Business Overview
Founded in the 1930s, GEM Engineering and Manufacturing (“GEM”) is a contract and specialized equipment manufacturer of highly engineered products serving the defense, healthcare, semiconductor, and industrial machinery markets. The Company leverages its electro-mechanical engineering expertise as well as lean, flexible and automated manufacturing processes to dramatically improve the manufacturability of complex products. GEM's capabilities are utilized by many of the world's most demanding equipment OEMs.
Investment Summary
Beginning in 2000, its CEO and majority owner, along with three other management owners of GEM, transitioned the company from a traditional contract manufacturing business focused on high volume products for the automobile industry to a highly specialized electromechanical designer and manufacturer. This transformation was financed entirely through internal cash flows. In 2007, the management owners, whose personal wealth was primarily in the form of their ownership of GEM equity, sought to diversify their financial holdings while simultaneously providing GEM with capital and other resources necessary to accelerate the company’s growth. They found themselves in need of a partner that would bring financial, strategic and operating expertise to enable them to realize the full potential of the business.
Riverside’s investment strategy for GEM centered around the company’s engineering and manufacturing expertise in complex electro-mechanical equipment. The company’s longstanding strategic relationships with a number of blue chip OEMs and its experienced management team were also critical factors in our analysis. With engineering and manufacturing capabilities in the US and Asia, GEM is now well positioned to take advantage of a number of high growth equipment markets such as advanced robotics, medical and semi-conductor.