Case Study: Talon Innovations

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Talon manufactures high-precision machined parts primarily for the semiconductor industry and other buyers with stringent technical requirements. It has particular expertise in gas and fluid delivery systems, which are crucial to semiconductor manufacturing. The company is vertically integrated to provide design, machining, welding and assembly. Over the course of Graycliff’s ownership, the company’s EBITDA grew 10x on an organic basis. We exited our investment when the company sold to Ichor Systems in 2017.

Headquarters
Sauk Rapids, MN

Industry
Industrials

Investment Date
September 2013

Status
Realized


Transaction Dynamics

Talon was a family-owned business that was looking for a buyer after the tragic loss of its founder. In addition to operating in an industry with relentless EBITDA pressure, the company’s revenues were highly concentrated in one customer. Graycliff saw the buyout as an attractive opportunity given the trends in semiconductors paired with Talon’s valuation and highly motivated sellers. We also recognized excellent leadership in its CEO and supported his vision for a turnaround.


Investment Thesis

  • Leading niche manufacturer with a highly sticky customer base

  • Talented leadership with a solid turnaround plan and further support from a Graycliff operating partner

  • Positive long-term macro industry trends as a tailwind

  • Entry at an attractive multiple, at the perceived bottom of the semiconductor cycle


Graycliff Value Enhancement

  • Helped Talon to develop and execute on a 5-year plan

  • Provided capital to support capacity expansion, including the add-on acquisition of Vulcan Machine, which also diversified Talon’s end-markets and customer base

  • Built out a world-class management team, including a CFO and VP of Sales

  • Helped the company to establish a Korea presence to better serve customers

  • Leveraged Graycliff’s operating partner to strengthen customer relationships and provide strategic guidance


We leveraged each other’s strengths. They let us run the company with our expertise, and we leveraged their banking relationships, financial acumen, and ability to connect me with other CEOs at their other portfolio companies for best practices discussions.
— Greg Olson / Chief Development Officer / Ichor Systems