Preferred Compounding boosts capabilities for new owners

BARBERTON, Ohio—Preferred Compounding Corp. has been purchased by Audax Private Equity and members of the custom mixer's management team.

Audax bought the growing business from Wingate Partners, a Dallas-based private equity firm. Terms of the deal, which was finalized on Feb. 1, were not disclosed.

An official at Audax said it was acquiring Preferred Compounding because of its growth during the last few years and its great potential to expand further.

“We help transform market leaders into substantially larger and better-positioned enterprises by building close partnerships with strong management teams,” according to Geoffrey S. Rehnert, co-CEO of Audax, an integral part of Audax Group, which manages more than $9 billion in assets across its private, mezzanine and senior debt businesses.

He said Audax looked forward to working with and supporting Preferred Compounding's managers to enhance the company's capabilities and services.

Wingate's sale of the custom mixer was not unexpected. It is typical in the industry for a private equity firm to help a business grow over a five-year span and then sell it.

“We've grown considerably in the last five years,” said Ken Bloom, president and CEO of Preferred Compounding. “Wingate invested more than $20 million in the business. Now we have a new owner that's bigger, with more resources available and can help us grow further to the next level.”

It claims it has become the second largest custom rubber compounder in North America since it was acquired by Wingate and company managers in 2010.

Barberton-headquartered Preferred Compounding employs more than 400 at its four plants, located in Georgia, Tennessee, Mexico and Barberton. Bloom noted that the firm is actively hiring new employees at all of its locations.

Bloom said he will continue to head up the firm as president and CEO and all members of the current management team and work force will remain in place. “Nothing changes at the plants or the number of facilities,” he said.

“We're very excited,” he said about the acquisition. “Audax has tremendous experience in middle market industrial companies and fully supports our vision. We will continue to invest in quality, capabilities and partnering with our customers through flexible programs and services that add value.”

He said that when Wingate purchased the company, “north of 20 members” from Preferred Compounding were involved as partners in the acquisition. This time around, additional people, including Bloom, from the company are part of the purchasing unit.

Bloom said Wingate has been “a tremendous partner for Preferred Compounding. It's one of the best private equity firms I've ever worked with. They assisted us in developing and implementing our business strategies over the past five years, and we are now positioned to take the next step in our growth.

“I've got the best team of individuals to work with, so I enjoy coming to work every day. We will continue to develop partnerships with our customers. We view this as the next logical step in our growth path and as a way to better service our customers in North America and around the world.”

Preferred Compounding provides proprietary and custom rubber compounds to customers globally, but particularly in North America, including molders, extruders, mixers and others in the rubber goods market.

It primarily serves the automotive, construction, power generation and roll goods industries.