The would-be entrepreneurs were after some of Carlyle’s gilt-edged reputation as well as its partnership. Most of all, they wanted access to its deep pockets. If Carlyle was willing to put up the money, it would buy and revamp what had been a lethargic, cash-starved Michigan auto components manufacturer with the funny name of UniBoring. The company’s expertise, lightweight aluminum drivetrains, filled a niche in the industry, and the executives thought they could turn it around.
Bruce Swift, who led the auto group, knew the industry supply chain inside and out from two decades of working at places like Ford Motor and Honda. Steve Bay was an expert on the manufacturing side of auto components. And Shankar Kiru was a whiz at the financi
al and technology side of automaking.
Their business plan was something out of “Moneyball”: Unleash data crunchers and turn an inefficient company into a streamlined marvel of efficiency.
This was the bet: Demand for better vehicle gas mileage would create huge and
growing demand in the auto industry for lightweight aluminum parts.
“We were going to transition the business from a local manufacturer into a globally competitive enterprise,” Swift said. “We had to take it apart and put it together with the right people,
right machines, right
customers, right suppliers.”
Three partners from Carlyle’s special situations and distressed assets team listened for two hours, pushing back diplomatically, aware that their guests had never done this before.
Special situations teams like the ones at Carlyle hunt vulnerable, at-risk companies — often from old industries like coal or carpets. These dealmakers are hard-core, unsentimental capitalists. They might quickly fix the business and flip it for a fast profit. They might break it up and sell off the pieces. A third strategy is to turn it around and expand it for a big home run down the road.
This wasn’t going to be a breakup. It wasn’t going to be a flip job.
The auto guys were swinging for a home run. They wanted to turn around UniBoring. The family-owned company had a good product and customers, but it was hampered by poor financing and outdated equipment.
The auto executives thought that with the right management and Carlyle’s financing, there was a fortune to be made.
And Carlyle knows about making fortunes. The Washington-based firm is a paragon of private equity, an industry that puts investment money behind companies, revamps their operations and tries to sell at a profit. It is the world’s second-largest firm of its kind behind Blackstone, with $147 billion under management and more than 200 companies in its portfolio. Its co-founder David M. Rubenstein is an outspoken proponent of private equity, which in recent months has come to the forefront of the national economic debate over tax fairness and the more Darwinian aspects of business.