Small Is Beautiful

Girding for Growth

The firm’s experience with Apex Print Technologies, a business-statement processing and printing services firm in Little Canada, shows how deals can benefit both Tonka Bay and the acquired business. Musech’s firm acquired a majority stake in Apex in January 2007, but left Brian Kueppers in place as CEO and 20 percent owner.

In 1995, Kueppers and his wife each pitched in $2,500 to launch Apex in their home. Its annual revenue doubled to $18.3 million in 2007 from $9 million in 2004—a gain big enough to land it on Inc. magazine’s 2008 list of America’s 5,000 fastest-growing private companies. In 2008, revenue grew to $20.5 million.

Kueppers’ wealth had been tied up in the company. The deal gave him liquidity and peace of mind, and helped position Apex as a consolidator in the statement processing industry. “Now I think of the business separately from my personal life,” Kueppers says.

At All-Flex, Anne Lundstrom wanted out. She had founded the flexible circuit manufacturer in 1991 and built it to $13.5 million in revenue, but didn’t want the burden of taking it to the next level.

Tonka Bay acquired most of All-Flex in January of 2007, then created the company’s first board and named Greg Closser, already part of the management, as president. Closser says the deal enabled the company to attract more investment, crank out more value-added products, add key hires, and boost revenue to $19 million last year.

“I couldn’t have written a better description for the way it’s turned out,” he says. “We told them what our plan was, and they said, ‘Go for it.’ ”

Cary Musech hopes to wrap up the second fund with six more deals by the end of 2010. All of Tonka Bay’s companies are doing more contingency planning, given the unpredictable economy.

Musech harbors no aspirations of becoming a private equity giant. “Knock on wood,” he says of his firm’s future. “We’re not quick-flip artists. We’ve decided to stay in our niche. It’s what we know.”