Kinderhook Industries has sold a majority stake in Tectum Holdings (THI), a manufacturer of pickup truck accessories, to TA Associates. Kinderhook will maintain a significant minority interest in THI and will continue to participate on the company’s board of directors.
THI has been a portfolio company of Kinderhook’s since 2007 and the sale, including prior distributions and Kinderhook’s minority interest, equates to an aggregate return in excess of $300 million for Kinderhook Capital Fund II, LP which represents approximately 23x Kinderhook’s invested capital.
Tectum is a manufacturer of branded light duty truck tonneau covers, bedliners and accessories. Designed for security and cargo protection, the covers are available in a variety of soft and rigid materials such as vinyl, plastic and metal, and numerous styles, including retractable, folding, roll-up and snap-on units. The company also manufactures cushioned and carpeted protective liners for truck beds. THI products are sold through independent retailers such as truck accessory stores, new and used vehicle dealerships and e-commerce websites. Company owned brands include Extang (www.extang.com), Truxedo (www.truxedo.com), Undercover Advantage (www.undercoverinfo.com), Retrax (www.retrax.com), BedRug (www.bedrug.com) and BAK Industries (bakindustries.com). THI operates manufacturing facilities in California, Michigan, Missouri, North Dakota, South Dakota and Tennessee. The company is headquartered near Detroit in Ann Arbor, MI (www.thicorp.com).
“We are appreciative of the partnership we have had with CEO Bill Reminder, COO Kelly Kniefl and the entire THI family,” said Tom Tuttle, Managing Director at Kinderhook. “Bill and his team have done an amazing job over the past seven years executing on our original strategy of investing in new products, implementing continuous improvement in operations to enhance margins and acquiring complementary brands. To that end, since partnering with Kinderhook, THI has grown revenue by over 600%, completed seven acquisitions and more than doubled EBITDA margins. THI exemplifies Kinderhook’s investment strategy of partnering with strong management teams and executing a buy-and-build strategy to build dominant market share leaders.”
Kinderhook Industries makes control investments in companies with transaction values of $25 million to $150 million in which the firm can achieve financial, operational and growth improvements. The firm pursues private equity investments in non-core divisions of public companies, management buyouts of entrepreneurial-owned businesses, troubled situations and existing small capitalization companies lacking institutional support. Kinderhook was founded in 2003 and has $770 million of committed capital. The firm is based in New York (www.kinderhook.com).
“THI is a prime example of how manufacturing in America can thrive with the right leadership, strategic vision and capital investment. Kinderhook and THI set out with a clear vision that focused on an aggressive organic and acquisition growth strategy which management has executed upon to become the market leader in the truck accessories industry,” said Paul Cifelli, Managing Director at Kinderhook. “THI is an exceptional company with strong brand equity and tremendous opportunities for growth. Kinderhook is very excited to maintain a significant minority investment in THI and expects the company to continue to flourish under the control of TA Associates.”
Financing for this transaction was provided by the Senior Secured Loan Program which is jointly managed by Ares Capital Corporation and GE Capital. Robert W. Baird & Co. served as financial adviser to Kinderhook and THI.
“Kinderhook has been an outstanding partner over the last seven years. Through our partnership with Kinderhook, we were able to create enormous value as we collaborated on strategy, growth and vision,” said Bill Reminder, CEO of THI. “With Kinderhook’s strategic guidance and support, we successfully completed and integrated seven acquisitions as well as introduced over a dozen new products. Kinderhook’s continued involvement paired with our new ownership group, our strong competitive position and our operational capabilities will continue to enhance our growth prospects and provide for an exciting future for THI, our employees, our customers and our suppliers.”
2014 PEPD • Private Equity’s Leading News Magazine • 7-29-14
