Q&A: Investing in Specialty

This summer, Specialty Manufacturing Inc. (SMI) entered a partnership with Century Park Capital Partners, a private equity firm in Los Angeles.

Officials on both sides of the agreement pointed to the opportunities for growth that SMI would see with support from a deep-pocketed equity sponsor.

The Pineville, N.C.-based company, which supplies the school bus industry with such safety products as stop arms, crossing-control arms and roof hatches, will continue with its current management and operational structure. John Ellison and Gray Ellison will continue as shareholders and members of the board, with Gray Ellison continuing as president.

SBF Managing Editor Thomas McMahon spoke with Gray Ellison for insight on the partnership and its effects on SMI.

What prompted SMI to partner with Century Park Capital Partners (CPCP)?
John [Ellison] and I always expected that Specialty would continue to grow. Throughout Specialty’s history, we have achieved this growth by broadening our product portfolio. It was our belief that we would need to make significant acquisitions to keep pace with our goal growth rate. Hence we began a search for a partner whose philosophy was in accord with our own.

What are some of the key advantages of this type of partnership with a private equity firm?
They open the door to lending opportunities that were not available to us before. They bring a great deal of experience, as well as different perspectives from other industries. We also have access to a number of other companies that are affiliated with Century Park. It is our goal to realize some synergies with these sister companies, with the aim of helping SMI as well as our customer base.

How will this change SMI?
We expect the change to be transparent. We will continue to strive to service our customers in a fashion that adds value to their organization. All of our management team will stay intact, and day-to-day business will continue as it has since SMI’s inception. Century Park prefers to stay under the radar and put their resources to work on a more strategic level.

Does SMI have any new products in the works that you’d like to talk about?
We have several developments that are in motion at the moment. Unfortunately, I think it is a bit premature to unveil those at this time.

What about enhancements to existing products?
We made several upgrades to some of our existing products. The electric stop and crossing arms have a new module that we call “Sentinel technology.” It replaces the exposed micro switches and relays that could be susceptible to difficult weather conditions. We have also migrated to a new LED light for our stop arms that we worked with SoundOff Signal to develop, where our customers will experience a significant difference in its brightness. And finally, we have designed an air crossing arm that utilizes an air diaphragm located behind the bumper. This development leverages our time-tested air technology to a modern integrated application. These are a few examples, but our sales and engineering groups are always striving to identify ways to make our products more reliable and user-friendly.