TVV Capital Hits 12x Return on Latest Sale

TVV Capital has sold Big 3 Precision Products to The Eastern Company for $81.7 million.

Big 3 operates through two divisions. The molding division designs and manufactures blow mold tooling that is used in the pharmaceutical and personal care products industries to produce bottles, jars and other containers.

The company’s other division is a designer and manufacturer of container and racking products including packaging and shipping trays; steel racking; specialty pallets; and dunnage trays. The company’s products are used in the aerospace, truck, automotive, plastic, glass, fiberglass, and military sectors. Big 3, led by President Todd Riley, has seven manufacturing facilities in Illinois, Massachusetts, New Jersey, Missouri, and Michigan, and is headquartered 75 miles east of St. Louis in Centralia, IL.

For the 12 months ended June 30, 2019, Big 3 had revenues of $72 million and an adjusted EBITDA of $13.4 million. TVV acquired Big 3 in October 2012 through its third fund and at that time the company’s revenue was $28 million with an adjusted EBITDA of $5.5 million. During its hold period, TVV assisted the company with the construction of a new 87,000-square-foot facility in Detroit and completed three add-on acquisitions. The company’s sales have grown by double digits in each of the last five years.

With a valuation multiple of just over 6x adjusted EBITDA, the sale of Big 3 to Eastern generated a 12x return on invested capital for TVV. The senior management team of Big 3 owned over 16% of the equity of the company.

“We are pleased to have worked closely with TVV to position Big 3 over the past seven years for this milestone,” said Alan Scheidt, Big 3’s former CEO and senior advisor. “TVV was a trusted partner for management, able to guide us on the growth path that has led to this acquisition. The firm’s strong focus on operational improvement allowed us to increase our market share, grow revenue and EBITDA and expand internationally. We set out seven years ago with certain objectives in mind, and we nailed every one of them.  TVV took care of everyone involved.”

“When TVV acquired Big 3 in 2012, we immediately understood that its strong asset base, its ability to generate cash flow and its diversified revenue stream were real strengths that would allow the company to continue on its growth trajectory,” said Andrew Byrd, the president of TVV. “The company’s outstanding management team worked hand in hand with us to pursue successfully our growth strategy. We wish the company all our best for its next chapter under the new ownership.”

TVV is a lower middle-market buyout firm focused on acquiring market-leading niche companies across a range of industries.  The firm targets companies with enterprise values from $10 million to $100 million, revenues from $10 million to $150 million, and EBITDA margins of at least 10%. TVV was founded in 1997 and is headquartered in Nashville (www.tvvcapital.com).

“In acquiring Big 3 Precision, we are adding a substantial new growth business and moving Eastern closer to our long-term goal of generating $100 million in EBITDA. This transaction – our third acquisition in three years – represents another step toward our ambition of building a larger company that has a strong presence with key customers in key markets,” said August Vlak, president and CEO of Eastern.

The Eastern Company (NASDAQ: EML) is a 161-year-old manufacturer of components and products including industrial hardware, security products and metal castings that are used in heavy and medium trucks, consumer packaged goods, mining, commercial laundry, electronics, and military applications. The company, headquartered in Naugatuck, CT, operates from 18 locations in the US, Canada, Mexico, the UK, Taiwan and China.

Stout was the financial advisor to TVV on this transaction. Stout is a Chicago-headquartered advisory and consulting firm specializing in investment banking, valuation advisory, dispute consulting, and management consulting.

© 2019 Private Equity Professional | September 9, 2019

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