In 1997, Beacon Sales Acquisition Corporation’s founder and majority owner, Andrew Logie, sought a partner to provide additional liquidity to grow his business. The company was a leading distributor of roofing products and related accessories with nine locations and approximately $72 million of sales. The company operated primarily in the Northeast and planned to expand throughout the entire East coast and into Canada.

Beacon was appealing to CHS because it demonstrated similar attributes to SCP Pool Corporation, a highly-successful investment in an earlier CHS fund. Like SCP, Beacon was a regional market leader with opportunities to expand organically and through acquisitions. Also like SCP, Beacon offered an opportunity for CHS to partner with a proven executive who would remain with the company as CEO and a significant owner. Other characteristics also suggested a good investment for CHS: barriers to entry through exclusive distribution rights to leading roofing products; a long history of growth in sales and profitability; a high percentage of maintenance and repair projects to insulate profitability from construction cycles; and a highly fragmented customer base consisting of large and small commercial and residential roofing contractors.

Over the next several years, CHS supported Beacon’s management team by identifying, negotiating and closing nine add-on acquisitions, executing a planned leadership transition, recruiting an experienced Board of Directors, and facilitating the company’s migration to an enterprise-wide, commercial distribution software package. CHS also arranged for and completed four re-financing transactions on the company’s behalf. These efforts and the opening of 22 new branches helped the company increase sales and gain significant market share despite the downturn in the commercial construction industry from 2001-2003.

In 2004, CHS recognized that strong operating performance at Beacon combined with capital market conditions created an opportunity to execute an initial public offering of Beacon common stock. Working with JPMorgan and William Blair as co-lead underwriters, Beacon priced its IPO in September 2004. The IPO resulted in a realized return of 6.4 times CHS’ invested capital including cash received at the offering and the value of retained shares at the IPO price.

Subsequent to the IPO, CHS remained active at Beacon with three representatives on the company’s Board of Directors. With assistance from CHS, Beacon continued to make acquisitions completing its largest acquisition, Shelter Distribution, Inc. (“SDI”) in October 2005. With 50 branches in 14 states, SDI provided an opportunity for Beacon to expand quickly throughout the Midwest, Central Plains and Southwest.

In December, 2005, CHS sold substantially all of its common stock in Beacon. Beacon successfully executed a sale of primary and secondary shares of common stock which resulted in a realized return of 9.5 times CHS’ invested capital. The secondary offering capped another successful investment by CHS in a distribution company serving fragmented markets where CHS executed a consolidation strategy.