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| Westport
firm invests the old fashioned way |
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Daniel Levinson, founder and chief executive officer of
Main Street Resources, only invests in people who are
both personally and financially committed to their businesses.
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by DAVID J. GLENN
FAIRFIELD COUNTY BUSINESS JOURNAL
OCTOBER 13, 2003
The offices of Main Street Resources are physically located
on Wright Street in Westport.
But philosophically, the equity investment company is firmly
in place on Main Street, USA, says founder and chief executive
officer Daniel Levinson.
"It's all about the people," he said. "We only invest in people
who are both personally and financially committed to their businesses."
He said Main Street Resources invests only in "good, solid, niche companies, as
opposed to startups or fleeting high-tech companies."
Levinson, 42, who holds an M.B.A. from the Stanford Graduate
School of Business, founded Main Street in 1995 after working
for 10 years at New York City-based Holding Capital Group, which
he describes as a "highly successful niche private equity firm."
His approach, he said, is to commit generally $2 million to
$10 million in capital to small to mid-sized companies with
proven financial and management records that want to expand.
For its investment, Main Street Resources acquires a partial stake, almost always
a noncontrolling ownership.
Main Street Resources has so far invested $17 million in six companies. He hopes
to have as many as 20 ventures in Main Street's portfolio within
the next two years.
Levinson, a Westport resident, said Main Street Resources looks primarily at the
"quality and commitment" of the management team – people
whom he and his associates know or have come to know after Main
Street does "due diligence" on researching the company.
"Dan Levinson is interested first in the (client) company and
the principals" and second, in immediate returns, said Don Sinkin,
CEO of Disc Graphics on Long Island, who has worked with Levinson
since the Holding Capital days. "I enjoy his management style
and his integrity. That's not to say we haven't disagreed at
times, but it's always been on a very professional level, and
we've always resolved the problem."
Main Street Resources acquired equity in Disc Graphics, which supplies packaging
for videotapes and DVDs, after investing in its expansion.
Main Street Resources also invested in Best Manufacturing, based in Manhattan,
suppliers of linen and employee uniforms to hotels, restaurants,
hospitals and other service industries.
"We've had a terrific relationship with Dan," said Best Manufacturing
CEO Scott Korman. "Main Street has a unique investment strategy,
a holistic approach."
He said Main Street Resources has been "very instrumental" in Best Manufacturing
being able to make effective acquisitions.
Executives of many of Main Street Resources's clients – "old-economy" companies
with $10 million to $150 million in annual sales, mainly in
the Northeast – turn around and invest their own money
in the five-to -six-digit range in Main Street Resources, and join the company's
"guild" of about 100 corporations that help other firms with
advice or investment.
Partners and investors of Main Street Resources also include JP Morgan Chase &
Co., Citibank Community Development, Dime Capital Partners and
SSB Investments Inc.
Main Street Resources is not for the investor who wants a quick return.
"It takes three, four, five years to put the money to work,"
Levinson said, but the potential return is worth waiting for.
He said that since it's an equity investment, investors can
reasonably anticipate a return of up to five times what they
put in.
Levinson prides himself on dealing face to face with the executives
of clients and being straightforward with them. "If we think
they don't need an equity investment, we'll tell them," he said.
The companies in Main Street Resources's portfolio, in addition to Disc Graphics
and Best Manufacturing, are:
Sage Parts in Farmingdale, N.Y., founded in 1969. The company
supplies replacement parts for aircraft ground support equipment,
such as de-icers, cargo loaders and passenger boarding bridges.
Vertex Fasteners of Pawtucket, R. I., founded in 1882.The company
distributes stainless steel, corrosion resistant and metric
fasteners.
Black Clawson of Fulton, founded in 1873. It manufacturers a
broad range of machinery for the plastics and paper industries.
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