Financing helps Sciemetric buy out equity investors and achieve exponential growth
Sciemetric, headquartered in Ottawa, designs and manufactures a full range of process monitoring test and analysis hardware and software. The company is a recognized leader in the application of real-time signature analysis technology to catch manufacturing defects as they happen, pinpoint root causes, provide complete traceability and increase quality. Its customers include the world’s top manufacturers.
The President and founder of Sciemetric Nathan Sheaff and his management team were looking to buy out the company’s venture capital investors. Although the business was performing moderately well, Nathan felt that they needed to regain full control of the company to maximize its growth potential. His challenge was to find patient capital to make this important business transition, as well as invest in key areas such as management, sales and R&D expansion in order to put the company on a trajectory of accelerated growth.
The right financing and advice to expand in China
BDC’s Growth & Transition Capital experts recognized that Sciemetric had a strong leadership team in place and a detailed strategic plan. They were confident that once the company was back in the founder’s hands, it could significantly increase its revenues. Complementing senior debt financing from RBC, BDC provided mezzanine financing with flexible repayment terms to protect the company’s cash flow, allowing the firm to invest in its growth. Once the deal was in place, the BDC team also acted as a sounding board to provide guidance on financial management and potential U.S. acquisitions. As well, Sciemetric took advantage of BDC’s advisory services to develop a market entry strategy in China, which represents enormous growth potential for the firm.
Doubling the company’s earnings
With the help of BDC’s Growth & Transition Capital team, Sciemetric successfully executed the take out of its institutional investors. Using cash generated from increased sales, the company then wisely invested in key areas such as management, sales and R & D, which helped motivate and galvanize the entire team to reach ambitious sales goals through new product releases as well as focused sales incentive programs. The results have been simply amazing, with growth tripling to the 30% year-over-year range from pre-buyout levels hovering under 10%, and at the same time doubling earnings and increasing cash generated. The firm was recently acquired, providing it access to world markets and global channels. Nathan will remain as President of the company, and the majority of the Sciemetric team plan to continue with the firm.
“When we needed capital to buy out our equity investors, BDC’s Growth & Transition Capital experts helped us structure a financing package that was a win-win for everybody involved. And in the background, I had that reassurance that if we met unforeseen challenges or significant obstacles along the way, BDC would back us and be patient. They really get what entrepreneurship is all about. BDC genuinely believed in us and that buyout allowed us to triple our revenue,” concludes Sheaff.