Archives for 2020

Audax Bests 9x on Sale of CURT Group

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Audax Private Equity has sold CURT Group, a manufacturer and distributor of towing equipment for cars and trucks, to Lippert Components, a subsidiary of publicly traded LCI Industries. The purchase price for CURT was $340 million and the EBITDA valuation multiple for this transaction appears below.

CURT is a designer, manufacturer, marketer and distributor of towing equipment and other vehicle accessory products including hitches, towing electricals, ball mounts, and cargo management systems.

Company-owned brand names include CURT, Aries, Luverne, Retrac, and UWS. CURT’s products are sold through installer, distributor, e-commerce, retail, and auto dealer channels. For the 12-month period through September 2019, CURT had revenues of approximately $255 million and an adjusted EBITDA of $35 million. This calculates to a 9.7x valuation multiple.

Eau Claire, Wisconsin-based CURT, led by CEO Rock Lambert, has more than 1,000 employees worldwide, with manufacturing plants in Wisconsin, South Dakota and Florida, and 11 regional warehouses across the United States and Canada.

Audax acquired CURT in March 2014 from Pfingsten Partners. During its ownership term, Audax completed six add-on acquisitions which grew its towing accessories business and expanded the company into aftermarket truck accessories. The largest of the six add-ons included Aries Automotive, a Torrance, California-based designer, manufacturer and distributor of aftermarket truck accessories (acquired in June 2014); United Welding Services (UWS), a Perry, Florida-based manufacturer of truck toolboxes and other truck accessories (March 2016); ProTek (a wholly-owned subsidiary of UWS), a Philippines-based manufacturer of truck toolboxes and other truck accessories (March 2016); and Luverne Truck Equipment, a Brandon, South Dakota-based manufacturer of truck accessories including front-end protection, side steps, splash guards, and mirrors (February 2016).

“We are incredibly proud to have partnered with Rock Lambert and the CURT team,” said Jay Mitchell, a managing director at Audax. “Through organic and acquisition growth the company has expanded its product portfolio and manufacturing capabilities while diversifying the business into a broader aftermarket towing and truck accessories provider.”

Audax invests in middle-market companies that have from $8 million to $50 million in EBITDA and enterprise values of $50 million to $400 million. Sectors of interest include business and consumer services; energy; healthcare; technology, media and telecom; and industrials including chemicals, infrastructure, and building materials. Audax is currently investing out of its $3.5 billion, sixth private equity fund. The firm has offices in Boston, New York, and San Francisco.

LCI Industries (NYSE: LCII) manufactures components used by original equipment manufacturers of recreational vehicles, buses, trailers, trucks, trains, and modular housing. LCI’s products include steel chassis; axles and suspensions; thermoformed bath and kitchen products; vinyl, aluminum, and frameless windows; stabilizer and leveling systems; entry and patio doors; towing products and truck accessories; and electronic components. The Elkhart, Indiana-based company was founded in 1962 and has 85 manufacturing and distribution facilities located throughout North America and Europe.

LCI funded the purchase price of CURT through a combination of available cash, borrowings under its revolving credit facility, and an incremental term loan of $300 million under an existing credit agreement.

© 2020 Private Equity Professional | January 6, 2020

Crestview Hits Big Number on Latest Exit

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Crestview Partners has closed the April 2019 announced sale of JR Automation Technologies to Hitachi for $1.4 billion. Crestview’s return multiple on invested capital and the IRR for this transaction appear below.

JR Automation is a designer, manufacturer, and systems integrator of automated or manually operated assembly line equipment such as sonic welders, riveters, adhesive dispensers, vision inspectors and verifiers, leak testers, robotic palletizers, and other equipment. The company’s products are used in the automotive, aerospace and defense, life sciences, battery and energy, electronics and consumer goods, food and beverage, construction and amusement industries.

JR Automation has more than 2,000 employees and facilities in 23 locations in North America, Europe, and Asia. The company was founded in 1980 and is headquartered in Holland, Michigan.

Crestview acquired JR Automation in March 2015 from Huizenga Automation Group. “Since our investment in JR Automation in 2015, the company has grown dramatically from $170 million of sales and five production facilities in North America to $600+ million of sales and 23 facilities worldwide,” said Mike DuBose, a Crestview senior advisor and the outgoing chairman of JR Automation. “Through that period, JR became the largest independent provider of custom automation systems in North America while simultaneously increasing international revenue to approximately 25% of total sales.”

A source close to Private Equity Professional reports that this transaction netted Crestview a 7.5x multiple on its invested equity and a 65% IRR.

“Following our investment in JR, we invested heavily in people, systems and infrastructure that would allow JR to grow organically in new geographies and end markets and to be a platform to consolidate this fragmented industry,” said Alex Rose, a partner and co-head of industrials at Crestview. “By focusing on global expansion and end-market diversification, JR grew organically by over 20% per year and by over 40% per year including acquisitions. This strong growth trajectory led to interest from numerous potential buyers from all over the world which ultimately resulted in the sale of JR to Hitachi.”

Hitachi (TSE: 6501) is a multinational conglomerate with products and services in several industries. The company, headquartered in Tokyo with more than 300,000 employees worldwide, had revenues in 2018 of $88 billion.

As a result of the JR acquisition, Hitachi will enter the North American robotic systems integration sector that is experiencing growth of more than ten percent per year. The buy of JR follows Hitachi’s acquisition of KEC Corporation, a Japanese robotic system integrator in March 2019. Additionally, the acquisition of JR will allow Hitachi to expand its Lumada business, which is active in data analytics, internet of things (IoT) platform components, artificial intelligence and machine learning.

“We want to thank outgoing Chairman Mike DuBose and CEO Bryan Jones as well as the rest of JR’s employees for their hard work and dedication over the past four years,” added Mr. Rose. “All of us at Crestview are extremely proud of what we were able to accomplish through our highly successful partnership.”

Crestview invests from $100 million to $250 million in companies with enterprise values up to $3 billion. Sectors of specific interest include media, industrials, energy and financial services. The firm will invest in other industries where its relationship network and senior operating capabilities provide an advantage.  Crestview, founded in 2004 and headquartered in New York, manages funds with over $9 billion of aggregate capital commitments.

“JR Automation is an excellent example of Crestview’s investment strategy and how we seek to apply it in the industrials sector,” concluded Mr. Rose. “Crestview looks to back industrial businesses which are well-positioned to take advantage of major growth trends in ways that are not yet obvious to the broader marketplace. We work closely with the management teams of our portfolio companies to execute on strategies to accelerate growth and transform the companies into global leaders in their niche industries.”

Goldman Sachs & Co. and BofA Merrill Lynch were the financial advisors to JR and the selling shareholders. Mitsubishi UFJ Morgan Stanley Securities was the financial advisor to Hitachi.

© 2020 Private Equity Professional | January 6, 2020

Littlejohn and Resilience Combine Metal Benders

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Maysteel Industries, a portfolio company of Littlejohn Capital, and Porter’s Group, a portfolio company of Resilience Capital Partners, have merged. The combined companies will operate under the Maysteel brand name with both Littlejohn and Resilience Capital maintaining equity interests in the company.

Maysteel specializes in designing, engineering and manufacturing custom OEM sheet metal enclosures, electrical cabinets and metal fabricated assemblies. The company’s products are used in the alternative energy, kiosk, gaming, security, medical, utility, industrial drive and automation, and self-serve/vending machine industries.

Maysteel was founded in 1936 and has a 240,000 square-foot manufacturing facility and headquarters in Allenton, Wisconsin (northwest of Milwaukee); a 50,000 square-foot manufacturing facility in La Mirada, California; and a 96,000 square-foot manufacturing facility in Monterrey, Mexico.  Littlejohn acquired Maysteel in April 2017 from Revolution Capital Group.

Porter’s Group is a provider of metal fabrication services to companies operating in the security, military, mining, heavy equipment and trucking industries. The company considers itself to be the largest metal fabricator of ATMs in North America. Porter’s, founded in 1964, is headquartered in Bessemer City, North Carolina and has manufacturing facilities in Lynchburg, Virginia; Sumter, South Carolina; and Garland, Texas. Guy Roberts, the CEO of Porter’s Group, now serves as the chief operating officer of Maysteel. Resilience Capital acquired Porter’s in August 2015.

With the merger completed, the combined company has over 1,000 employees with six manufacturing locations covering the US and Mexico. “This merger creates a dynamic company and a much stronger competitor that responds to the needs of our customers and markets we serve,” said Kevin Matkin, CEO of Maysteel who now serves as the CEO of the newly-combined company. “With greater scale, improved market leadership, increased engineering expertise, complementary strengths and geographic reach we have a broader product base to offer our customers from locations where customers need us.”

“As a result of the hard work of Kevin and his team, Maysteel has achieved many milestones, including completing an important acquisition that positioned Maysteel with a significant presence in the growing data center market,” said Angus Littlejohn Jr., founder and chairman of Littlejohn Capital. In December 2017, Maysteel acquired DAMAC Products, a La Mirada, California-based manufacturer of data center equipment including server cabinets, wallmount racks, seismic and thermal management products, power distribution equipment and cable runway systems.

Littlejohn Capital invests from $5 million to $15 million of equity in middle-market companies that have EBITDAs from $2 million to $12.5 million and are valued from $20 million to $75 million. Sectors of interest include manufacturing, fabrication, processing, logistics, materials, and services. Littlejohn Capital, headquartered in Savannah, Georgia, is the family office of Angus Littlejohn Jr., co-founder of Littlejohn & Co., where he currently serves as chairman.

“We look forward to becoming partners with the teams at Littlejohn Capital and Maysteel,” said Bassem Mansour, co-chief executive officer of Resilience Capital. “Both bring tremendous resources and experiences to the combined companies. We are like-minded in our approach and we are confident that the future is bright for Maysteel.”

Resilience Capital Partners invests from $10 million to $40 million in middle-market companies with $25 million to $250 million in revenues and EBITDA typically under $20 million. Sectors of interest include industrial manufacturing, distribution, business services, aviation & aerospace, minerals & mining, consumer goods, transportation logistics, building products, metals, and capital equipment. The firm was founded in 2001 and is based in Cleveland.

© 2020 Private Equity Professional | January 6, 2020

Olympus Acquires Heniff Transportation

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Olympus Partners has acquired Heniff Transportation Systems, a provider of liquid bulk transportation services throughout the United States, Canada and Mexico.

In addition to its liquid bulk transportation services, Heniff also provides tank washing, ISO container transportation and storage, and transloading services. More than 35 of the top 50 US chemical companies are customers of Heniff.

The Oakbrook, Illinois-based company operates a network of 13 terminals located in Kentucky, Texas (3), Louisiana (2), North Carolina (3), Illinois (2), Tennessee, and Pennsylvania.

“We are very excited to partner with Olympus,” said CEO Bob Heniff. “Bringing on a capital partner with significant transportation experience will allow us to further invest in our future and execute on our numerous expansion opportunities.”

“Heniff is a proven leader in liquid bulk transportation. Bob Heniff and the Heniff management team have a long track record of safety, service, and growth,” said Dave Cardenas, a partner at Olympus. “We look forward to supporting the company in its next phase of development and growth.”

Olympus invests in a range of industries but has specific interest in business services, food services, consumer products, healthcare services, financial services, industrial services and manufacturing. In December 2017, the firm held a final closing of its seventh institutional private equity fund, Olympus Growth Fund VII LP, with an oversubscribed $3 billion of capital commitments. The firm was founded in 1988 and is based in Stamford, Connecticut.

The Olympus transaction team included Mr. Cardenas, Principal Griffin Barstis, Associate Bryson Bono, and Associate Jordan Gershman.

MidCap Financial was the was the Joint Lead Arranger and Joint Bookrunner for a $535 million senior secured credit facility that supported Olympus’ buy of Heniff. MidCap’s deal team was led by Managing Director Puja Parekh.

MidCap Financial, in alliance with its investment manager Apollo Capital Management, is a middle-market focused finance firm that provides debt instruments of $10 million to $750 million to companies across all industries.

© 2020 Private Equity Professional | January 6, 2020