Exited Portfolio Companies - Alternative Resources Corporation
Alternative Resources Corporation Information technology management and staffing
BUSINESS: Alternative Resources Corporation (ARC) was a leading nationwide provider of information technology solutions and staffing services to "Fortune 1000" corporations and mid-sized companies.
TRANSACTION: In January 2002, Wynnchurch purchased $10 million of subordinated convertible debt, with 10 million warrants to purchase common stock in the company.
CHALLENGE: Wynnchurch's investment was part of a recapitalization to support ARC in managing through an industry downturn. At the time of the investment, ARC's staffing revenue had declined nearly 50% from the previous year.
STRATEGY: Wynnchurch, in partnership with company management, restructured the business by eliminating unprofitable lines of business and repositioning it to place a greater emphasis on high-end solutions away from basic staffing. In addition, Wynnchurch and management placed greater emphasis on expanding alliances with key customers and the development of new channel partners.
RESULT: The strategic realignment strengthened ARC's market position, making it an attractive business expansion candidate. In July 2004, Pomeroy IT Solutions, Inc., a $600 million leader in selling, installing, servicing and leasing computer equipment, made ARC its biggest acquisition ever. Upon the sale of ARC to Pomeroy, Wynnchurch received $20.1 million in proceeds, generating an investment return of over 30%.