Lincolnshire Management's Market Adaptation

Lincolnshire Management, a middle-market private equity firm with a nearly four-decade track record, has demonstrated resilience and adaptability amidst recent economic challenges. Over the past several years, the private equity industry has faced numerous obstacles including the disruption caused by the COVID-19 pandemic, rising inflation, interest rate hikes, and recessionary concerns. Despite these challenges, Lincolnshire Management has navigated the difficult environment and positioned its portfolio companies for success.

A Proactive Approach to an Uncertain Environment

When the COVID-19 pandemic forced a global shutdown in March 2020, Lincolnshire Management took swift action to support its portfolio companies. The firm initiated daily calls with each company to assess the potential impacts of the pandemic. Lincolnshire ensured that its companies had sufficient liquidity, implemented safety measures and developed business continuity plans to maintain operations. The firm also helped its portfolio companies take advantage of assistance programs and worked with vendors to provide additional flexibility where possible.

John Comino, a Managing Director at Lincolnshire, emphasized that while the source of stress on its businesses was unprecedented, the firm’s focus remained the same, determining what actions they could take to impact the outcome and finding the right people to execute those actions. Lincolnshire’s robust due diligence process — which includes a strong emphasis on leadership — played a crucial role in helping the firm and its companies successfully navigate this challenging period.

Despite having to temporarily reduce headcount, furlough some workers, and enact production cuts, Lincolnshire Management’s President, Michael Lyons, noted that the firm’s intimate knowledge of each of its portfolio company’s operations, from production and service metrics to human resources and supply chain relationships, was a key factor in the firm’s ability to help its companies survive and emerge on even stronger footing.

Opportunistic Investments in a Rapidly Shifting Landscape

The Dividend Recap of Schumacher Electric

As the pandemic progressed and the investment environment shifted, with interest rates declining to near 0%, Lincolnshire proactively identified opportunities to take advantage of a newly favorable credit environment to benefit investors and portfolio companies alike. Lincolnshire’s dividend recapitalization of Schumacher in June 2021 is a great example of the firm’s approach during this period. The $148 million transaction took advantage of a favorable low-interest-rate environment at the time and enabled Lincolnshire to recoup all of the capital it invested in acquiring Schumacher while also refinancing the company’s debt on more attractive terms. Lincolnshire Managing Director, Thomas Callahan, commented, “Lenders are much more receptive than when we arranged the original acquisition debt. The timing is just right for us to recapitalize and really take advantage of market conditions.”

Lincolnshire’s decision to execute a dividend recap of Schumacher demonstrates the firm’s opportunistic and proactive approach to protecting and growing capital for its investors as well as the firm’s ability to successfully execute on value-add transactions in varying market environments.

Acquiring CrossCom at an Inflection Point

Lincolnshire Management’s investment in CrossCom National in November 2021 highlights the firm’s ability to identify and capitalize on opportunistic investments in the middle market during challenging economic times. As businesses began to recover from the impacts of the COVID-19 pandemic, Lincolnshire recognized that CrossCom, a leading provider of IT services and solutions, was at an inflection point in its recovery and poised for significant growth.

T.J. Maloney, Chairman and CEO of Lincolnshire Management, emphasized the timely nature of the investment stating, “We are excited to partner with the management team of a leading North America IT maintenance service and solutions provider and to invest to grow the business at an inflection point where experience tells us CrossCom is well positioned to benefit from the recovery of service revenue related to increased foot traffic for these sizable enterprises.”

Lincolnshire’s opportunistic approach during this period of economic recovery allowed the firm to identify and invest in a company with a strong market position, diverse customer base, and significant potential for growth. The firm also recognized the potential for cross-selling opportunities between CrossCom and other portfolio companies in the facilities maintenance and refresh space, such as Powerhouse, Security Vault Works, and Dentco.

Three Add-Ons in Three Days

At a time when rapidly rising interest rates and high inflation were causing market volatility and uncertainty, Lincolnshire leveraged its expertise, operational capabilities, and strong industry relationships to identify and close value-enhancing deals for its portfolio companies. Lincolnshire’s ability to complete three add-on acquisitions for its portfolio companies in just three days during the summer of 2022 highlights the firm’s agility and effectiveness in executing transactions despite a challenging economic environment.

In just three days, Lincolnshire’s portfolio company, REMEDI8 (formerly Barrier Companies), completed two strategic acquisitions in the fire, life, and safety compliance space: Fire Door Solutions and United Fire Door Inspection. These acquisitions align with Barrier’s strategy to build a nationwide footprint and enhance its fire safety solutions, ultimately creating a leading platform company in the industry. Tad Nedeau, a Managing Director at Lincolnshire Management, commented on the significance of these acquisitions, saying, “The acquisition of these market leading-businesses is a continuation of Barrier’s strategy to build a nationwide footprint and enhance its fire safety solutions to serve customers. We are very excited about the additional value these well-performing companies will bring to Barrier as we raise its industry profile across the country.”

Simultaneously, Lincolnshire’s portfolio company True Temper Sports acquired 44 Pro Gloves, a rapidly growing direct-to-consumer baseball fielding glove brand. This acquisition enables True Temper Sports to expand its baseball product offering, increase its consumer-facing presence, and access a substantial new customer base.

Philip Kim, a Managing Director at Lincolnshire Management, noted the strategic importance of this acquisition, stating, “44 Pro Glove is a prime example of a complementary add-on we seek for our investments. This deal will enable True Sports to expand its baseball product offering and serve more players in that market with a proven glove used by Major League professionals.”

Lincolnshire’s ability to execute these transactions in rapid succession during a challenging economic environment underscores the firm’s adaptability, industry expertise, and strong operational capabilities. By identifying and capitalizing on value-add opportunities for its portfolio companies, Lincolnshire further demonstrated its ability to drive growth and create value, even in the face of market volatility and uncertainty.

Lincolnshire Management: Looking Ahead

Lincolnshire remains well positioned to capitalize on market dislocations and execute its strategy of partnering with management to build better businesses. The firm’s experienced team, operational capabilities, and flexible investment approach provide a compelling value proposition to middle-market companies, particularly during periods of heightened volatility.

As the private equity industry navigates the challenges and opportunities ahead, Lincolnshire Management’s disciplined investment approach and value creation strategies position the firm to be an attractive partner for middle-market companies.