by Maureen Flanagan
ThreeSixty Sourcing Hong Kong Limited ("ThreeSixty Sourcing"), a global products sourcing firm serving middle-market consumer product companies, has been spun-off as a stand-alone entity. As a subsidiary of Ontario, Canada-based DS-Max International Inc. ("DS-Max"), the company has established a consistent track record of growth and profitability and will benefit from new opportunities to accelerate its growth as an independent company. ThreeSixty Sourcing has offices in Hong Kong and in the U.S. in Orange County, California.
ThreeSixty Sourcing develops and sources products through a network of more than 1,700 Asia-based manufacturers, overseeing production of more than $300 million of made-to-order goods ranging from luggage to sporting goods to children's books. Offering a complete range of sourcing services, the company is a leader in helping companies save significantly on their cost of goods - typically achieving savings of 25% or more - while enhancing their competitive edge in the marketplace.
In a September 28, 2001 transaction, a majority interest in ThreeSixty Sourcing was sold by its parent company, DS-Max, to Brentwood Associates, a leading Los Angeles-based private equity firm. To accomplish the buyout, American Capital Strategies, Ltd. (Nasdaq: ACAS) provided a $15 million senior bridge facility and $20 million of senior subordinated debt with warrants.
"The financing from American Capital enables ThreeSixty Sourcing to recapitalize the company in a timely fashion, providing resources to become the leading sourcing specialist for a growing number of America's consumer goods companies," said Peter Waller, CEO of ThreeSixty Sourcing.
ThreeSixty Sourcing began as a captive sourcing operation within DS-Max, a worldwide direct marketer of consumer products. In 1996 ThreeSixty initiated sourcing for other leading consumer products companies. ThreeSixty Sourcing consistently multiplies the value of its customers' businesses through an unmatched combination of strengths, including an experienced regionally-based staff and long standing relationships with manufacturers across Asia. It leverages its in-depth market knowledge and a unique competitive bidding process among manufacturers to provide cost savings of 25% or more to its customers.
ThreeSixty Sourcing is a multi-faceted sourcing firm that handles the complex sourcing requirements for each customer, often involving hundreds of product lines a year, from multiple factories across numerous Asian countries. In fact, although most of its manufacturing relationships are in China, the company sources products from more than 20 Asian countries. ThreeSixty Sourcing oversees the entire outsourcing process for its customers: collaborating on product development and engineering, selecting potential suppliers, conducting the bidding process and negotiating costs. It also coordinates raw materials, monitors production for quality, analyzes pre-production samples, facilitates communication between the customer and manufacturer, and handles shipping and logistics to over 90 countries.
ThreeSixty Sourcing is unique in its ability to achieve the absolute lowest cost for its customers. Through an extensive and disciplined competitive bidding process, pre-certified manufacturers located throughout Asia compete to deliver the lowest bid. Cost savings for new customers are consistently 25% or more, even for those customers that are already sourcing their products in Asia. The company achieves these savings while maintaining the highest quality control over the manufacturing process. With its on-site staff of trained quality control inspectors, the company ensures a high quality of service and product.
"Global sourcing is a complex and sophisticated business, rife with inefficiency," said Jeri Harman, American Capital Principal. "For best results, it requires an experienced specialist with the knowledge and expertise that can meet the customer's specific product requirements. ThreeSixty Sourcing does just this, bringing the best of Asian manufacturing to the doorstep of the U.S. middle-market. By leveraging all the advantages of sourcing in Asia, ThreeSixty Sourcing dramatically strengthens the financial position of its customers."
ThreeSixty Sourcing joins American Capital's portfolio of more than 50 middle-market companies representing a broad spectrum of industries. Since 1997, ACAS has invested over $770 million in senior and subordinated debt to provide middle-market companies with financing for growth, acquisitions, management and employee buyouts, liquidity and restructuring. Among American Capital's portfolio companies are consumer products companies that will be ideal candidates for ThreeSixty Sourcing's global outsourcing services.
Global outsourcing of consumer products is a large and growing market. ThreeSixty Sourcing's market segment - middle-market producers of consumer hand-held hard goods -- represents an $80 billion market opportunity worldwide, including $33 billion in the United States. Growing at 12% a year, global sourcing in the United States is driven by the need for companies to outsource purchasing operations and focus more closely on the core business of building a brand. Consumer products companies are under increasing pressure to offer improved products at lower prices. Faced with this pressure, companies are increasingly turning to outsourcing to reduce costs, particularly in Asia where labor costs and expenses are low.
Operating in a fragmented industry, ThreeSixty Sourcing is one of a few global sourcing firms that have established an operation with significant scale. With its expertise in middle-market companies, geographically diverse manufacturing base, and ability to generate deep cost reductions, ThreeSixty Sourcing fills a unique niche in the market. The company sets itself apart from the competition by its partnership approach with customers, making the outsourcing process transparent so customers have access to the information they need to ensure pricing integrity, quality and process control.
As a well-capitalized, stand-alone company, ThreeSixty Sourcing is well positioned for future growth. Its existing customers will continue to grow their businesses by leveraging the benefits of the ThreeSixty Sourcing relationship while new customers will come on-line to access the value that ThreeSixty Sourcing can bring to their business. Clearly, ThreeSixty Sourcing is poised to become an even greater force in the global sourcing of products and to continue to multiply the value of its customers' businesses.
