Examples of Our Work
RAM Holdings acquired Gloves, Inc. in 1997. The company was founded and owned by an entrepreneur that wanted to retire. RAM purchased the company for cash, providing the entrepreneur with liquidity. His son, who had been working in the business, invested alongside RAM and took a management position with the new company.
Gloves, Inc. manufactured work gloves and sold them through industrial and safety equipment distributors. The business was well established, had been growing at five to ten percent annually, and maintained a competitive cost position versus other suppliers. On top of this stable base, the company had begun to build a new division, a catalog marketing business that would sell the company's products directly to businesses at discount prices. This division was young, but enjoying rapid growth.
Ronald Mis joined the company as CEO, and prepared a blueprint to grow the business and increase its value. The blueprint involved strengthening the management team with an experienced Controller and a Vice President of Direct Marketing. With these new managers on board, the company installed a new management information system that could capture the data required to more effectively market the company's products through direct sales channels.
An analysis of the company's costs revealed that its manufacturing assets were generating a very low return on investment. For the amount of capital invested, the company would be much better off sourcing its products from overseas manufacturers. A number of overseas manufacturers were identified to manufacture prodcucts to the company's design, and production was shifted from El Salvador, where the company operated its largest factory, to China and other Southeastern Asian countries.
This shift in the company's sourcing strategy freed up cash that had been invested in inventory and dramatically reduced the Cost of Goods Sold. With a lower cost, less capital-intensive supply chain, Gloves focused its energies on growing its direct marketing channel.
A significant portion of the market preferred to buy their safety supplies directly at lower cost, rather than through more expensive distributors. Targeting these customers with catalogs, the company promoted its line and rapidly gained market share from higher cost competitors. To provide its customers with convenient on-line ordering, Gloves launched an e-commerce enabled website, one of the first in its industry.
While building its direct marketing business, the company looked for complementary businesses to acquire. One such acquisition was a manufacturer of firefighting gloves. Gloves acquired Safeguard America, expanding into new U.S. and European markets.
With a strong position as a supplier of hand protection products, and tens of thousands of commercial accounts, the company advanced to its next stage of growth by launching new lines of related safety products. Safety eyewear, reflective clothing, hard hats, fall protection harnesses and other protective devices were added to the company's growing catalog. Gloves, through its direct marketing division, sold these products via catalog, outbound telemarketing and e-commerce campaigns. Constantly measuring the ROI for these and other investments, the company refined its capital allocation decisions, boosting revenue and earnings growth by investing in the most productive projects.
The company's direct marketing division grew to become the fastest growing catalog supplier of industrial safety products in America. Gloves' growth and profitability attracted the attention of strategic buyers, and the company was sold for more than 25 times the equity capital invested. Employees and investors shared in the success.
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