Kinderhook Industries has agreed to sell SCA Performance (SCA), an OEM authorized specialty vehicle manufacturer, to publicly traded Fox Factory for $328 million. Kinderhook acquired SCA in April 2018 in partnership with the founding McSweeney family.
SCA is a provider of vehicle upgrades for specialty light-duty trucks. The company’s upgrades include wheels, tires, bumpers, lighting, suspensions, fenders, badging, side steps, running boards, and exhaust systems. SCA receives new vehicles directly from original equipment manufacturers (including Chevrolet, Ford, GMC, Jeep, and Dodge), adds its specialty packages and then sells the up-fitted vehicles to new truck dealers with a full OEM warranty.
The company operates under three aftermarket brands – SCA Performance, Rocky Ridge Trucks, and Rocky Mountain Truckworks. Since its founding in 1979, SCA has produced over 120,000 custom vehicles. The company, led by CEO Michael McSweeney, is headquartered northeast of Birmingham in Trussville, Alabama with additional facilities in Fort Collins, Colorado (Rocky Mountain Truckworks which was acquired in March 2019) and Franklin Springs, Georgia (Rocky Ridge Trucks).
“This is an outstanding outcome for Kinderhook, SCA and its employees,” said Tom Tuttle, a managing director at Kinderhook. “The SCA team, led by Michael and Matt McSweeney, executed on an aggressive organic and acquisition-led growth strategy since Kinderhook acquired SCA in April 2018. We are very proud of the SCA team’s accomplishments and expect the company to continue its track record of success as part of Fox. Our investment in SCA highlights the key tenets of Kinderhook’s investment strategy – partnering with world-class management teams to create leading niche market companies.”
Fox’s buy of SCA is expected to close by the end of March 2020. According to Fox, for the balance of FY 2020 (nine months), SCA will have from $83 million to $89 million of revenue and $22 million to $24 million of adjusted EBITDA. Annualizing these nine-month projections results in revenues of $111 million to $119 million and adjusted EBITDA of $29 million to $32 million. Based on a purchase price of $341 million (including $13 million of post-closing performance-based contingent payments) the forward-looking adjusted EBITDA valuation multiple is from 10.6x to 11.7x.
Headquartered near San Jose in Scotts Valley, California, Fox Factory (NASDAQ: FOXF) designs and manufactures performance products primarily for bicycles, on-road and off-road vehicles and trucks, side-by-side vehicles, all-terrain vehicles, snowmobiles, specialty vehicles, and motorcycles. The company is a direct supplier to power vehicle OEMs, supplies bicycle OEMs and their contract manufacturers, and provides aftermarket products to retailers and distributors.
“We are excited to announce the acquisition of SCA, and believe it presents a substantial opportunity for Fox to further expand its performance-defining aftermarket solutions and continue to drive growth in our Powered Vehicles Group,” said Mike Dennison, Fox’s chief executive officer. “We look forward to further accelerating our already significant presence in the growing specialty vehicle manufacturing market. We welcome the experienced SCA leadership team and believe they will play an integral part in our company’s growth going forward.”
New York City-based Kinderhook 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 makes investments in non-core divisions of public companies, management buyouts of entrepreneurial-owned businesses, troubled situations, and existing small-capitalization companies lacking institutional support. Sectors of interest include healthcare services; environmental and business services; and automotive and light manufacturing.
Last month, Kinderhook held a final closing of its sixth fund, Kinderhook Capital Fund VI LP (along with a parallel fund, together “Fund VI”), at its hard cap with $1 billion of limited partner commitments. Fund VI was oversubscribed and is the largest fund ever raised by Kinderhook. Also last month, Kinderhook sold Stratus Video, a Florida-based provider of video, over-the-phone, and in-person interpretation services used in the healthcare industry, to publicly traded AMN Healthcare Services for $475 million, a purchase price equal to 14x adjusted EBITDA.
Fox Factory will finance the buy of SCA under an expanded, syndicated credit facility led by Bank of America. Jefferies was the financial advisor to Fox Factory on this transaction.
© 2020 Private Equity Professional | February 14, 2020
Entrepreneurial Equity Partners (E2P) has acquired Kronos Foods, a manufacturer and distributor of Mediterranean food products, from Grey Mountain Partners which acquired the company in September 2016 from Prospect Partners.
Chicago-based 
Windjammer Capital Investors has acquired Compex Legal Services, a provider of outsourced legal services, from Mehta Family Partners.
“Compex has a deep understanding of its customers’ needs which is reflected in its investment in technology, consistently high levels of customer service, and long-tenured customers. The company is a great fit for Windjammer and its strategy of investing in niche market leaders with mission-critical products and services,” said Jeff Miehe, a managing principal at Windjammer. “We look forward to working closely with the Compex team to capitalize on its multiple growth opportunities.”
“Several years ago, we identified Compex as an established market leader in an attractive niche within the outsourced litigation support services space. We are thrilled to partner with the management team to execute on its next phase of growth,” said Ryan Pertz, a principal at Windjammer. “The company’s national scale and recent implementation of its next-generation workflow technology make Compex attractively positioned for growth, both organically and through acquisition.”
Westhook Capital has acquired Santa Rita Landscaping, a provider of residential and commercial landscaping services.
With the close of the transaction, Santa Rita will continue to be run by CEO Tanner Spross and CFO Kathi Roche, in partnership with Westhook.
“We are excited to partner with the Santa Rita team and look forward to supporting the company’s next phase of growth,” said Wes Knuth, a partner at Westhook.
Westhook is an active investor in the landscaping sector. In September 2018, the firm acquired 
Investcorp has closed its buy of Fortune International, a specialty distributor of seafood and gourmet food products.
“Specialty foodservice distribution in the United States is a highly fragmented, resilient and a growing $40 billion market,” said Dave Tayeh, the head of North American private equity at Investcorp. “We believe that Fortune is well-positioned to capture significant share with its unique platform as a scaled, specialty seafood enterprise delivering superior product quality and service across a wide breadth of products. We have a long history of partnering with founder-led businesses, and we look forward to working with Sean and his talented team over the coming years.”
Investcorp
Incline Equity Partners has acquired ASP Global, an Atlanta-based distributor of healthcare supplies.
“ASP serves an important niche by providing a tailored product offering to a marketplace accustomed to a limited set of alternatives,” said Tom Ritchie, a partner at Incline. “The company has experienced tremendous growth supported by an exceptional value proposition in a recession-resistant end market, and we are thrilled to be able to work with Lorne and his team moving forward.”
Pittsburgh-based Incline Equity Partners was formed in 2011 and is led by its senior partners, Jack Glover, Justin Bertram and Leon Rubinov.
Angelo, Gordon & Co. has held a final close of AG Credit Solutions Fund LP (AGCS) with $1.8 billion of capital commitments.
“Distressed and special situations credit has been a core expertise of Angelo Gordon since its founding over 30 years ago,” said Josh Baumgarten, co-CIO and head of credit at Angelo Gordon. “The successful fundraising of the Credit Solutions Fund is confirmation of the platform’s leadership position in both the United States and Europe, and investors’ conviction in our ability to execute this all-markets investment strategy.”
“We are grateful for the strong support from both longstanding clients and new investors to the firm,” said Ryan Mollett, Angelo Gordon’s global head of distressed and corporate special situations and the portfolio manager of the AGCS. “Our solutions-based, partnership approach is differentiated, and we are committed to using our capital, creativity and scale to help companies and drive performance for our investors.”
P&M Corporate Finance (PMCF) has promoted Bryan Hughes to managing director. Mr. Hughes leads the firm’s medical technology investment banking team and co-leads its broader healthcare team.
PMCF is a middle-market investment bank providing merger and acquisition advisory services to private, public, and private equity-owned companies. The firm’s services include buy and sell-side advisory, capital raising, and strategic advisory. PMCF has dedicated teams providing services to the healthcare, medical technology, diversified industrials, plastics and packaging, business and technology services, and consumer and retail industries.