When a business owner decides to sell, it’s usually discussed in hushed tones on a need-to-know-basis. A confidential matter not to be uttered publicly, until absolutely necessary.
A Daniel Island-based company takes the opposite tack.
In a refreshing change of pace, Quest Specialty Chemicals openly acknowledges that it’s on the block — at least, what remains of it — with no apparent harm to its reputation, its workforce or its prospects.
“It is available for sale. Actually, the way I’d say it is, we’re exploring strategic alternatives,” CEO Doug Mattscheck said Tuesday.
The closely held company scored a nice payday last week by announcing the sale of two of its three divisions for a reported $300 million. It’s a deal that not only provides a glimpse into the low-key world of private equity, it also further reinforces the quality-of-life quotient for the Lowcountry.
Quest was created in 2003 to buy and “roll up” small and “nichey” manufacturers of high-performance paints and other commercial coating products, Mattscheck said. The original founders were a combination of industry veterans and the private-equity firm Huron Capital. One of their acquisitions along the way, in 2007, was Hydro-Stop, a maker of water-based roofing and waterproofing systems that still operates from the old Navy base in North Charleston.
Quest’s ownership mix shifted several years ago, when Huron took its chips off the table, reportedly for more than four times its original investment. Two more private-equity shops, Audax Group and Moelis Capital Partners, stepped in along with management and recapitalized the company in 2011.
Mattscheck, who had been running a specialty fiber business in Aiken, was hired as Quest’s CEO that same year. He wanted to live near one of the company’s manufacturing sites, so his choices were Phoenix, Detroit, Milwaukee and Charleston. He decided to set up his corporate office on the South Carolina coast.
“It’s an easy place to attract talent at the headquarters level,” Mattscheck told The Post and Courier last year
He also noted Charleston’s moderate winters, among other attributes.
“You don’t shovel humidity, right?” he said.
Quest continued to snap up companies and add market share on its way to making itself an attractive buyout target, essentially completing the private-equity circle. A report last October in the Wall Street Journal estimated the company was valued at $500 million.
A partial payoff rolled in Tuesday, when Quest announced a deal to sell two of its three high-performance coatings businesses to The Valspar Corp., a publicly traded paint giant from Minneapolis. Global sales at Quest Automotive Products and Quest Industrial Products are $190 million.
Omar Diaz, a managing director who focuses on the chemicals industry at the investment firm Dresner Partners, called the sale a success.
“This is a dream fulfilled for Quest and the people who put this company together,” Diaz told TheDeal.com, which covers the private-equity industry. “It’s a tedious process, and Quest has really grown itself into a decently sized company over the years.”
Mattscheck said it was “a long haul, but we think we did well for the shareholders.”
“We found a good buyer that’s going to take the business to the next level,” he said Tuesday. “It’s good for everybody.”
The sale leaves as the last man standing Quest Construction Products, the roof-sealing business on Pipefitter Street on the former Navy base. That division pulls down an estimated $60 million a year in revenue, based on sales figures released last week.
And it’s still available. Even if sold, the business isn’t likely to leave the Charleston area, Mattscheck said.
“We’re reaching out into the market to determine if there’s a buyer who’s a great fit, and if so we would look at selling the business,” he said. “But if not, we’re happy to run it. We think the world of that business.”
Contact John McDermott at 937-5572.