IVCA Feature: New Member Profile of CORE Industrial Partners

IVCA Feature: New Member Profile of CORE Industrial Partners

October 10, 2018

The membership of the Illinois Venture Capital Association keeps expanding with each new addition, connecting to the roster of Venture Capital, Private Equity and the support industries. Members have opportunities in IVCA networking, lobbying support and participation in the development of new ideas within the association. The latest new member are CORE Industrial Partners, a Private Equity firm “providing capital & operational expertise to manufacturing and industrial technology businesses.”
 
The following is a Q&A profile with CORE Industrial Partners, which explores the firm’s background and their expectations for interacting with the IVCA.
 
New Member: CORE Industrial Partners
Representative: John May, Managing Partner
 
IVCA: What is a brief history and background of CORE Industrial Partners?
 
CORE Industrial Partners: My partners and I started CORE Industrial Partners in early 2017 to invest exclusively in manufacturing and industrial technology companies in North America. We know these types of companies well, having collectively served as 15-time CEOs and completed over 50 transactions in the space representing over $2.5 billion in enterprise value. We are actively leveraging our combined experiences to acquire family-owned and entrepreneur-led businesses... with up to $20 million in EBITDA. Over the past nine months, we have completed two platform investments and one add-on acquisition.
 
IVCA: Why did the firm decide to join the Illinois Venture Capital Association?
 
CORE Industrial Partners: The IVCA has done an excellent job over the years cultivating a strong network of private equity, venture capital, and corporate investors in order to further the education, networking, and collective public policy interests of our industry. As a Chicago-based private equity fund with deep Midwestern roots, we feel it is especially important for the overall development of our firm to be more involved in the local private equity and venture capital community, so joining the IVCA represents a great opportunity to do exactly that. We are excited to be part of this group and look forward to building relationships with talented investors and organizations across the Chicagoland area.
 
IVCA: The nature of manufacturing and industrial technology – and investing in them – has changed profoundly during the last 25 years of the tech revolution, and in the 25 years before that as their contribution to the U.S. economy had lessened considerably. How do you approach your strategy for investment, given those two profound changes?
 
CORE Industrial Partners: We see a highly compelling investment opportunity within the industrials space, particularly in the target-rich lower middle market. There are  approximately 250,000 small manufacturing companies in the U.S. today, more than half of which are owned by baby boomers.  Many of these business owners do not have succession plans in place and are increasingly seeking full exit opportunities or the ability to ‘take chips off the table.’ In addition, several macroeconomic dynamics are creating favorable tailwinds, including one... nationalism on the heels of Brexit, two... increased U.S. infrastructure spending, and three... U.S. tax reform and reduction in corporate tax rates.
 
Further, the CORE team has over 100 years of combined experience in manufacturing and industrial technology. Given the team’s deep operating track record, CORE’s investment strategy and approach to value creation are centered around levers that we can control within the four walls of the business, such as lean and operational improvement and/or revenue and growth initiatives. This approach affords us considerable flexibility across verticals, end markets and economic cycles.
 
Lastly, we are leveraging our industrial technology backgrounds to respond to ‘Industry 4.0,’ which is on the cutting edge of the industrial space. Both of our first two platforms are squarely positioned within the industrial technology sector and are effectively responding to fast-evolving trends.
 
IVCA: The word "CORE" in your name is actually a declaration of core values. How has the C-collaboration, O-outperformance, R-respect and E-ethics continued to be guidelines for your investment philosophy, and how have they even gone further and evolved over the years?
 
CORE Industrial Partners: Each value has significant and consistent influence on the behaviors and actions of the firm. You can find these values hanging in every office of our firm, but it’s worth noting that the CORE values are more than just a sign on the wall... they help guide all aspects of our operation and culture; everything from hiring to investment decisions.
 
We believe that by working together (Collaboration) and doing things the right way (Respect and Ethics) we can deliver best-in-class returns for our limited partners and constituents (Outperformance). We have also found over time that the CORE values have made a positive impact on sourcing deals – the values tend to resonate in a meaningful way with family business owners and entrepreneurs who are looking to sell their business to a buyer who will carry on their legacy.
 
IVCA: You list ten specific manufacturing and industrial technology businesses in which you have experience and expertise. How does one specific business category help another when collaborating on approach, strategy and problem solving?
 
CORE Industrial Partners: The CORE team has meaningful operating and investment experience across verticals that cover over 80% of the $2.4 trillion U.S. manufacturing industry. This rich experience allows CORE to bring a well-defined operating playbook, developed over 20 plus years of leading and operating Fortune 500 manufacturing and industrial technology companies, to the lower-middle market. Also, while we target investments in many different segments, each of our portfolio companies tends to share several similar attributes and/or is facing similar issues and challenges, such as conservative management, capital constraints, and more.
 
As CORE typically serves as the first provider of institutional capital, we are often leveraging the same types of value creation initiatives to help professionalize and grow these businesses. We support our companies through various strategic initiatives, including execution of complementary acquisitions, go-to-market strategy development, investments in systems & infrastructure, and management team additions, among other levers that are commonly underdeveloped in lower middle market businesses.
 
IVCA: What do CORE Industrial Partners hope to achieve in their interaction with the VC/PE community within the IVCA?
 
CORE Industrial Partners: The IVCA membership base includes a highly impressive and successful group of firms and investment professionals. Collaboration is in our firm’s DNA, and we look forward to exploring ways in which we can work together, share best practices and ultimately drive growth across our respective businesses, and further support the IVCA community.
 
For more information on CORE Industrial Partners, go to www.CoreIPfund.com