Co., a century-old firm here that designs and manufactures security systems and fire sprinkler monitoring systems, is under new ownership, after being acquired by a private equity group headed by Two Rivers Associates.
The new investors include members of Potter Electric's executive management as well as other individual and private equity investors, the company said in a statement released Jan. 14.
John McCarthy, a managing director of Clayton-based Two Rivers, said his firm participated in an auction run last fall by Stifel, Nicolaus & Co., which served as an investment adviser to Potter Electric. He declined to discuss any terms of the deal.
McCarthy and Charles Dill, a Two Rivers partner, both signed documents Jan. 4 as executives with Potter Acquisition LLC, the entity that took over Potter Electric, according to records filed with the Missouri secretary of state. Dill was listed as one of Potter Electric's directors on the company's 2007 annual report, also filed with the state.
Andrew Schmucker, managing director in Stifel's Philadelphia office, which handled the sale, referred questions about the transaction to Bernie Lears, president of Potter Electric.
Lears could not be reached for comment. He was quoted in the Jan. 14 statement saying Potter Electric's transition from the founder's family owners to the Two Rivers Associates investor group would provide "seamless continuity for the Potter business, for our St. Louis-based employees, and for our customers and industry relationships."
Potter Electric started in 1898 and originally had been owned by the descendants of founder Charles Potter. It was controlled by several family trusts, administered by the Central Trust and Investment Co. (formerly Guaranty Trust) in St. Louis. Potter Electric's handwritten incorporation papers show the current company dates from 1916 and started with $150,000 in capital.
Potter Electric's annual sales have been estimated at $65.6 million with 200 employees, according to InfoUSA's SourceOne business information company in Boston. Sources familiar with Potter Electric, who spoke on the condition they not be identified, said its annual sales are closer to $50 million and the business has about 160 employees.
Potter Electric is one of two companies to make flow switches that are installed on all sprinkler systems, said John Viniello, president of the National Fire Sprinkler Association, in Patterson, N.Y. "They pretty much have a lock on the market," he said, along with another firm, System Sensor, a St. Charles, Ill., company that is owned by Honeywell International.
Those firms serve a roughly $6 billion U.S. sprinkler-system market, Viniello said, and Lears and other Potter executives have been active in efforts to bring fire protection systems to markets in China, Japan and Australia, where sprinkler systems are less common.
Craig Herron, a director with Clayton Capital Partners, a Ladue-based investment banking firm for middle-market companies, said firms such as Potter Electric are benefiting from a general surge in two global trends: heightened awareness of security and an increased focus on building and environmental controls. Clayton Capital has represented firms that operate in those fields but was not involved in the Potter Electric transaction, Herron said.
Potter Electric's products include fire sprinkler monitoring equipment, security systems, fire systems and industrial controls -- which Potter sells to a worldwide market. The company markets its equipment under the Potter and Amseco brand names to manufacturers of fire sprinkler components and to distributors and installers of electronic fire protection and security systems, according to the company.
The deal by Two Rivers, a successor company to Gateway Venture Partners, is one of the visible signs the investment firm shifted from operating as a venture capital business to a leveraged buyout firm, McCarthy said. Two Rivers was No. 8 on the St. Louis Business Journal's list of the largest venture capital firms published June 29, 2007, with $88 million in total capital under management.
Two Rivers formed in 2005 and originally included as a partner Joe Adorjan, a longtime Emerson executive and the retired chairman and chief executive of Borg-Warner Security Corp. Adorjan said he is no longer a member of the group.
Before joining McCarthy at Gateway in 1995, Dill was chief executive of Bridge Information Systems Inc. and early in his career he was an executive at Emerson. Dill sits on public company boards including those of local companies Stifel Financial Corp. and Zoltek Cos. Inc.
