HRCP Investment:
GranQuartz Holdings LLC

GranQuartz ("GQ" or the "Company") of Tucker, GA is a developer, distributor, and marketer of tools, equipment and supplies to the natural and engineered stone industry.  The Company supplied the tools and equipment needed to fabricate and install kitchen and bathroom countertops, making it a "one-stop shop" for fabricators.  GranQuartz developed a unique multi-channel sales and distribution strategy consisting of field salespeople, six distribution centers, and one of the industry's most robust catalogs and e-commerce platforms.

Sourcing, Transaction and Opportunity

Initial contact was made with GranQuartz through a referral from a private equity firm, Independent Bankers Capital Fund ("IBC") of Dallas, TX, which resulted in the two firms recapitalizing the company.  HRCP provided partial liquidity for an elderly individual investor and growth capital for the business.  The business owner very selectively sought a partner to accomplish two goals; first to provide partial liquidity for his valuable investment and as importantly, a partner to help the business and organization develop professionally over the next few years to maximize the ultimate exit from his ownership position.  The owner sought an investor with experience, capital, patience and a history of successfully supporting management teams.  HRCP and Independent Bankers Capital were his choices to partner with.

GQ's strengths were in the breadth and depth of its product offerings, the knowledge and experience of its sales force, and its ability to globally source the highest quality products under exclusive arrangements and private label.  The investment thesis was to expand the company's geographic footprint and product selection while improving customer service and delivery times.   

Value Creation

Management and Culture.  HRCP and IBC led the hiring process for a COO as a first step in professionalizing the management team and dealing with a critical succession issue.  Comprehensive financial measurements were implemented, resulting in working capital improvements and significant cash flow benefits.

Management Incentive.  HRCP and IBC implemented a performance-based management compensation structure to supplement the equity incentive plan put in place at closing.

Internal GrowthHRCP and IBC supported management's plan to develop new house-brand products at multiple U.S. locations.  The branch-level expansion model was critical to GQ's success since geographic proximity to its customers was a strong selling tool.  HRCP and IBC helped refine the new location opening process, which ultimately resulted in 4 new branches opened over the course of the investment.

HRCP Contribution

Professionalized management team and hired new COO who became CEO at sale
Introduced formal strategic planning process to the company
Implemented customer surveys
Supported and refined geographic growth strategy, opened four distribution centers
Transitioned reliance on sales relationships of founder to a broader sales team

Investment Results

GranQuartz surpassed its initial 5-year business plan in less than 3 years.  With a robust housing market and economic storm clouds building, the Company retained Harris Williams to assist in the sale of the business.  GranQuartz was sold to a private-equity backed industry buyer.  Decisive board action allowed the business to be sold before the 2008 recession became acute.  Expansion strategies drove earnings growth in this investment.  Multiple expansion was just as important and resulted from two factors – the benefit of a privately negotiated growth capital recapitalization and from the significant improvement in operations including the elimination of the management succession issue.

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