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ACG: What attracted GCP to the opportunity?

On December 29, 2009, Guardian Capital Partners ("GCP") and Argosy Private Equity teamed together to acquire Sure Fit Inc. headquartered in Allentown, PA.

Sure Fit (www.surefit.com) is the nation’s leading provider of ready-made slipcovers and related accessories.  Its products provide an attractive and affordable solution for consumers who need to protect furniture from children, pets and general wear or want to quickly and cost-effectively enhance the appearance of a room.  The Company sells through major national retailers, its own website and other channels.  

ACG: What attracted GCP to the opportunity?

It was a jockey and horse story.  Sure Fit has a ninety-five year history as the market leader in ready-made slipcovers.  Through these years, the Company has endured many economic cycles and itself has been knocked down and had to reorganize.  However, through the leadership of today’s CEO, Hugh Rovit, the Company has not only survived in a challenging retail environment, but is thriving and well positioned for future growth.  Today’s new normal, for at least the foreseeable future, includes a cost conscious consumer and tight financial markets. Sure Fit has connected with this consumer, has identifiable growth opportunities and is led by a team with a proven track record and relentless focus for pursuing profitable growth and creating long-term value.       

ACG: Other than price, what was important to the Seller in this transaction?

Price was obviously important, but we prefer situations where price is not the only factor.  With this transaction, speed, certainty of closing, and partnership with management were all critical elements of the deal.  We recognized this early on and as such jumped out of the gates with an efficient diligence process.  That is not to mean that we sacrificed the quality of diligence to save time; we used our experience in deal execution to our advantage and worked efficiently to compress months of heavy lifting into weeks.  There are always those deals that require the round the clock work ethic, and this was one of those times.  On the management front, we embraced the executive team immediately and rigorously tested our respective philosophies, company vision, and business acumen to conclude that there was a natural and lasting fit to our relationship.  The process clicked, the people clicked, and despite the typical buyer/seller differences, we delivered a clean and efficient proposal that was accepted for reasons other than just price.

ACG: You mentioned the importance of partnership with management.  What where they looking for and what does Guardian Capital Partners provide?

Similar to preferring deals that aren’t solely based on price, we also prefer companies (and management teams) requiring more than just capital.  On a continuum of "active vs passive" approach to ownership, GCP is an active owner.  That does not mean that we are micro-managers.  On the contrary, we empower our management teams to deliver results and we provide support through strategic guidance, new and meaningful relationships, access to our proven tools and techniques over the years in private equity and operations, and, of course, capital.  For example, the first 100 days of ownership ("F-100") are a critical part of our process and we work just as hard, if not harder, during this period than we do during our diligence phase.  It is a period of on-boarding, strategic planning, and many other necessary activities to provide the backbone, governance and roadmap for success.

ACG: Who were the critical partners in this transaction?

At the top, we partnered with Wells Fargo Business Credit. This was strategic for many reasons, including that Wells Fargo was the incumbent lender and brought with them the knowledge and background with the Company.  This was important given the reliance of speed and certainty for this deal as mentioned earlier.  Argosy Private Equity was also a critical partner in this transaction.  It had considered an investment in Sure Fit twice before, once in the late 1990’s and again in the early 2000 timeframe.  In both instances, Argosy passed.  This time everything was different - the performance of the business, the executive management team, and the attributes of the transaction and future of Sure Fit.  Argosy and GCP have looked at opportunities together in the past, and are both active members of ACG (as is Wells Fargo).  Sure Fit was an ideal opportunity for Argosy to partner with GCP by providing mezzanine financing and minority equity.       

ACG: Guardian Capital Partners recently announced a final close on its Fund.  Did this play a part in the transaction of Sure Fit?

The Sure Fit transaction was not dependent on our final close on committed capital.  Nonetheless, we are extremely pleased to have reached our final amount for Guardian Capital Partners Fund I.  It was obviously a difficult fund raising environment, and we believe our success in it is not only attributable to the quality of our team, but it also speaks to the market’s interest in our investment strategy to acquire lower middle market companies with the focus of building more efficient, higher performing and safer businesses.  We feel fortunate to have dry powder to pursue opportunities like Sure Fit.

ACG: What is next for Sure Fit?

Our goal, of course, is to grow profitably.  During our due diligence and as part of our F-100 process, we identified a number of revenue growth and operating efficiency opportunities, which are now being prioritized.  We are also developing plans to accelerate opportunities to create product, customer and channel expansion.  Sure Fit’s products, business infrastructure and management team are highly scalable and well positioned to take advantage of growth opportunities quickly and efficiently.  As you can tell, GCP and Argosy are very excited about the Sure Fit transaction and are wasting no time in working with management to build value in this market-leading Company.