Case Study

Entrepreneur Owner-Manager: Founder

Rapid Manufacturing Group acquired by Proto Labs

RAPID is a high-tech digital manufacturer known for supplying custom parts requiredin quick-turn sheet metal fabrication and CNC machining. It is the world’s largest prototype sheet metal manufacturer. RAPID was founded in 2001 on the idea of using automation to provide custom sheet metal parts faster than traditional methods.

Bigelow Assignment

RAPID’s Founder (and majority shareholder) was evaluating his ownership and role with the Company; with his sights set on other entrepreneurial and eco-conscious interests. RAPID had recently experienced significant revenue growth and required future investment to maintain its competitive position. With Bigelow’s coaching, the Founder promoted certain members of senior management, removing himself from the day-to-day operations and making possible a transition away from the Company upon a transaction. It was essential to find an investor who would support the management team and the future growth opportunities they wanted to pursue.

Unique Challenges

Throughout its history, RAPID focused on developing intellectual property related to unique manufacturing processes. RAPID’s IP gave them a distinct competitive advantage in an industry accustomed to more traditional manufacturing techniques. Prospective investors would be keen to understand the value of RAPID’s IP, but there was significant risk in exposing the IP in an uncontrolled manner. Would prospective investors see great value in the IP portfolio?

RAPID had been approached by both strategic and financial investors attracted by its growth story and unique IP. Could Bigelow help manage the existing conversations while ensuring that the ownership group would realize fair market value in a sale transaction?

Outcome

One company that approached RAPID was Maple Plain, MN-based Proto Labs (NYSE: PRLB), the largest digital manufacturer in the US. RAPID and Proto saw great potential synergies between the two companies, along with a strong cultural fit. As a result, Bigelow allowed Proto Labs the opportunity to make a preemptive offer which, if compelling enough, would allow RAPID to forego a larger process and proceed quickly to due diligence and final negotiations.

Proto Labs was primarily focused on CNC machining, plastic molding, and 3D printing. RAPID offered Proto the chance to dramatically increase their CNC business plus add sheet metal as a new capability within their service suite. Access to Proto’s customer base provided significant additional sales opportunity for RAPID. It was a natural fit.

The preemptive strategy was ultimately successful and a transaction with Proto Labs was consummated which allowed RAPID’s Founder and majority shareholder to pursue his several start-up interests outside of RAPID. The existing professional management team will continue to run the day-to-day operations, and Proto Labs will provide RAPID with access to capital for growth investments and management expertise for strategic initiatives.

“We couldn’t have done it without Bigelow. The breadth and experience of the Bigelow team was indispensable—if we didn’t have your skill set, I don’t think the deal would have gotten done. Thank you for keeping us sane.”

Jay Jacobs, Founder & CEO
Rapid Manufacturing Group

“Without your coaching and guidance, this deal would never have happened. What a great fit with Proto Labs!”

Tom Pursch, Chief Operating Officer
Rapid Manufacturing Group