While many investors continue to ignore "traditional" U.S. manufacturers having only small- or medium-market capitalization, others see remarkable opportunities for productive and profitable growth among the metal benders, fastener makers, auto-parts producers, specialty-chemical companies, basic food processors, and kitchen cabinetmakers. Within a month, for example, a buyout firm headed by former Reagan Administration budget director and Michigan congressman David A. Stockman expects to record its first closing. Heartland Industrial Partners is gambling that private equity can be profitably used to selectively acquire manufacturing firms in the Midwest and grow their scale and earnings. Heartland is focusing on small- and medium-cap companies in such industrial sectors as auto components, chemicals, and metal forming and bending. It plans to string them together, invest internally in new plants, products, and information technology, and over five years build firms that it can then take public and that will command reasonable valuation multiples. For about a month, Corpfin.com, an Atlanta-based Internet company, has been registering small-cap manufacturers, other public companies, and potential investors. Its goal: to make completing a private placement quick, competitive, international, and secure by providing tools that significantly reduce the time, effort, and cost of private equity transactions. In practice this means that the CFO or CEO of a $100 million medical-products company seeking to raise $10 million in capital could obtain a closely matched list of interested investors "within the snap of a finger," asserts Gregory Miller, Corpfin's COO. Then it's up to the CFO to speak with investors (either online or off), negotiate terms, and come up with a term sheet that makes the most sense. "And for that . . . it's only a 4% fee-as opposed to the traditional 7% to 11%," says Miller. Meanwhile, 10-year-old Pfingsten Partners LLC, Deerfield, Ill., continues to invest in low- to medium-tech manufacturers -- the food processors, metals companies, specialty-chemicals producers, and auto-parts firms of the Midwest and Middle Atlantic regions. Pfingsten, a private equity fund that counts more than a dozen former senior corporate executives as limited partners, furnishes capital and management expertise to companies in fragmented industries. And, in return, it requires controlling interest. Typically "one of the first things we do is address all forms of information technology: phone systems, PC LANs, the mainframe, data warehousing," explains Richard W. Manning, a Pfingsten partner and managing director. Next, Pfingsten gets involved in rationalizing the layout. "If you've had eight additions to your building [over 20 to 30 years], probably you don't have the most efficient building anymore," observes Manning. "You have to make a relatively significant investment to . . . get rid of the old facility, get a new facility, and just redo the entire manufacturing or distribution process." And Pfingsten works to improve the management process. "We come in and pull the team together and introduce the concept that if you're in sales, you have to understand the impact on manufacturing -- and if you're in manufacturing, you have to understand how your decisions impact sales, finance, etc.," says Manning. The strategy of improving IT, the deployment of fixed assets, and management style is being applied to Norcraft Cos. Inc., a Minneapolis-based kitchen and bathroom cabinetmaker that Pfingsten acquired in June 1998. Having renamed the company Norcraft Cos. LLC, Pfingsten's stated objective was to double or triple its sales within five years. In 1997 sales were more than $84 million. They're now above $100 million, relates Thomas S. Bagley, a Pfingsten partner and senior managing director. What's more, the estimated $6.5 billion industry "is on a pretty good growth curve right now, and there also exists the possibility for us to grow fairly rapidly through add-on acquisitions," he says.