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MiddleGround Capital Announces Intent to Acquire 3D Printing Bureaus https://ift.tt/nIpkiY2 The additive manufacturing (AM) industry is currently experiencing an interesting set of roll-ups related to 3D printing service bureaus. Given the pace of the sector and the number of smaller businesses in the space, we may expect the trend to continue for some time. Behind the wheel of much of this consolidation is private equity, with investment vehicles seeing an opportunity to consolidate a fragmented market in the midst of a temporary economic downshift for the industry. The latest such firm to set its eyes on digital manufacturing services is MiddleGround Capital. With a focus on medium-sized businesses in the U.S. and North America, MiddleGround has begun its foray into the space with the purchase of Megatech, a Canadian CNC provider based in Montreal. The investment firm alerted us to the fact that this was just its entry point into digital manufacturing and that MiddleGround had its sights set on 3D printing next. We spoke to MiddleGround Director Marten Sjoquist to learn more. Based in Lexington, Kentucky with offices in New York and Amsterdam, MiddleGround is a comparatively new private equity firm established about five years ago. The company targets businesses with revenue of over $75 million, providing equity investments of between $20 million and $350 million, and operating in transactions of over $500 million. One of the unique features that sets MiddleGround apart from many of the private equity groups driving the service bureau consolidation in AM is the fact that its leadership team comes from the manufacturing world.
MiddleGround also features a large in-house operations team who all have experience in industry and serve as instrumental resources for the management teams of the firm’s our portfolio companies. They work hand in hand with management teams to implement specific value creation projects. Sjoquist listed examples that include improving labor efficiency, managing capital, optimizing supply chains, and executing new capital projects. Rather than rely on debt or financial engineering to generate returns, MiddleGround aims to perform operational improvements to the businesses that it acquires. As the company has invested in the industrial sector, it also conducts thematic investing, including industry 4.0 and digital manufacturing. In addition to the general benefits of 3D printing, ranging from part complexity to shorter product development cycles and mass customization, Sjoquist highlighted the role that AM will have in supply chain resilience as a key factor for the company’s interest in the technology.
Altogether, this has driven MiddleGround to build a platform dedicated to high complexity, low volume, high mix manufacturing services for technologically advanced and secularly growing and resilient end markets. The first piece of this platform is Megatech, which produces complex, low-volume components for such sectors optics and photonics robotics, medical, non-destructive testing, and aerospace. To do so, the company uses a combination of advanced software programs, in-house machine programming expertise, and state-of-the-art equipment. However, Megatech is only just the beginning.
There are potential benefits to blending a CNC business like Megatech with newer 3D printing bureaus. Sjoquist pointed out that established subtractive manufacturing firms have solid industrial customer relationships due to their longevity, while 3D printing companies may have strong digital platforms without the same level of relationships. Just as subtractive and additive production are complementary at the physical level, so too can they be at the business level. Of the private equity firms in the market performing these types of consolidations, MiddleGround is definitely unique in a number of ways: from Sjoquist’s candid discussion of the topic to the manufacturing background of the company’s leadership, as well as MiddleGround’s reliance on operational excellence over debt financing. With such a player in the field, we’re not only witnessing the evolution of AM technology itself, but also the investors interested in that technology. With MiddleGround’s next acquisition, we’re sure to see exactly how the service bureau industry begins to evolve from what we’re used to to a greater number of differentiators across businesses. The post MiddleGround Capital Announces Intent to Acquire 3D Printing Bureaus appeared first on 3DPrint.com | The Voice of 3D Printing / Additive Manufacturing. Printing via 3DPrint.com | The Voice of 3D Printing / Additive Manufacturing https://ift.tt/HbkPwgh March 29, 2023 at 08:18AM
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