contracting company on June 17, 1999, expanding Starcom's geographic presence and doubling the size of the company. An American Capital portfolio company since December 1998, Starcom is a provider of commercial custom-built electrical and telecommunications networking services. American Capital supported Starcom management's 1998 recapitalization of the company with an investment of $16 million in subordinated debt with warrants and $500,000 in common stock. For the recent acquisition, American Capital provided $6.5 million in loans and purchased shares of the company's stock for an additional $120,000.
The acquisition is a strategic move that fits with Starcom's ambitious growth plan. It makes Starcom a market leader in the New England, Middle Atlantic and South Atlantic regions of the country," said Mark Benham, Starcom's President.
With the new funding, Starcom added a leading private electrical contracting company in North Carolina. The acquisition strengthens the company's East Coast position and takes advantage of national demographic growth trends in the Southeast.
The new company provides electrical contracting services that will complement the parent company's interrelated electrical and networking groups. With a history of quality workmanship, customer service, market recognition and profitability, the company opens up further opportunities for Starcom's systems, processes and service offerings across a wide variety of quality customers.
"Since the initial recapitalization, Starcom's goal was to grow rapidly in a fragmented, consolidating market," said American Capital Principal John Freal. "Now with the ongoing support of American Capital and other partners, the company has been quickly able to execute its ambitious business plan."
"American Capital seeks to build long-term partnerships with its investment companies, providing them with ongoing financial support for growth, acquisitions or other capital needs," said American Capital President Malon Wilkus. "We are pleased to once again partner with First Dominion Capital and Celerity Partners to make Starcom's growth plan a reality."
Starcom's management experience will provide economies of scale and increase profit margins for the newly acquired company. Opportunities also exist to enhance sales and marketing programs and implement more sophisticated budgeting, reporting, planning and quality control programs.
Building industry analysts project that changes in technology, safety codes and the shift to "design & build" will favor continued growth of national companies as they take market share from smaller, less well-positioned competitors.
"Starcom is well positioned to be a leader in the industry," said Benham, "offering a broad range of services nationwide, with a proven track record for providing timely and reliable, low-cost services designed specifically for each customer. We are excited to launch our expansion plan and look forward to further growth opportunities in the future."
