Creating Value in Private Companies: Spotlight on Prodomax Automation

In 2015, Kensington partnered with the management team at Prodomax Automation with the goal of accelerating the growth of the business and facilitating a transition of ownership. To enable Prodomax to seize more business opportunities, Kensington has identified and executed a number of strategies to support the growth of the business and drive value:

Strategic Acquisitions

Kensington has evaluated a number of acquisition opportunities with management in the past year. This work has resulted in the signing of an LOI to acquire a complementary business that will enhance Prodomax’s machining and fabrication capabilities, provide needed capacity for the growth of the business and establish a strategic location in the GTA.

Recruiting

In order to keep pace with the increasing volume of business, Prodomax commenced a recruiting initiative to add senior controls, robotics and mechanical designers. Additional resources are being added to the finance & administration functions as well.

Enterprise Resource Planning

Kensington and management have initiated a process to implement a new enterprise resource planning system to provide greater functionality and better integration of systems and processes than were available under the legacy system.

Foreign Exchange Hedging

Given the significant amount of U.S. projects booked by the company for the next year, coupled with the volatility of the U.S./Canadian dollar exchange rate, Kensington worked with management to introduce a hedging strategy to lock-in a significant amount of the revenues from these projects.

Budgeting & Planning

Kensington has implemented more formal budgeting, planning, and financial reporting programs to help management set and meet performance targets.

Financial Flexibility

Kensington has been working with the company’s senior lender and Export Development Canada to increase working capital availability, and enhance financial flexibility in general, to support the execution of the increasing number of larger projects Prodomax is winning. In addition, this flexibility will enable the company to take advantage of further acquisition opportunities as they arise.