Laidlaw Corp. Chemical Products Division

Laidlaw Corp., headquartered in Scottsdale, AZ, was a significant supplier of chemicals, paper products and wire garment hangers to the U.S. dry cleaning industry.

While operating in some fashion since 1917, Laidlaw's entry into chemical manufacture came in 1976 when it acquired the Wallerstein Division of Baxter-Travenol. It expanded its chemical operations the following year with the purchase of American Riverside, of St. Louis. By the 1990's, its Chemical Products Division was marketing approximately 60 different chemical products to the U.S. dry cleaning industry through a network of 200 distributors.

Despite ambitious growth plans, Laidlaw's penetration into the U.S. dry cleaning market had fallen short of expectations. It ranked fourth out of five major dry cleaning chemical marketers, and could claim U.S. market share of only 8%. Just five Laidlaw products accounted for nearly 40% of the company's total sales, and a similar proportion of total sales contributed by just five distributors.

The opportunity here was the fact that most of Laidlaw's chemicals were actually blended under contract by Adco, Inc., one of Mentor Partners portfolio companies. If Laidlaw's Chemical Products Division could be acquired at reasonable cost, it could contribute an additional 8% of market share with virtually no attendant marginal expense for manufacturing, marketing or sales.

As it turned out, Laidlaw was anxious to concentrate its attention on elements of its business that the company could grow faster than it had been able to grow chemical products.

After several months of negotiations, Mentor Partners and Adco Inc. acquired the business and marketing assets of Laidlaw Chemical Products; hired Laidlaw's senior chemical products sales head; and inherited the company's distributor network &emdash; all part of the plan to grow Adco by 25% and transform it overnight into the industry's largest player.