Builders TradeSource Corporation, A Specialty Contracting Holding Company Sponsored By SKM Growth Investors and Four Corners Capital Partners, Acquires Paradise Electric, Inc

Business Wire, Feb 8, 2005

SAN DIEGO & DALLAS -- Holding Company to Grow Organically and via Acquisitions of Residential Specialty Contractors in the Southwest

Builders TradeSource Corporation (BTSC), a holding company formed by SKM Growth Investors (SKMGI) and Four Corners Capital Partners (4CCP) for the purpose of acquiring and consolidating specialty trade services to large production homebuilders, has acquired Paradise Electric, Inc. (Paradise), a leading provider of electrical contracting services in Southern California.

This acquisition is the second SKMGI/4CCP-sponsored acquisition in the residential specialty contracting industry in less than two years. The first SKMGI/4CCP-sponsored acquisition, Schilling Corporation (Schilling), the leading installer of dry underground utilities for residential homebuilders in Southern California, was completed in May 2003. Schilling and Paradise will continue to operate under their own brands as operating subsidiaries of BTSC. By forming BTSC, the Schilling and Paradise management teams, supported by SKMGI/4CCP, have created one of the largest specialty contracting companies in Southern California. The companies will continue to be led by their current, seasoned management teams. Schilling was founded in 1986, and Paradise was founded in 1988.

"We expect Builders TradeSource to grow both organically, through market share gains of the Schilling and Paradise operating subsidiaries, and through selective acquisitions of additional best-in-class, large-scale trade service providers to production homebuilders in Southern California, Northern California, Nevada and Arizona," said SKMGI Managing Director Ellery Roberts. "The Southwest, more specifically California, continues to experience strong growth in residential construction, and we believe that Builders TradeSource has a unique opportunity to capitalize on the region's growth."

The opportunity for Builders TradeSource is significant not only because of the West's and Southwest's rapidly growing homebuilding markets, but also because large-production homebuilders now demand more sophistication from specialty contractors who supply goods and services. SKMGI and 4CCP believe that this confluence of events has begun to drive market-share consolidation among specialty contractors serving large, production-oriented residential developers. BTSC, through the consolidation of leading contractors, can continue to offer customers excellent service from established market leaders while offering more robust systems, reporting and the project management necessary to meet the increasing demands of sophisticated, production homebuilders.

"Like all of our transactions, the development of Builders TradeSource and the Paradise acquisition reflect SKMGI's core belief in strong relationships, and that the key to a company's long-term success is the quality of its leadership," Roberts said. "Schilling and Paradise are outstanding businesses in their own right, and we are optimistic about the future of Builders TradeSource not only because of market conditions but because business operators like Bob Turner and John Paradise have proven themselves to be leaders who have successfully managed rapid growth while always ensuring that their companies provide best-in-class service. Now they have even more size and scale with which to operate."

Builders TradeSource and its companies will continue to benefit from the significant and relevant industry experience provided by Don Jungerman, a partner at Four Corners Capital Partners, an SKMGI operating partner.

SKM Growth Investors (SKMGI) invests private-equity capital in U.S. middle-market growth companies providing value-added products and services with attractive returns on capital. Founded in 1999 as part of Saunders Karp & Megrue, SKMGI focuses on privately held growth companies generating between $3 million and $10 million in operating cash flow in a variety of basic industrial and consumer products industries. SKMGI typically invests $5 million to $15 million to sponsor recapitalizations, buyouts and growth capital investments in partnership with management of privately held companies in all regions of the United States. Please refer to www.skmgi.com for overviews of each of SKMGI's portfolio companies.

Founded in 1990, Saunders Karp & Megrue (SKM) manages more than $1.7 billion of committed private-equity capital dedicated to sponsoring investments in larger middle-market growth companies in partnership with management. During the last 10 years, SKM and its affiliates have successfully completed more than 30 platform investments and more than 50 related add-on acquisitions. With offices in Stamford, Conn., New York City, and Dallas, SKM and SKMGI are capable of providing a range of $5 million to $200 million of equity capital to middle-market growth companies in any region of the United States.

Four Corners Capital Partners was founded to provide "operating partner" capabilities to established private-equity firms. The principals take active board roles on each investment to ensure that the investment thesis is transformed into the portfolio company's operating plan. The founders of the firm have a unique background that combines hands-on operating skills with strategic consulting skills to assist middle-market companies achieve attractive returns.