High Road Exits General Tools

High Road Capital Partners has sold GTI Holding Company, the parent company of General Tools and Instruments (GTI), to publicly traded Worthington Industries for $115 million.

The sale of GTI is High Road’s third exit for its second fund, High Road Capital Partners Fund II LP, which closed at its hard cap of $320 million in December 2013. GTI was acquired by High Road in February 2014.

GTI is a designer and developer of specialty hand tools and handheld test instruments for consumers and professionals. Company-owned brand names include General, PacTool, Garden Weasel, and Hawkeye.GTI’s products are sold through big-box, specialty retailers, online marketers, hardware retailers, and wholesale hardware and industrial distributors. Customers include Home Depot, Lowe’s, Sears, Ace Hardware, True Value Hardware stores and industrial distributors such as Grainger, MSC Industrial Supply and McMaster-Carr. GTI, led by CEO Ralph Mallozzi, was founded in 1922 by Abe and Lillian Rosenberg and is headquartered in Secaucus, New Jersey.

“High Road was a true partner in General Tools’ success, in every sense of the word,” said Mr. Mallozzi. “High Road provided the guidance and support to help me and the team build a great business that is well-positioned for continued growth at Worthington Industries.”

Worthington Industries (NYSE: WOR) is a diversified metals manufacturing company and is the largest independent processor of flat-rolled steel in the United States. Worthington’s products include pressure vessels, hand torches, refrigerant and industrial cylinders, metal framing systems for mid-rise buildings, steel shipping pallets and racks. The Columbus, Ohio-based company, led by CEO Andy Rose, was founded in 1955 and has 51 facilities in 15 states and 7 countries and more than 7,500 employees.

“The acquisition of General Tools expands our thriving consumer products portfolio, complementing our existing brands in niche tools and outdoor living with attractive end-markets,” said Mr. Rose.

During High Road’s ownership of GTI, the company’s revenue nearly doubled, and EBITDA nearly tripled through a combination of organic growth and add-on acquisitions. In May 2020, GTI acquired Garden Weasel, a Kansas City-based designer and manufacturer of cultivators, weeders, edgers, nut gatherers and hand tools including Garden Weasel, Garden Claw, and WeedPopper tools. Earlier, in November 2017, GTI acquired PacTool International, a Seattle-based designer and manufacturer of a range of siding tools, specialty hand tools, cutting tools and blades used in construction, renovation and remodeling jobs. PacTool’s products include the Gecko Gauge, Snapper Shears, and the Roof Snake.

In calendar year 2020, GTI had net revenues of $68.2 million and adjusted EBITDA of $15.2 million. Based on the $115 million purchase price this equates to a 7.7x EBITDA valuation multiple.

“Our successful investment in General Tools is a perfect example of High Road’s strategy to build lower-middle-market niche leaders into bigger and better companies in partnership with management,” said Jeff Goodrich, a partner at High Road. “General Tools’ CEO Ralph Mallozzi built and led a topflight management team, strengthened General Tools’ position in all channels, particularly online, inspired a culture of continuous product development, and seamlessly integrated acquisitions.”

The High Road transaction team was led by Mr. Goodrich and also included Operating Partner Jerome Anderson, Principal Eojin Lee, and Associate Austin Arnold.

High Road invests in manufacturing, service, or value-added distribution businesses with revenues of $10 million to $100 million and EBITDA of $3 million to $10 million. The New York City-based firm has completed 63 transactions – 20 platform investments, 33 add-on acquisitions and 10 exits – since its founding in 2007.

Lincoln International was the financial advisor to GTI and Jones Day provided legal services.

© 2021 Private Equity Professional | February 5, 2021