Merit Capital Partners

Parksite, headquartered in Batavia, Illinois, was founded as a family-owned business in 1971 and began distributing DuPont’s solid-surface Corian product in 1974. The Company later began distributing Tyvek, DuPont’s housewrap used in new home construction. Parksite’s success in marketing both Corian and Tyvek eventually led to expansion of its distribution territories and product lines. By 2000, Parksite had grown to include operations in 11 states and was the second largest domestic distributor of both Corian and Tyvek. Additionally, over the years, the Company underwent transactions resulting in it becoming a 100% ESOP owned Subchapter S-Corporation. This resulted in a special tax status eliminating federal income taxes for the corporation.

Early in 2000, George Pattee, Parksite’s Chief Executive Officer, developed an opportunity to acquire Plunkett-Webster (“PW”) a large, East Coast distributor. PW, founded in 1915, was the largest distributor of Tyvek in the United States, and distributed numerous other specialty branded building products through its operations in 16 states. Pattee and his management team saw an opportunity to make an acquisition that would lead to significant revenue synergies and cost savings, but, needed to raise a meaningful amount of capital while limiting dilution to its ESOP and preserving Parksite’s tax status.

Merit Capital Partners brought its knowledge of and comfort with ESOP transactions, as well as an understanding of the unique structural needs at Parksite to the PW acquisition. While some providers of subordinated debt and equity avoid transactions involving ESOPs, Merit had invested in a number of ESOP companies and was able to understand and evaluate the unique risks ESOP transactions can bring. Further, as an investor with more than 40 transactions to-date, Merit understood the important financial, cultural and operational issues facing Parksite’s management as it tackled such a large acquisition.

Merit invested $12,500,000 in Parksite, allowing the acquisition of PW to go forward without additional equity capital thereby limiting the dilution to the ESOP. Further, Merit structured the transaction in a manner that allowed the ESOP to maintain its unique tax status. Following the transaction, Merit served as a board level advisor, providing strategy and financial advice while leaving management to operate and grow its business.

During 2003, after three years of solid performance, Merit and Parksite’s management together recognized an opportunity to repay Merit’s loan and buy out its warrant (a financial security with a value tied to the company’s equity value). The investment was a success for all involved as Merit’s capital allowed Parksite to greatly expand the size and scope of its business while providing a solid return for Merit and its investors.