Don’t wish to be too Toronto-centric, but in certain parts of this city it seems that their products – which allow users to carry their gear in equipment attached to their cars — are everywhere. Especially so, when the driver is on vacation and hauling a boat, transporting bicycles, lugging skis or with a luggage box on top.

Those pieces of equipment carry the label of Rack Attack, a Canadian company that started in Vancouver more than two decades ago and which has since expanded to three cities in and around Toronto and to six cities in the U.S.

The company – which doesn’t manufacture its own products but rather installs racks and hitches made by others onto cars – is in the news because it is the latest investment by private equity firm, Banyan Capital Partners, a unit of Connor Clark & Lunn Financial Group (CC&L).

Terms were not disclosed but Banyan is acquiring majority control from the 55-year-old founder Chris Sandy who is about to put Freedom 55 into action and bow out. It’s understood that Rack Attack – whose key suppliers are outdoors equipment suppliers Thule Group and Yakima Products Inc. — generates annual revenue of about $20 million.

So why buy control?

Jeff Wigle, a managing director at Banyan, said the business is resilient, with “growth every year” that has occurred across different economic cycles and different geographical areas, “which is appealing to us.”

The demographics of the customers of what is a premium product are also “quite attractive. We see a very niche retailer that is underdeveloped.”

“The service offering has been proven out,” he said adding installation of the equipment is a key part of that offering.

Wigle, who had a connection to a colleague of Sandy and who received a phone call last spring from the founder, said the sale occurred when Sandy decided to leave and invite in a new partner, who will now grow the business in various cities in North America with the existing management team.

“There is a number of locations that are underserved from a rack specialty retailer perspective. Our vision is to come in, help the management team prepare for expansion and to open a number of new stores and in-fill where we have stores but think there could be (more growth.)”

In Canada, Wigle mentioned Montreal and Calgary, two markets it could enter through an acquisition. In the U.S. —Rack Attack already has stores in Boston, Denver, Portland and Minneapolis — growth will mostly likely occur in cities on the Pacific and Atlantic oceans.

As a result of Banyan’s investment, four of Rack Attack’s management team are now shareholders. Graeme Paterson, the new president, said expansion, when it comes will not be through franchising. In this way, he said “we get to control what goes into the stores, the service, the culture and the offerings we have.”

As a private equity firm, Banyan is a little different from the norm. For starters it doesn’t raise capital from external investors and run a fund with term limits. Instead it sources an investment, funds it with capital from CC&L and then offers the investment opportunity to CC&L’s high net worth clients.

The main difference is that it doesn’t plan to, or is not required to, sell the investments by a certain date. Instead its runs the business on the ‘forever principle,’ a rule it has adhered to given that it has only made one sale: its investment in Party Packagers was acquired by Party City, a U.S. company that wanted to expand into Canada. Banyan’s web site lists five other investments that it still owns.

Financial Post