When G&K Services last week announced it would be acquired by rival Cintas Corp. for $2.2 billion, it was only the latest Minnesota-based public company to receive a $1 billion-plus takeover offer.
The deal will further thin the ranks of the Star Tribune 100 list of Minnesota’s largest public companies.
In March, Minneapolis-based Valspar Corp. announced it would be acquired by rival coatings manufacturer Sherwin-Williams for $11.3 billion. In April, St. Jude Medical announced it would be acquired by Abbott Laboratories for about $25 billion, one of the 10 largest U.S. deals this year.
Mairs & Power, the St. Paul-based investment advisory firm, runs the Mairs & Power Balanced, Growth and Small Cap mutual funds. It has long had success investing in Midwest public companies. Mairs is a yearslong holder of hundreds of thousands of shares in G&K, Valspar and St. Jude.
“It’s a little bit disappointing to lose another one of our locally based companies,” said Andy Adams, lead manager of the Small Cap fund and co-manager of the Growth.” But I don’t think you can say it’s not a shareholder-friendly deal.”
Adams credits G&K CEO Doug Milroy, who streamlined during lean-revenue years and brought profitability in line with G&K’s peer group. “He’s done a nice job cleaning up the company and then getting a nice price on the sale.” Adams said.
Meanwhile the Mairs & Power Small Cap fund has recently hit its five-year anniversary. It’s the younger sibling to the Mairs & Power Growth Fund established in 1959, and the Mairs and Power Balanced Fund (launched 1961). The Small Cap fund started in August 2011.
As of September the firm will close the Small Cap fund to new investors. The fund has enjoyed good performance and has experienced significant-but-manageable asset flows. The Growth and Balanced funds remain open to new investors.
Gopher Angels lauds investments in fledgling companies, partly due to state tax program
Gopher Angels, the Minnesota association of affluent investors, has crossed $11 million invested in “high-potential” start-up companies in the state since its inception four years ago. Gopher Angels also plans the first Midwest regional conference of the Angel Capital Association on Sept. 22. More information: www.angelcapitalassociation.org/midwest.
“Investment by our members, who include family offices, funds … as well as individual accredited investors, is critical in helping early stage companies hit those key milestones for more growth, more employees and more capital,” said David Russick, managing director of Gopher Angels. In 2016, Gopher Angels members made new or continuing investments in firms such as Oculogica, Preceptis Medical, Stemonix and Advanced Cooling Technologies; companies that investors hope will be the next Proto Labs, if not 3M.
Gopher Angel investors also serve on boards, advise on issues and talent and attract other investors.
The Minnesota angel investment tax credit also has proved a big break for investors in start-up companies, thanks to a 25 percent annual tax credit of up to $250,000 per family. A 2015 state report said the program created 579 jobs between its 2010 inception and 2014. That cost Minnesota taxpayers $60 million, or more than $100,000 per job.
The risk of wealthy investors is mitigated thanks to Minnesota taxpayers. The program is capped at about $15 million in tax credits annually and requires recipient companies to meet certain job-and-wage goals. Critics say good ideas will get funded, without subsidy.
Supporters say the program has economic benefits, keeps local ideas from being lured to other states that have similar incentives, and should be renewed by the 2017 legislature. Several dozen firms, including BiteSquad, Vidku and 75F were funded in 2015 by angel investors.
Neal St. Anthony
Finalists heading to September bake off
Minnesota Cup, which says it is the largest new-venture competition in the country, has announced 2016 division finalists who are competing for a share of $402,000 in prize money that will be awarded in September. A record 1,500 applicants entered this year’s competition, and these 25 division finalists were narrowed down through a summerlong selection process.
Cup review boards have named finalists in several divisions, including Energy/Clean Tech/Water: Activated Research, Arc Suppression Technologies and Verterra Energy; Food/Agriculture/Beverage: Bolton Bees, Far North Spirits and SelfEco Garden; High Tech: Sezzle, Token of Trust and Vugo; Life Science: Geneticure, Stemonix and Zift Medical.
Division winners will be chosen Sept. 1, each receiving $30,000 in capital, and the opportunity to compete for the grand prize of $50,000. The winner will be announced Sept. 22 at a ceremony at University of Minnesota’s McNamara Alumni Center. More information: http:www.mncup.org
Neal St. Anthony