The Process of Restructuring Business - Essay Example

The Fojtasek Companies and Heritage Partners Randall Fojtasek, President and CEO of the Fojtasek Companies in March 1995 along with his father, Joe Fojtasek, discussed the future of the window and door manufacturing and distribution company. The two Fojtaseks along with other trust managers and family members discussed the possibility of the sale of their firm with investment banking firm Bear, Stearns. The main reason for this was outsider interest as well as prominent generational succession issues.

Other than this several other possibilities existed. The several buyout funds that were interested in outright acquiring the firm would surely ensure a healthy payout to the shareholders however if these were sufficient to restructure the firm was unclear. Also they would restrict the role of the founders. This led to a second option which was to attain leveraged recapitalization, as suggested by investment bankers. The downside of this option was the large scale of indebtedness and transactional complexity.

This leads us to the most viable option for Fojtasek suggested in shape of a hybrid transaction by a private equity group from Boston, Heritage Partners; with the agreement leading to lower debt levels, control for the family, and majority ownership for existing shareholders. In July 1995, Randall Fojtasek—in partnership with Heritage Partners—undertook a considerable restructuring.The first step in this process of restructuring was acquiring Bishiop Manufacturing, a vinyl window manufacturer in Northeast.

This was seventeen months later sold to Hicks, Muse, Tate & Furst, a private equity firm in the United States that specializes in leveraged buyouts. At a 45% premium to the original purchase price the shareholder’s profited from the transaction and a small amount was reinvested into the firm.Heritage partners, also known as, Partners International (HPI) is a senior level executive search and consulting firm that focuses on delivering superior work to a select group of clients globally in the life sciences industry.

During the undertaking of the transaction they were concentrating their efforts in raising follow-on funds of about 300 $ million. They were successful in their efforts and raised the amount from a variety of institutional investors such as Brinson Partners, the General Motors Investment Management Company, and the private equity arm of the Princeton endowment, Nassau Capital.It appears that Randall Fojtasek in the late 90’s had overcome the dilemma regarding the company he had faced in 95.

Not only had he managed to remain CEO of the firm, now renamed to Atrium Companies but had also managed to retain a large equity stake in the firm. The firm had managed to secure a number of investments, namely the Western Window and Door division of Gentek Building Products. It had also ventured forward despite setbacks like the unsuccessfully bid for Ply Gem, a window and door maker in the United States whose revenues outmatched Atrium Companies. Another perspective of the transactions can be viewed in the way Hicks and Muse sold their stake to Wing Industries in October 1998 to a New York-based private equity investment firm.

The transaction value placed on this enterprise was about 62% higher than Hicks and Muse’s original investment.