By ROGER BLOOM

   When a management-led group completed its $244 million deal to acquire Costa Mesa-based White Cap Industries Inc. March 10, the company became the fourth tnaior OC public company - after Irvine Apartment Communities, St. John Knits and Sunstone Hotel Investors -to be taken private by its managers or major shareholder since June.
And a fifth, Irvine-based BNC Mortgage Inc., is in the center of a bidding war between a management-led group and Greenlight Capital Inc., New York.
   Many in the investment community say the upsurge in such deals tocally mirrors a national trend. And the reason for the trend is directly related to the five OC firms' common denominator: none are tech companies.
   "These days, there's two kinds of companies, dot-coms and notcoms," said Fred Jager of Newport Beach-based Hunter Wise Financial Group LLC. "And if you're a not-com, even a highly profitable not-com, who cares?"
   Not Wall Street, say Jager and others. "If you're not favored, you're selling at low value," said George Bristol, an Ernst & Young LLC partner for global corporate. finance who specializes in merger and acquisition advisory work. "What do you do for shareholders when you're selling at a multiple of 10 or I t and    Internet companies are selling at 70?"
The easiest way to boost shareholder value, Bristol said, is to sell the company at a premium "and the most logical buyers are investment funds that sponsor management teams."
   Basically, said Jager, "a private investor will pay more than the public market will."
   In the White Cap deal, for instance, the $244 mullion sales price was 39°/, higher than the company's market cap on its final trading day.
   Rick Weiner, president of The Bush Firm, Irvine noted that a company whose share price is languishing is saddled with the dis advantages of being publicly-traded - pressure to sacrifice longterm planning for short-term gains, reporting demands and deadlines, the threat of shareholder suits - while not realizing its main benefit: liquidity for internal growth or acquisitions.
   "Maybe you're better off going with an LBO," Weiner said. "You take out the investors, realize value for the founding investors and are free to make long-term plans and moves."
   Peter Nolan, a partner in LA-based Leonard Green & Partners LP, which backed the White Cap managers with a $115 million investment, said that the OC firm's performance and position in its market were not appreciated by Wall Street, which had its shares priced at about half their 1997 IPO. Grosch began the take-back effort last year.
   "It has a great management team," Nolan said of the wholesale building-supply chain.
   "It's No. l in its market and construction materials is a half-trillion-dollar market. It's had great financial performance. They've increased their top line 40% and their bottom line 50% in the past four years. But the market didn't understand it."
   And, Nolan said, lining up financing for the deal was difficult because lenders, too, are enamored with the tech sectors at the expense of non-tech enterprises.

   "These companies can't get arrested," Nolan said.
His firm finally convinced some of its limited partners to help with the deal, he said.
   But Nolan said Leonard Green is primed to do more such deals. It has nearly $2 billion in funds and "we're looking for companies in the $150 million-to-$750 million range that the market just doesn't respect," he said, adding that the firm has two deals involving public companies in the works.
   Still, while going private may be an attractive proposition for companies with low PE ratios, it's not for everybody.
   For one thing, cautions E&Y's Bristol, since the company will have to incur debt to buy up shares, it needs to have a healthy and predictable cash flow attractive to lenders. Size and quality of assets also are factors for lenders, Bristol said.
   Weiner noted also that the debt incurred in what is basically a leveraged buyout restrains the use of cash and can jeopardize the operations of the company.
  Weiner said the matter comes down to "cash flow and what you can negotiate with the institutional investor."
   He also said going private can make it harder for a company to make acquisitions, because it will almost certainly have to offer cash rather than shares.
   Then there's the touchy conflict-of-interest issues raised by a management offer, especially when the managers also are directors.
   "It puts a big burden on the independent directors, " Jager said. And strike suits are almost de regueur in such cases. More intangibly, there's what Jager called "lender-vendor" issues. "It's a cultural transistion, " he said. "Companies have what I call 'stakeholders' - banks, employees, vendors - who need to be pacified."
   But the biggest downside risk, according to Jager, is what if you go public with a management offer and the transaction fails:' Either shareholders are in an up-roar, the board and management are at loggerheads, the company's been shown to be unable to attract lenders, or the market's valuation has been validated - or all of the above.
   'Then you're really in the tank," he said. On the other hand, if the deal is successful, stockholders get to sell their shares at a premiutn, the investor backing the deal gets a good company at a good price, and management gets a stake with a low cost basis that it can cash in with a subsequent IPO in a better market.
   It's for these reasons that Jager is an abashed fan of the strategy. "If a company's PE is less than about 6 or 6.5, it's probably worth more as a private company than as a public one," he said.
   And he's not.just talking about non-tech firms, either.
    "Fifty percent of Nasdaq companies do not have an analyst covering them," Jager noted.    "Nobody's making a market for them."
    And Jager said he has been talking to execs at six companies in the newly hot biomed sectors that are interested in making their firms private.
    "The companies are frantic for capital financing alternatives, "he said.
    And investors are willing to listen.
    "If you find any medical company with a market cap of six times EBITDA, you'll find someone out there interested, " lie said. "Investors are looking for bargains."