NY Times: Private Equity Firm Sees a Future in Flatware
Private Equity Firm Sees a Future in Flatware
By Kevin Roose
New York Times
ONEIDA, N.Y. — Some local residents, when eating out, instinctively turn their utensils upside-down to look for a telltale sign: the word “Oneida,” stamped into the back of the handle.The “Oneida flip,” as it’s called, is a ritual carried over from an era when Oneida Ltd., the company headquartered here, dominated the global market in flatware, setting tables all over the world with its stainless steel forks, spoons and knives. In recent years, the ritual became a painful reminder of the company’s troubles.
Once an economic engine of upstate New York and one of the region’s largest employers, Oneida no longer makes flatware in the area. Like so many industrial players across the country, the company has struggled to compete with a flood of low-cost foreign manufacturers. As sales evaporated, factories were shut down. Retail stores were closed. And jobs were shipped overseas.
But a funny thing happened on the way to Oneida’s demise. Wall Street — an industry that has been accused of destroying jobs and stripping businesses for parts — decided the company had long-term potential.
In November, Monomoy Capital Partners, a private equity firm, bought Oneida from a group of hedge funds. The new owner wants to expand, rather than decimate its operations. It is a simple but lofty goal for a company that has been slowly recovering since its bankruptcy in 2006.
“This is a meaningful investment for us,” said Daniel Collin, the Monomoy partner who led the deal to acquire Oneida. “After years of being undercapitalized, Oneida finally has a partner willing to invest in its future.”
How a 132-year-old flatware company ended up in the hands of a Manhattan private equity firm illustrates the woes of American manufacturing — and possibly, a way to improve its fortunes.
Last year, buyout shops bought 361 industrial companies, with many deals under $150 million, like the Oneida deal, according to Preqin, a research firm.
Monomoy, which has just 20 employees and manages a relatively small $700 million in assets, has specialized in acquiring small- to medium-size businesses that might seem antiquated to other buyout firms. Among the companies in its portfolio are Steel Parts Manufacturing, which produces clutch plates used in automatic transmission cars, and Awrey Bakeries, a 102-year-old company that makes frozen brownies, cakes and other desserts.
“A lot of times, these boring, stodgy businesses can generate consistent cash flow, and that’s important to a private equity buyer,” said Eric Hollowaty, an equity research analyst with Stephens Inc. “I don’t think many private equity firms are going to be motivated by saving an age-old brand if they don’t think they can make a handsome return.”
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