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DCS Group, LLC
Customers have been relying on Machine Repair & Design (MRD) for high-quality fabrication, machining, concept and restoration services for more than 30 years. The company offers services ranging from repairing or rebuilding manufacturing equipment to designing and building fully automated equipment. Clients include companies in aerospace, industrial, consumer goods and the government.
Erik Vossman had been familiar with MRD and its solid reputation for some time, so when he heard that the owners were looking to sell about a year ago, he and his wife contacted the broker and began to explore the possibility of becoming the new owners. Before forming DCS Group, LLC to purchase the business, Vossman was involved in a number of start-ups in the medical software and medical device industry. In that capacity, he did electromechanical design and engineering to bring products to market.
MRD enjoyed a good reputation with its customers but had not changed much or expanded services in many years. Part of the reason Vossman and his wife wanted to purchase the business was because they saw plenty of untapped potential for the company. Even before the deal was fi nalized, they began planning for the next chapter in the company’s history. First on the list was to improve the utilization of the equipment by increasing the number of pending orders. Expanding the customer base was also a high priority.
To accomplish these goals, Vossman needed to expand the manufacturing space, add several machinists, and invest in some additional equipment to reduce the amount of outsourcing currently happening. Furthermore, he planned to get into more complex work and to engage earlier with customers to provide prototype design and product manufacturing services. Eager to get started, he quickly moved to acquire the fi nancing needed to purchase the business.
Vossman had previous experience with venture capital funding, but was new to the process of securing a small business loan. He started by cold calling a number of banks, none of which took the time to listen to his story and help him find the right loan. Fortunately, the broker handling the sale of the business recommended KeyBank as a great source for financing and connected him with the right local KeyBank SBA Specialist to find out more about the loan options for purchase and expansion.
The process of negotiating a price and terms of the sale with the previous owners took almost a year, during which Vossman worked with KeyBank to completely understand financing options for the purchase and the pros and cons of each. As a naturally curious entrepreneur, he appreciated the fact that KeyBank answered all of his questions and helped to educate him about the Small Business Administration (SBA) loan programs. In the end, he secured an SBA 7(a) term loan for the purchase and an SBA Express Line of Credit for ongoing working capital needs.
In an effort to increase the efficiency of the operation and accommodate future expansion plans, Vossman has already added 3,000 square feet of floor space to his lease and has acquired a waterjet cutter to handle work that previously was being outsourced. He is concentrating on adding more customers in the aerospace industry and is hoping to add a second shift for more recurring work and additional production work very soon.
In the first few months, he has already accomplished his goal of doubling the orders and is looking for opportunities to expand his customer base geographically. The company currently has 17 employees—a number that is likely to rise as the work volume ramps up. With a goal of increasing annual revenues to $2.5 million by next year, Vossman will next be looking to transition from a building lease to building ownership, a move that will no doubt require another funding discussion with KeyBank.
"Right from the beginning, I could tell that KeyBank was different from other banks I had talked with. They were very patient and took the time to walk me through everything, explaining all the options and answering all my questions. It was a great experience." —Erik Vossman, Owner, DCS Group, LLC, DBA Machine Repair & Design
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