Cleary Gull, N.Y. firm team up

An investment firm in Milwaukee is teaming up with one in New York to make a $70 million fund available to Wisconsin companies looking for capital.

Cleary Gull Reiland & McDevitt Inc. will be searching for non-high-tech, small- to mid-sized companies with sales of between $5 million and $100 million companies that often are overlooked by national investment firms.

Cleary Gull, which is aiming to boost its national presence, is an agent and partner in the fund, which Stolberg Partners of New York City formed in October. This is the first formal alliance the fund managers have made with an outside firm, said Ted Stolberg, partner at Stolberg Partners.

Cleary Gull and Stolberg were familiar with each other because there had been a lot of overlap in the deals the two firms had done.

"Most venture capitalists want to do bits, bytes and lines of code," Stolberg said. "We want to do the kinds of business you have around the Fox River Valley basic manufacturing, retail and distribution."

Stolberg thinks the type of small companies the fund wants to finance are the wave of the future.

"It's the flight from the top," he said. "Executives are trading their executive suites and fat salaries for equity in small companies."

The Stolberg fund wants to make mostly $5 million to $10 million equity investments in companies in the Midwest and Rocky Mountain states. Wisconsin companies that currently do deals in that range include Baird Venture Capital Fund, Banc One Venture Corp., Lubar & Co. and M&I Ventures Corp.

"We'll have the ability to write a check for $10 million for one transaction," said David Prokupek, director of corporate finance at Cleary Gull. Or, if a company needs $3 million to build a new plant, the fund will consider supplying it, Stolberg added.

Small-company executives often worry that venture capitalists will provide funding conditioned upon an exit strategy an agreement that the company will go public within a certain period of time. Stolberg said he was more concerned with good management and production systems than an exit strategy.

Prokupek declined to discuss how much money Cleary Gull has invested in the fund, but he said the firm had made a "seven figure" commitment.

Copyright 1995
Provided by ProQuest Information and Learning Company. All rights Reserved.