Orval Kent Food Co. Inc. may be in the salad business, but its board of directors is definitely not garden variety. Small companies sometimes have trouble attracting high-quality board members. But those that, like Orval Kent, are backed by Milwaukee's Horizon Partners Ltd. don't have that problem.
Horizon is a private investment firm that specializes in providing equity capital for leveraged buyouts. It invests in three types of situations: management buyouts, recapitalizations of family-owned companies that want to remain independent and expansion financing. The group is composed of three principals and 22 partners, all of whom have experience running companies. The State of Wisconsin Investment Board also is an investor in Horizon, but is not involved in the activities of its partners. "I saw a lack of experienced people who are chief executive officers acting as a resource for entrepreneurs,” said Robert M. Feerick, a principal and founder of Horizon. The company's partners provide expertise to the companies it buys. Also, it provides its partners with a way of investing that they would not otherwise have. "This is very similar to an investment club, just on a little different scale. Investment clubs usually don't have something to do with management," said Robert G. Bush, a partner in Horizon and chairman of Schreiber Foods Inc., Green Bay.
Every Horizon partner contributes a minimum amount of money each year, Feerick said. Horizon uses that to do one or two deals a year, he explained. All Horizon partners also contribute a hefty chunk of their time. The partners typically spend about one day a month working on Horizon projects. They must be available to consult with any Horizon company, whether they are on that firm's board or not. The partners also meet with each other and the chief executive officers of Horizon companies once a year. Horizon completed its most recent acquisition - that of Orval Kent - in late March. Feerick and Bush will sit on the board of the nation's largest provider of refrigerated salad products.
Orval Kent's chief executive officer, Richard L. Fogg, will choose two other members of the Horizon team to be board members. With a clear majority on the board, one might assume that Horizon is running the company. "We don't look at our boards as places where we make yes or no decisions," said Feerick. Horizon prefers a coaching role and lets the chief executive officer run the company, Bush added. “If things are as they should be, the board is the sounding board for the chief executive officer," Bush said.
Horizon has bought four companies in its three-year history, and looked at more than 1,000, said Paul W. Sweeney, a Horizon principal. Horizon's purchases include: Gelber Industries Inc., an Aston, PA, small industrial pump distributor with 1993 sales of $14 million; Surface Systems Inc., a St. Louis, MO, manufacturer of electronic pavement monitoring systems with 1993 sales of $12 million; Xymox Technologies Inc., a Milwaukee manufacturer of custom membrane switches with 1993 sales of $11 million; and Orval Kent, which had 1993 sales of $130 million.
The Orval Kent acquisition is a good example of what a company can gain when it is acquired by Horizon. "I was in cheese and bacon and this is salad,” said Bush. The new Orval Kent board member contributes food industry experience, as well as an understanding of what's involved. What's on the immediate horizon? "We're actively looking now at two growth capital situations," said Paul A. Stewart, a Horizon principal.