Tapping investors for help

Think of it as an investment club for folks who are considerably better heeled than the Beardstown Ladies - not to mention a little more sophisticated about toting up their returns.

The investors that Eagle Ventures rounds up aren't fooling around with a few hundred shares of stock. They're buying whole companies

Nor are these investors just bringing money to the table, said Melvin Pirchesky, Eagle's president and founder.

" We're looking to tap their talents," he said.

Eagle's niche is finding small manufacturing companies that are up for sale, usually because their owners want to retire and have no children who want to take over.

Even owners who want to sell can be a finicky lot and don't want to sell to just anyone. In many cases, their companies have been their lives. "They know the names of their employees' spouses," said Pirchesky. "Selling is the equivalent of marrying off your child.

" Often a seller can find someone who has the money to buy a company or someone with the experience to run it, but rarely both."

That's where Eagle's strategy of finding the right investors comes into play. About 25 executives with careers in manufacturing comprise its regular pool.

Not all of the investors put money in every deal. Rather; Eagle assembles small groups. The companies they take over have revenues ranging from $3 million to $10 million a year. As founder and head of Eagle, Pirchesky, a former Big Eight accounting firm partner; coordinates the takeovers.

Eagle's investors include some heavy hitters former Alcoa President, C. Fred Fetterolf, for example; Armco Inc.'s chief executive, James Will and Respironics Inc. founder, Gerald McGinnis.

Among the companies Eagle has brought under new ownership are Allegheny Container; a Harmarville maker of corrugated boxes; Dawar Technologies, a Pittsburgh manufacturer of electronic touch pads, similar to the controls found on most microwave ovens, and Pyramid Operating Systems, a Greenville-based maker of equipment for fiberglass manufacturing.

Eagle has also put venture capital into Cardiac Telcom Corp., a Turtle Creek company that recently received Food & Drug Administration approval to market a heart monitor that it developed for home use.

Eagle last year sold the first company that it acquired, Schultz Mechanical Wire Co., based in Ashtabula, Ohio, to its managers. After holding it for seven years, investors came away with a 19 percent compounded annual return, Pirchesky said.

The company makes springs for use in products ranging from flashlights to automated teller machines.

When an Eagle investment group acquired it, it was operating in a building that once housed a gasoline station and service garage. "During the time we owned it, we built a new facility and installed $1.5 million worth of new equipment," Pirchesky said. "Our modus operandi is not to run these companies [indefinitely] but to take to them to the next level."

Pirchesky said Eagle targets com- panies that can potentially increase their revenues by 15 percent a year or more.
And that doesn't necessarily mean young companies - just ones that can benefit from new ideas and new capital.

Dawar; for example, is a century old.

Founded as Davis & Ward Co., a commercial printing and typesetting firm, it evolved into printing polycarbonate film overlays for electronic touch pads by the mid-1970s.

By 1994, Dawar began making the entire membrane switch by applying conductive ink underneath the overlays to activate the electronic controls that make the touch pads work.

Dawar's touch pads are used in a variety of products, including medical devices.
Dawar President Jim Ocskay; who has been with the company for 15 years, said having contact with the investors that Eagle brought in is akin to being able to tap a high-priced consultant for advice without getting a bill.

" It's been quite helpful. We didn't have that kind of exposure before."