December 27, 2013
Interviewed by: David Snow
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Supply-Chain Gains: How Greenbriar Partnered with GENCO

After a long courtship, Greenbriar Equity Group invested in logistics company GENCO for shared growth. Greenbriar’s Regg Jones describes the dynamics of the logistics industry, what he saw in GENCO’s CEO, and the resources that his firm has contributed to GENCO’s further success.

After a long courtship, Greenbriar Equity Group invested in logistics company GENCO for shared growth. Greenbriar’s Regg Jones describes the dynamics of the logistics industry, what he saw in GENCO’s CEO, and the resources that his firm has contributed to GENCO’s further success.

Supply Chain Gains: How Greenbriar Partnered With GENCOPE Value-Creation Stories

With Regg Jones of Greenbriar

Regg, What did you like about the logistics space that drew Greenbriar to invest in GENCO Supply Chain Solutions in 2010?

Jones: We love logistics. Logistics, again, is an asset light business with very high returns on investing capital; great secular growth because companies more and more are trying to outsource management of their supply chain. It’s not a core competency for them. And so to have somebody come in who does that for a lot of companies can get scale and other expertise related advantages, it’s a natural fit. And so we’ve spent a lot of time looking at logistics. We got to know a guy named Herb Shear in Pittsburgh around 2002-2003.

It’s a very large private company. Herb owned the majority-, the vast majority, of it. And as we got to know him we said, “Well, Herb. You know, you’ve been doing this a long time. Would you like to take a little money off the table, bring in a partner, get some personal diversification?” We tried 10 other arguments. None of them worked. Herb wasn’t interested. But he liked us and we liked him. And so we would have dinner. Whenever we were in Pittsburgh we invited him to our CEO conferences. We would spend time together, golfing or whatever. And by the time Herb had quadrupled his EBITDA over the- ensuing six or seven years, we figured, well, this is just a great network for us but nothing is going to happen.

Herb was met with the opportunity in 2009 to buy a public competitor in the downturn, ATC Technologies, a $500 million deal. He did not want to lever up his company too much.

He recognized that his opportunity to buy that company one-off would be influenced by whether other people knew about the deal. He wanted to bring in a capital partner. Herb gets calls every week from private equity funds. But we were the ones that we-, that he became closest to. And so he called us up and we had a deal, handshake over the phone for a real handshake within a couple weeks on what the terms would look like. And Herb was not overly generous with us because he knew the market but he wasn’t overly tough either. And I’m sure others would’ve outbid us. Herb had an M&A banker advising him on the actual acquisition who said that, “That’s a nice deal you have with Greenbriar. Let me go to six other private equity funds and shop it. I’m sure I can get you a better deal.” And Herb said, “That’s not what I’m looking for. I’m looking for to partner with this firm.”

What capabilities did Greenbriar bring to GENCO that enhanced its value?

Jones: Well, you know, it’s a family company so building it up. Both to integrate a very large acquisition, and to get the company ready eventually for potential an IPO, requires institutionalizing the company. And so there’s a lot of sort of bread and butter stuff that good private equity firms do.

We can help a company make really smart strategic decisions, that not only help them allocate capital and allocate time in ways that accelerate their growth, but actually make them more coherent and more qualitatively attractive companies. And we’ve demonstrated that time and again. And we did spend a lot of time with Herb thinking about the strategy and how he puts-, gets the best out of both these companies.

The second area we add value is in the commercial field. We know people at the highest levels, at major transportation companies up and down the line. So oftentimes the companies that our portfolio of companies are supplying are led by people that we can get access to on a privileged basis. And oftentimes that leads to winning new business. We’ve already made introductions for Herb with a number of Fortune 500 companies that have helped him. And he manages 130 warehouses around North America for major consumer retail and other healthcare companies and other large Fortune 500 companies, but we’ve been able to help accelerate that.

And the third area is really operational. And we’ve helped Herb think about how to do cross-selling and how to share expertise across the organization. Herb is running a very, very well managed business and has leading industry technology. But in some other instances we brought in Lean Manufacturing experts. We’ve looked at the manufacturing footprint. We already know the best practices for putting together a distribution network or a logistics network. So we’ll bring that wisdom to bear, always in concert with our management team.

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