Information on the Target

HTR Holding Corp. and its subsidiaries, collectively known as Hi-Tech Rubber (HTR), are headquartered in Anaheim, California. The company specializes in providing precision plastic and elastomeric components, primarily for the medical device sector. Its extensive product line includes intravenous equipment, drug infusion pumps, masks, septums, respirator hoses, catheters, and diaphragms, which are sold directly to original equipment manufacturers (OEMs). In addition to medical applications, HTR also manufactures components for pump valves, liquid control valves, and other non-medical devices. The company operates under various trade names, including Accusil, AC Hoffman, Infinity Plastics, Inland Technologies, and Ventrex.

Industry Overview in the United States

The medical device industry in the United States is a vibrant and rapidly evolving sector, characterized by significant innovation and growth. With a robust healthcare system and a strong emphasis on R&D, the U.S. has emerged as a global leader in medical technology. This industry is governed by strict regulatory standards, ensuring the production of high-quality and safe products. Additionally, advancements in digital health technologies are further expanding market opportunities.

In recent years, the demand for medical devices has surged, largely due to an aging population and the growing prevalence of chronic diseases. This has spurred increased investment and development within the industry, leading to the introduction of cutting-edge devices and personalized healthcare solutions. As a result, the market for medical devices is projected to continue its upward trajectory.

Moreover, the U.S. government has implemented various initiatives to support innovation in the medical device sector, enhancing its competitiveness on a global scale. The combination of favorable regulatory frameworks and well-established manufacturing capabilities positions the country as a preferred location for medical device production.

However, challenges such as evolving government regulations, pricing pressures, and increased competition from international markets require companies within the industry to remain agile and forward-thinking to maintain their competitive edge.

The Rationale Behind the Deal

The sale of HTR is a strategic move that reflects the successful realization of value by both Century Park Capital Partners (CPC) and Red Diamond Capital (RDC). The transaction not only yielded outstanding returns for the investor group but also highlights the effectiveness of HTR's acquisition strategy, which was pivotal to CPC and RDC's original investment thesis. Under the guidance of Neil Martin, who served as CEO and chairman, HTR transformed into a diversified global manufacturer with significant market presence.

This deal signifies the culmination of careful business development, operational improvements, and strategic acquisitions that have enhanced HTR's value proposition in the competitive medical device landscape.

Information about the Investor

Century Park Capital Partners (CPC) is a private equity firm based in Los Angeles that focuses on investing in companies for the purpose of facilitating owner liquidity and business expansion. With equity investments ranging between $10 million to $50 million, CPC targets various sectors, specializing in recapitalizations, growth financings, management-led buyouts, and acquisitions. The firm’s commitment to building successful companies has positioned it as a reputable player in the private equity landscape.

Red Diamond Capital (RDC), founded in 2002, operates as a $150 million private equity fund that primarily invests in middle-market manufacturing, service, and distribution businesses in North America. As an affiliate of Mitsubishi Corporation, RDC has the advantage of combining strategic resources with deep industry knowledge, providing valuable support to its portfolio companies. Both CPC and RDC's partnership in this transaction underscores their commitment to building and realizing value through strategic investments.

View of Dealert

The sale of HTR is viewed positively within the investment community, primarily due to the impressive returns achieved and the growth trajectory of the company during CPC and RDC's ownership. The substantial increase in HTR's revenues from $31 million to approximately $93 million over a relatively short span is a clear indication of successful management practices and strategic expansion efforts. This reflects well on the capabilities of both the firm’s management and their chosen executive leadership.

Moreover, the backdrop of a strong medical device industry in the U.S. adds further attractiveness to this investment. Given the sector's growth potential and HTR's strategic position within it, the decision to sell to Parker Hannifin Corporation is timely and underscores the confidence in HTR’s operational foundation.

Overall, the synergy between CPC, RDC, and HTR's management teams seems to have fostered a conducive environment for success, leading to this profitable exit. As such, this deal not only benefits the immediate stakeholders but also positions HTR for continued future success under Parker Hannifin Corporation, suggesting a well-considered transaction for all parties involved.

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