Contract Manufacturer Creates an M&A Post

Manufacturers’ Services Ltd. (MSL) Concord, Mass, tapped Frank Binder early in the first quarter to head up the contract manufacturer’s m&a and pricing operations. The newly created position, vice president of m&a and pricing, puts the 53-year old Binder at the helm of the company’s efforts to maintain what he describes as a 50% growth rate. Binder had been vice president of finance at MSL. “We have to supplement our internal growth, which is about 25% per year, with a continuing series of acquisitions in order to continue our expansion.” Prior to his MSL career, Binder, an accountant with an MBA from Boston’s Babson College, worked for the former Coopers & Lybrand, Digital Equipment Corp., and Quantum Inc. In a conversation with Binder, M&A magazine asked him to take a look at the role m&a plays in contract manufacturing today and to reflect on the direction of the industry. “The biggest challenge in m&a is to make the acquired company have the look and feel of your own company,” he said. Binder has had many opportunities to do this kind of melding because MSL is a company that is literally built on acquisitions. Founded in 1994, with Binder coming abroad as employee No. 7, the company was created by lashing together five contract manufacturers in North America, Europe, and Asia. Entities affiliated with Credit Suisse First Boston (formerly Donaldson, Lufkin & Jenrette) own nearly 60% of the company. Over the years, this foundation was added to by a number of strategic deals that picked up companies that provide design and other services for MSL clients. Today, MSL is among the largest electronics manufacturing service providers in the world, procuring equipment, assembling printed circuit boards, and offering design and testing services to the computer, communications, medical, and peripherals industries. MSL has grown significantly – to 15 sites and more than 6,500 employees worldwide – and its 2000 annualized revenue will be in excess of $2 billion. Most recently, the company bought 3 Com Inc.’s manufacturing facility in Mt. Pleasant, Ill. This added 1,000 employees and an operation with hundreds of millions of dollars in sales. The deal gives MSL responsibility for 3 Com’s cable modem and DSL modem production. Binder described the strategy in this and many of the acquisitions done by MSL as part of the company’s effort to focus on the most profitable parts of the value chain. In his industry, Binder says that these points were at the front of the chain, which is in design services, and at the end of the chain, in areas such as logistics and repairs. The MSL executive also says there are two schools of thought about the effect of an economic downturn on contract manufacturers. The optimists say that the more difficulties original equipment manufacturers (OEMs) face in a slowing economy, the more they will turn to the outsourcing options that companies like MSL provide. He cites Swedish telecommunications manufacturer Ericcson Inc.’s recent decision to outsource the production of its cellular phones as a positive outgrowth for contract manufacturers in a rocky period for a OEM. Naysayers think that if things deteriorate for the clients of contract manufacturers, it will inevitably affect them negatively as well. Binder says there are lessons to be learned from both views on the industry and that the best option is to take advantage of the opportunities in the current environment, while being nimble enough to avoid the pitfalls. And whether the economy is on an upswing or a downswing, Binder says that m&a will continue to be a integral part of his mission to grow MSL. “Only about 20% to 30% of the high- technology community’s manufacturing has been outsourced to the largest contract manufacturers. That leaves a lot of room for the growth of MSL. M&A will be one driver of our growth over the foreseeable future.” Service Appointments Barclays Capital – Ed Brown has joined Barclays Capital. He will head up a new team that will offer leveraged loans to financial sponsors and acquisition groups. He had been with Credit Suisse First Boston. Fried, Frank, Harris, Shriver & Jacobson – Charles Rule, an antitrust lawyer, has joined this New York law firm. He will work out of Washington and New York. He had been with the Washington-based firm of Covington & Burling. Jordan, Edmiston Group Inc. – Charles A. Richard was appointed VP of business development and client services at this investment bank. He had been VP of strategic planning at Cahners Business Information Inc. Latham & Watkins – Charles M. Nathan will become partner and head of m&a in the New York office of this Los Angeles-based law firm. He had been with Fried, Frank, Harris, Shriver & Jacobson. Rothschild North America – Roger Kimmel has joined the firm as vice chairman. He had been a senior m&a counsel in Latham & Watkins’ New York office. Shearman & Sterling – Peter J. Rooney and Christa A. D’Alimonte were promoted to partner. Both are m&a attorneys. Salomon Smith Barney – Frank Yeary, a media and telecommunications m&a lawyer, is returning to this securities firm as chairman of the global media and telecom practice. He will also be a member of the executive committee of SSB Capital Partners, the firm’s private equity operation. He had been at the Washington buyout firm, Carlyle Group. UBS Warburg – James Ryan has joined this investment bank as head of U.S. transportation corporate finance. He specializes in m&a finance in the airline and rail industries. He had been a managing director at Chase Securities. Buyout Appointments Insight Capital Partners – Deven Parekh was appointed managing director of this global private equity firm. He had been a principal at Berenson Minella & Co. Thayer Capital Partners – Dan Dickinson has become a senior partner specializing in manufacturing companies at this Washington, D.C.-based private equity firm. He had been co-head of global mergers at Merrill Lynch & Co. Corporate Appointments Ackerley Group – John Dresel was named to the newly created position of SVP of m&a at this media and entertainment company. He had been business operations manager for the Seattle Supersonics pro basketball franchise. Barr Laboratories Inc. – Charlene Good Polino has been appointed VP of strategic business development. She had been VP of new ventures at Geneva Pharmaceuticals. Barr Laboratories is a specialty pharmaceuticals company. Business Objects – Tom Schroeder was named group VP of corporate development at this provider of e-business intelligence. He will assume responsibility for acquisitions and equity investments. Prior to Business Objects, he held senior positions at Sun Microsystems in corporate development and venture investment. Dragon Pharmaceuticals Inc. – Rita Jervis was named VP of corporate development. She had been president of Jervis Associates, a pharmaceuticals consulting firm. Dragon is a biopharmaceuticals company. Efficient Networks Inc. – Jack Reily was named EVP of corporate development. He had been an executive director at Broadview International. Efficient Networks is a provider of broadband Internet access. Great Lakes Chemical Corp. – Richard T. Higgons was appointed SVP of business development at this specialty chemicals company. His responsibilities include strategic planning and m&a. He comes to Great Lakes from Mallinckrodt Inc., where he held various finance and business development positions. Hawk Corp. – Christopher DiSantis was named VP of corporate development at this producer of engineered parts for the automotive and other industries. He had been VP at Seabury Metals. Newell Rubbermaid Inc. – William T. Alldredge was named CFO and president of corporate development at this producer of consumer products. He had been VP of finance at the company. Seagate Technology LLC – Jeremy Tennenbaum was named EVP of business development and strategic planning at this provider of computer storage technology. He had been global equity analyst at Wellington Management Co. US Data Authority Inc. – Gerald C. Parker was appointed VP of corporate finance and m&a. He is one of the founders of Inktomi Corp. More recently, he had worked in private equity. US Data provides online data storage and content delivery services.