H.I.G. Takes SMTC Private at 9.6x
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H.I.G. Takes SMTC Private at 9.6x

H.I.G. Capital has acquired the equity of publicly traded SMTC Corporation for $172 million.

SMTC is a low-to-medium volume provider of electronics manufacturing services (EMS) including printed circuit board assembly (PCBA), design and development, systems integration and testing services. Customers of SMTC are active in the medical, semiconductor, defense and aerospace, test and measurement, industrial, and telecom sectors.

The company has more than 550,000 square feet of manufacturing space at 10 locations in the United States (5), China (2), Mexico (2) and Canada. The Toronto-headquartered company, led by CEO Edward Smith, was founded in 1985 as Surface Mount Technology Centre and began trading on the NASDAQ in July 2000.

In fiscal year 2020, SMTC had revenues of $386 million and an adjusted EBITDA of $27 million. The company’s net debt at year end was $87 million. Based on the equity value of $172 million and the net debt of $87 million, this yields at enterprise valuation to adjusted EBITDA multiple of 9.6x. For 2021, SMTC estimates revenues of $430 million and adjusted EBITDA of $33 million. Click HERE for a copy of a March 2021 presentation from SMTC’s management on the acquisition.

“Over the past three years, SMTC has become a global leader among mid-size providers of end-to-end EMS by offering superior supply chain management and proactive services and solutions to an expanding base of customers,” said Mr. Smith. “Partnering with H.I.G. will enable us to accelerate our growth through continued investment in our customers, capabilities, and footprint.”

“We are pleased to partner with Eddie Smith and his team,” said Phillip Wood-Smith, a managing director of H.I.G. “They have done an outstanding job over the past three years serving some of the most attractive EMS end markets. With its industry-leading solutions and strong customer relationships, we believe there is significant opportunity to invest in SMTC’s customers and capabilities to further expand the company’s leadership position.”

H.I.G. specializes in providing debt and equity capital to small and medium-sized companies and invests in management buyouts, recapitalizations, and corporate carve-outs of both profitable as well as underperforming manufacturing and service businesses. In September 2020, H.I.G. held an above-target close of H.I.G. Capital Partners VI LP with aggregate capital commitments of $1.3 billion.

H.I.G. was founded in 1993 and is headquartered in Miami with additional offices in New York, Boston, Chicago, Dallas, Los Angeles, San Francisco, Atlanta, and Stamford.

Lincoln International was the financial advisor to SMTC on this transaction.

© 2021 Private Equity Professional | April 8, 2021

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