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Private Equity Deal Positions Grand River Aseptic Manufacturing for Growth

Sunday, November 26, 2017   (0 Comments)
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GRAND RAPIDS — Grand River Aseptic Manufacturing Inc. was struggling in late 2010 when a group of West Michigan investors put up $5 million to acquire the company’s assets.

The initial investment seven years ago put GRAM onto the right trajectory. The company began attracting clients, secured additional capital, and over the years grew to more than $20 million in annual sales with a workforce of 160, nearly three times that of just a few years earlier.

Now a fast-growing contract developer and manufacturer of injectable drugs for pharmaceutical companies, GRAM is entering a new stage. Investors this month sold a majority of the company to private equity firm Arlington Capital Partners of Chevy Chase, Md.

The investment recapitalized GRAM for expansion and continued fast-paced growth.

“As many people in West Michigan know, it wasn’t an easy start for the company and it took a while to get its feet under them and gain some traction,” said John Kerschen, the managing director at Charter Capital Partners, a lead investor that retained a minority interest in GRAM.

“We’re happy to make money and have success as investors, of course, but it’s a really heartwarming story in terms of taking something from almost nothing to a nice, sustainable business,” Kerschen said. “GRAM would not be here if it weren’t for this collection of investors from around West Michigan or the state. It was a good collective effort.”

After landing new business with biotech and pharmaceutical customers, GRAM tripled revenues in 2015 and nearly doubled them again in 2016, said President and CEO Tom Ross. That growth pushed the company to capacity at its facilities on Front Avenue south of downtown Grand Rapids, and nearby on Godfrey Avenue, requiring GRAM to seek growth capital to support expansion.

“The only thing holding us back was we didn’t have the capital,” Ross said. “We’re at a point where our capacity is limited and we have all this growth opportunity that is constrained by the lack of capacity.”

Arlington Capital solved the problem and committed to a “significant investment” for GRAM, he said.


Many investors — including the Municipal Employees’ Retirement System, plus founders Van Andel Institute and Grand Valley State University — retained a minority stake in GRAM. Individual investors who invested in GRAM as part of Holland-based Grand Angels LLC also remain as shareholders.

Previously, the company secured $2 million in capital in 2013 and a year later received a subsequent investment of $9.8 million in a round led by a pension fund for public employees in Michigan.

The investment by Arlington Capital Partners provided an exit for former investors who wanted liquidity and a partial return for those who retained minority positions. The deal also serves as an example of a successful local investment that led to an early-stage company attracting a large outside investor to take the business to the next level.

“This demonstrates that we can take private capital from around our community and build good businesses,” Kerschen said.

Terms of the deal were not disclosed. GRAM was advised on the deal by investment banking firm Fairmount Partners of Conshohocken, Pa.

The investment by Arlington Capital Partners, which manages four private equity funds with a collective $2.2 billion in committed capital and has expertise in the pharmaceutical services industry, gives GRAM the capital it needs to expand.

“The company’s broad manufacturing experience and exemplary quality record provide an ideal platform from which to pursue the numerous growth initiatives we have collectively identified within the large and growing aseptic manufacturing market,” said Matt Altman, a managing partner at Arlington Capital. “Our investment in GRAM continues Arlington’s history of building differentiated pharma services providers in partnership with leading management teams.”


GRAM’s expansion will occur over a two-year timeline, Ross said. The expansion should provide the capacity for GRAM to quadruple revenues within the next several years.

“Our growth in the next five to 10 years will be substantial,” he said. “The future looks fantastic. We have incredible growth opportunities, all centered here in West Michigan.”

As GRAM went through the process of working with Fairmount Partners to look at potential financial or strategic buyers, existing investors “ultimately decided we wanted to remain part of the business,” Kerschen said.

Arlington Capital was chosen because it has a good track record of buying and growing companies and was willing to work with minority shareholders who retained an interest in the company.

“We had a lot of options and we got to pick the one that best fit our needs,” Kerschen said. “The competitive nature that’s out there leads to more creative structure to get deals done.”

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