Special Coverage

Management Briefing Seminars

TRAVERSE CITY, MI – Private-equity firms are providing “desperately needed capital” to struggling automotive suppliers, John Casesa, managing partner of Casesa Shapiro Group LLC, says following a speech at the Management Briefing Seminars.

Casesa Shapiro is a leading advisor to auto makers and suppliers.

However, most private-equity companies remain in the game for only three to five years, so what happens after that time is uncertain.

If a struggling supplier makes a strong comeback thanks to the infusion of private-equity cash, one likely alternative is to launch an initial public offering and sell shares publicly, recovering an investment in shares of the new company.

Casesa listed several suppliers that already have gone through this process, such as TRW Inc. and BorgWarner Inc. “An IPO would be great because it would provide permanent capital,” he says.

Scott Merlis, managing director of Ducker Advisory, a unit of Ducker Worldwide LLC, says after his speech at MBS that private-equity firms “are playing a very constructive role” in helping financially ailing suppliers consolidate, invest in plants and products and underwrite overseas expansion.

“The record (of success) is mixed so far, but an estimated 35% of the U.S. supplier base is involved in some way with private equity, and that may go to 50% in the future,” Casesa says.

Merlis says there is no shortage of available private-equity capital, but he expects the pool will grow when the currently tight debt market rebounds.