There were no archery enthusisasts at Los Angeles private equity firm Diversis Capital LLC, but after the firm wrapped up its first deal, "there are right now, I can tell you that," the firm's managing director Ron Nayot tells Mergers & Acquisitions.
The new firm recently completed the acquisition of Martin Archery Inc., a producer and retailer of bows, arrows and hunting accessories.
Terms of the deal were not disclosed, but Divsersis - launched in May - looks to make equity investments of up to $20 million in distressed companies with revenue up to $400 million.
"That's probably our sweet spot," Nayot says. "Underperforming companies are what we look for."
Martin Archery fit the bill. Diversis is expected "to bring the once-thriving business back to prominence," according to a company statement.
Nayot notes the lack of customer service and response to what archers wanted in the product was the main reason why it needed a turnaround.
"There were no analytics in that respect," he says.
Martin Archery's troubles didn't end there. The Walla Walla, Wash.-based company was put up for sale in December when founder and president Gail Martin announced retirement plans.
Martin, an Olympic medalist and Archery Hall of Famer, died in July at 89 years old.
Enter Diversis. The firm expects to be sector agnostic, but saw the silver lining with Martin Archery and its niche customer base. In addition to improving the company's interaction with end users, Diversis plans to keep the company name, but rebrand the business as a means to improve sales and marketing.
"There were a lot of levers that this company had," Nayot says. Between growing the supply chain, providing company analytics and improving the operations, "all of those things should translate to higher margins."
So far, Diversis named Rich Weatherford the new chief executive and is looking to put in place more executives as a way to "elevate Martin Archery to new levels of success," says Diversis managing director Kevin Ma.
To facilitate the deal, Diversis tapped into an open fund, in which it invests on behalf of various limited partners, including institutions and high-net worth individuals.
In its own right, Martin Archery has a storied past. Founded in 1951 as a small operation - where bows were handmade at Martin's dining room table - it went on to manufacture various types of bows and arrows for the sport, as well as Hollywood films. One of its bows was famously used to light the Olympic torch during the 1992 Barcelona Olympics.
Diversis, based in Santa Monica, Calif., is an affiliate of real estate investment firm The Luzzatto Co. Inc. The firm looks forward to completing four deals in 2014, Nayot adds.