The interview below is part of a series from McGuireWoods that features interviews with impressive independent sponsors as part of our ongoing commitment to the independent sponsor community. To recommend an independent sponsor for a future interview, email Jon Finger at [email protected].
Q: Why did you decide to become an independent sponsor?
Ryan Sullivan: I began acquiring U.S.-based manufacturing businesses eight years ago while CEO for a public holding company. Since then, I have participated in more than 20 acquisitions under various investment portfolios. This experience led to the formation of North Park Group in December 2021 with an eye toward continued acquisition, growth and development of U.S.-based manufacturing businesses.
We are operators who grew up in manufacturing plants — and love it — so we naturally want to spend our days doing our part to keep manufacturing businesses alive and thriving in the United States.
We have a nontraditional model. Whereas other firms may plan for a five- to seven-year-hold period, we make long-term investments in our companies with a vision of holding them for multiple decades and being good stewards for our employees and investors. This makes us a great partner for family businesses that have been around, in some cases, for nearly a century, and their stewards wish them to continue in perpetuity.
We are not only good stewards, but we continue family legacies. We focus on growth, employee success and business improvement — not on selling the business in the future. We are truly owner-operators.
Q: How long have you been operating as an independent sponsor, and how long did it take you to get your first deal closed?
RS: We formed North Park Group in December 2021 and closed our first acquisition — Elec-Tron — in May 2022. All of our acquisitions have closed in roughly 90 days from signing a letter of intent. We currently have four companies in our portfolio and are always looking to acquire more. Our model makes us an attractive partner for a seller looking to transition their business to a long-term owner.
Q: What are some of the most impactful reasons you think the independent sponsor model has grown so robustly?
RS: Sellers want to partner with someone they trust, someone they understand and someone who understands their business. I believe this has caused independent sponsors to grow, as sellers place a higher level of importance on the relationship and not just on finding someone with the funds to close a transaction.
Q: What are the most common misperceptions about the independent sponsor model?
RS: The largest misconception is that independent sponsors don’t have the equity capital to close acquisitions. While we did not raise a traditional fund, we are a funded organization and have over 40 investors that participate in each acquisition. We prefer the deal-by-deal model since it offers everyone the most flexibility.
Q: Recognizing every deal is different, what are some of the most important considerations for you when choosing a capital partner for a deal?
RS: On the debt side, banking partners are key. We tend to be very conservative with debt levels and prefer to partner with banks on numerous transactions.
The same can be said for our capital investors. We only accept investors who align with our vision of business ownership and plan to participate in numerous acquisitions.
Q: How have you worked to differentiate North Park Group for sellers and investors?
RS: We’re operators, not just deal sponsors. We’ve spent our careers running manufacturing businesses and we know what it means to be good, long-term stewards of the business.
We also structure our transactions so we can pay distributions to investors during the hold period. This is fundamentally different than a typical private equity deal. Our acquisitions generate high annual cash flow returns to investors that you won’t find in most private equity or independent sponsor deals.
About Ryan Sullivan
Ryan Sullivan is the managing director of North Park Group. He is a proven chief executive officer with extensive experience in diverse industries and a record of increasing profitability and market share and developing strong management teams. While at Continental Materials Corp., he led the turnaround from neutral earnings to double-digit EBITDA. As executive vice president and North American president of James Hardie, he held full profit and loss responsibility, achieving $1.5 billion in annual revenue and a greater than 10% growth rate. Sullivan earned a BSME from Carnegie Mellon, an MSEE from University of Pittsburgh and an MBA from the University of Pittsburgh Katz Graduate School of Business.