When Terry Scott and his business partner wanted to sell their 28- year-old company, Albertville based Factory Connection LLC, they turned to Founders Investment Banking LLC.
Within a few months, Founders brought several offers to the table – one for an all cash buyout and others that would allow company owners to retain a sizeable portion of the business.
Through a transaction set up by Founders, Scott and his partner were able to recapitalize the company, gain substantial liquidity and still retain partial ownership.
“My partner and I definitely wanted to stay and grow the company,” says Scott, president of Factory Connection. “Our new partners are an investment group from Chicago. We’ve opened up 10 new stores in the past year and are looking to continue a rapid growth in the near future.”
Founded in 2003 by Duane Donner, Founders is a boutique-type investment firm working with clients who wish to sell or buy interest in privately owned companies through mergers or acquisitions. As investment bankers, Founders staff meet with clients, find out their needs and shop those needs around to investors.
At first, Scott says he didn’t know what to expect from Founders.
“We had been through similar experiences with larger firms who just gave lip service to our needs (but) never made any real effort to promote our company,” he says. “Duane is an absolute bulldog who kept pushing and pushing until we had several people to talk to.”
Donner wants Founders “to be to Birmingham and Alabama the conduit for our clients to reach the open, broad capital market.”
Donner serves as the Birmingham-based firm’s managing director of investment banking. He hatched the idea for Founders shortly after graduating from the University of Alabama with an MBA. At the time, he was selling a food production company he owned.
As Donner looked for an investment banking firm that could provide him with advice and options to help him make the right decisions, he says he realized the market was vastly underserved. He says he couldn’t find a firm in Birmingham that could put him in contact with the right people, he decided to create his own.
After working in the investment banking field for a few years, he started Founders, recruiting David Hobbs, an experienced financial analyst, to join him as a principal. They also brought in Andy Sink as managing director of the firm’s commercial real estate service line. Sink previously worked in investment property brokerage and development and had expertise in sales leasebacks.
“These services are very complementary, and it made a lot of sense to put the two practices together,” Hobbs says. “It’s made us unique.”
The firm also provides financial and strategic advice to help companies create budgets, finance growth and restructure debt.
Through real estate investment services, Founders is involved in investment property brokerage and alternative options such as sale leasebacks, where a company might sell a physical facility, gain liquidity to put back into the company and rent the facility from an investor.
“We help companies understand what their alternatives are,” Sink says. “Sometimes they think there are only certain things that they can do. We show them the whole world of capital markets that are out there.”
In its first year, according to Donner, Founders handled a transaction volume of $10 million to $20 million. The firm now has clients throughout Alabama, Louisiana and Mississippi. Deals have included investors from across the United States, as well as countries such as Singapore. Now in its second year, Founders has eight employees and is handling a transaction volume of $50 million to $100 million. New clients include aerospace firms and other tech companies from north Alabama.
“Our closing ratio is strong,” Donner says, adding that Founders has closed all transactions it has engaged. “Because we are (a young company), so much of what we are doing is pioneering for us. We’re working on some deals right now that are the biggest deals we’ve ever done.”
“We see a ton of opportunity in that (area),” Donner says. “We’re doing a good bit of work in Huntsville right now and are excited about what we see happening.”
Founders has outgrown its current 1,500-square-foot office in the Colonial Bank building, just off the Elton B. Stephens Expressway. In late May, it will move to a 3,500-square-foot office in the Protective Center on U.S. Highway 280.