Paramax office plays key role in $395 million deal

By Tom Adams

The Rochester office of Paramax Corp. provided the jump start for this month’s $395 million sale of Buffalo based International Motion Control Inc. to ITT Corp. The transaction, the most lucrative corporate merger involving Paramax in its 15 year history, was agreed to in June. It closed Sept. 7. IMC will be folded into ITT’s Motion & Flow Control Division. ITT, whose headquarters are in White Plains, employs some 2,640 at its Space Systems Division on St. Paul Street. “The Rochester office was very instrumental in this,” Paramax founder and president Russell D’Alba said. “Without them, the project would never have taken light. “They played a pivotal role in creating a relationship with ITT Corp., identifying them as a buyer and creating a relationship with them where they felt comfortable enough to invest lots of time and effort in looking at International Motion Control.”

Paramax, an investment banking firm with 17 employees, consults with private and public companies on divestitures, mergers, acquisitions and solvency. Its headquarters are in the Buffalo suburb of Williamsville. “We do not have another investment banking competitor that’s our size and that specializes in divestiture only,” D’Alba said. “There are smaller groups that do a broader base of general investment banking services. But as far as specializing in sell-side (transactions), we’re it. And I think, outside of New York City, we’re probably it for the rest of the state.” In addition to Rochester, Paramax has satellite offices in Boston and Cary, N.C. Both were added within the last 12 months, D’Alba said. Paramax is thinking of adding an office in Florida.

The typical selling price for a Paramax project in Upstate New York ranges from $5 million to $100 million, he said. IMC was an exception. Working with international clients can bring sale prices as high as $500 million, D’Alba said. John Sorensen, Rochester based senior vice president and head of corporate development for Paramax, has known IMC chairman and CEO Patrick Lee for six years. “I have a territory that, for closely held companies, is roughly a 250 mile range from Rochester,” Sorensen said of his office, which employs three. “(IMC) was one of the preeminent companies in that territory.” IMC employs 1,000 in 11 manufacturing facilities world wide and 360 in Western New York. It develops motion control products such as specialty energy absorption, industrial and aviation control and automation technology.

The products are sold by Enidine Inc., CMC Industries Inc., the Burny Division of Cleveland Motion Controls Inc., Compact Automation Products LLC, and MidlandACS. “John introduced the CEO of International Motion Control to our group,” D’Alba said. “(IMC) then began to rely on Paramax for services, with the idea of ultimately selling their company.” The Rochester office pro vided various analyses, including a valuation of how much IMC was worth, for IMC board members to consider, D’Alba said. After the board approved the valuation, the Rochester office searched for buyers. “The Rochester office maintains relationships with at least 50 of the Fortune 500 companies,” D’Alba said. “The Rochester office began making contacts and having discussions with the large international buyers.” IMC settled on ITT, which supplies advanced technology products and services and reported $7.8 billion in 2006 sales. IMC re ported 2006 revenues of nearly $200 million. “Paramax was instrumental in helping to identify the right fit for IMC’s products and people,” Lee said in a statement announcing the closing of the deal.

The Paramax office in Rochester evolved from Capital Formation Group of Rochester L.P., founded in 1992. Paramax acquired CFG operations in 2005 from what is now DeltaPoint Capital Management LLC. Sorensen was a commercial banker prior to joining CFG. “There are two aspects of our company,” said Sorensen, who works out of DeltaPoint offices.