In an industry where quality, customer service, and reliability are non-negotiable, the “business as usual” model of private equity—often driven by short-term financial targets and a predetermined exit timeline—can create significant vulnerabilities. This case study examines how Arcamed, a leader in medical device manufacturing, leverages a unique investment partnership with Heron Capital, a Patient Capital firm with no exit clock, to build long-term value and create a durable competitive advantage, defying the conventional wisdom of the private equity landscape.

The Challenge: Escaping the Short-Term Trap

Heron Capital’s partnership with Arcamed offers a distinct advantage over traditional private equity models. Unlike firms whose decisions are driven by their fund’s life cycle, Heron’s Patient Capital approach focuses on long-term growth. This provides Arcamed with the stability to invest in innovation and expand operations without the pressure of optimizing short-term margins (that dictate the sale price a private equity firm gets upon exit). Heron’s commitment to the company’s future helps strengthen its market position and avoid the typical pitfalls of a short-term investment strategy.

The Pitfalls of Short-Term Private Equity

Traditional private equity’s focus on a pre-determined exit landscape and short-term margin enhancement often leads to a cycle of decisions that do not prioritize the long-term health of the customer relationships. These include:

• Cost-Cutting over Capacity Building: Investments in essential areas like technology, intelligent scheduling, advanced robotics, sophisticated automation, artificial intelligence, workforce development, and most other higher-priced and longer ROI investments are often deferred in favor of

immediate cost reductions and a short-term margin lift.

• A Retreat in Downturns: Economic volatility can lead to private equity-owned layoffs and facility closures, sacrificing long-term capabilities for short-term financial stability and cash retention.

• An Expendable Culture: Employee morale and talent retention are often deprioritized by private equity as companies are measured on quarterly financial targets.

This model, while profitable for some, is fundamentally misaligned with the demands of the medical device industry. In this sector, validated processes, employee expertise, and a resilient supply chain are critical to ensuring that the OEM can expand timely and with integrity.

The Solution: A Partner with Patient Capital

Heron Capital’s investment in Arcamed was not a private equity investment. Instead, Heron facilitated the Patient Capital investment from its partners. In other words, business executives with deep expertise, acumen, and experience invested their own money to start and grow a

fantastic company for the long term. The founding of Arcamed was not just a financial transaction; it is the start of a paradigm shift. Heron operates on a philosophy of “capital with no exit clock.” In fact, Heron prefers to buy and hold. This is “The Heron Way.”

This new model is built on three core pillars:

1.Generational Growth Focus: Instead of cost-cutting, Heron facilitates the provision of capital to execute on a thoughtful growth strategy focused on long term success. This includes expanding capacity, upgrading technology, and doubling down on key investments even during economic downturns, such as in 2024. Because there is no exit timeline, decisions are made with decades—not quarters—in mind.

2.Hands-On Partnership: Heron Capital works directly with Arcamed’s management, acting as a true partner. This collaboration focuses on solving complex problems, securing critical resources, and implementing a clear, long-term strategic plan to build enduring capabilities.

3.Culture as a Competitive Advantage: A key difference is Heron’s belief that a strong culture is a source of competitive advantage. Arcamed’s leaders feel empowered to build a workplace where talented people want to stay and grow, leading to higher morale, lower turnover, and a dedicated, productive workforce focused on exceeding the expectations of Arcamed’s customers.

The Results: A Resilient, Enduring Business

The results of this partnership prove that “The Heron Way” is not just a philosophy—it’s a superior business model.

This philosophy is the opposite of “business as usual” in private equity. By providing Patient Capital that prioritizes long-term strategic thinking, customer relationships, and employee culture over this quarter’s margins, Arcamed has not only secured its future but also established a new standard for excellence in the medical manufacturing industry. Arcamed’s customers can take great confidence in the assurance that Arcamed will be a reliable partner for years – in fact decades – to come.

PATIENT CAPITAL AND A HANDS-ON APPROACH HAS ESTABLISHED A NEW STANDARD