| Founded
in 1977 in Waterloo, Iowa, Omega Cabinets designed and manufactured
custom and semi-custom kitchen cabinets, bathroom vanities
and accessories. A company with humble beginnings in an Iowa
barn, Omega had become a leading manufacturer that sold its
products through a national network of kitchen and bath dealers,
for use in the residential remodeling market and, to a lesser
extent, in new residential construction.
Through financial advisors, the founder contacted
CHS in 1994. His goal was to create partial liquidity for
his stock, broaden the management team and position the company
to grow in value through internal expansion and acquisition.
Working with the founder, CHS recruited a new management team
including a Chief Executive Officer, a Chief Financial Officer
and a Vice President of Operations shortly after acquiring
the business. The founder remained Chairman of the Board of
Directors.
The new executive team worked quickly to
develop and implement improved management information systems
and more effective financial controls. CHS worked with them
to embark upon a comprehensive growth strategy that included
geographic and product line expansion and industry consolidation
through acquisition. Omega had significant competitive advantages
resulting from low cost manufacturing, broad distribution
channels and low working capital requirements which allowed
rapid, profitable growth.
Along with senior management, CHS evaluated
numerous add-on acquisitions. In May, 1995, Omega completed
the acquisition of HomeCrest Corporation, a leading stock
cabinetry brand. The acquisition nearly doubled Omega's revenues
and added a stock cabinetry line to round out Omega's product
offering. There also were significant operational synergies
between these two businesses. Through agressive and internal
growth, CHS oversaw a meaningful increase in Omega’s
dealer base and an expansion of Omega's distribution channels
into home centers.
Omega's earnings grew from $10 million to
$27 million in three years. The successful exit in June 1997
generated a 100% IRR and returned 7.0x CHS’ invested
capital. |
