Right Down the Middle, KPS Exits TaylorMade

KPS Capital Partners has agreed to sell TaylorMade Golf Company to Centroid Investment Partners for $1.6 billion, the largest-ever acquisition in the golfing equipment industry.

TaylorMade is a designer and manufacturer of golf equipment including drivers, fairway woods, hybrids, irons, wedges, golf balls, bags, and accessories. The Carlsbad, California-based company has a #1 or #2 market position in most of its key products and geographies.

TaylorMade was founded in 1979 by Gary Adams with three employees in a 6,000 square-foot former television set assembly facility near Chicago in McHenry, Illinois. The company’s first product was a 12-degree perimeter-weighted stainless steel driver – the golf industry’s first “metalwood” product.

KPS carved out TaylorMade in 2017 from Adidas for total consideration of $425 million. During KPS’ ownership of TaylorMade, the company invested in new manufacturing and distribution facilities, introduced new products, grew its market share in golf balls, and refocused its marketing strategy including the build-out of its digital platforms. As a result of these efforts, TaylorMade has experienced substantial growth in profitability each year under KPS ownership.

According to sources familiar with this transaction, the purchase price of $1.6 billion is approximately 12x projected 2021 EBITDA of $133 million.

“TaylorMade demonstrates KPS’ ability to see value where others do not, buy right and make businesses better,” said David Shapiro, a co-founder and co-managing partner of KPS. “KPS recognized the value of the iconic TaylorMade brand, its cutting-edge product portfolio, the talent of its world-class management team and employees and the opportunity to align the company’s cost structure with the market realities.”

“Our partnership with KPS has been extraordinary. It has been inspiring and incredibly productive to work with the team across the firm,” said CEO David Abeles. “From the beginning, KPS had the vision to recognize the strength and potential of the TaylorMade brand and business. Under KPS’s ownership, TaylorMade has become a far better company by investing in our operations, product technology pathways, product development processes and, importantly, in our people. TaylorMade has never been better positioned for future growth than we are today.”

New York City-headquartered KPS makes control investments in manufacturing and industrial companies across a range of industries, including basic materials, branded consumer, healthcare, automotive parts, capital equipment, and general manufacturing. Many of KPS’s investments involve creating new companies to buy underperforming or distressed assets, companies operating in bankruptcy or in default of obligations to creditors, or with a history of recurring operating losses.

In October 2019, KPS held a hard cap and oversubscribed closing of KPS Special Situations Fund V LP and KPS Mid-Cap Fund LP. KPS Fund V had a $5 billion target and a $6 billion hard cap, and KPS Mid-Cap had a $750 million target and a $1 billion hard cap.

Centroid Investment Partners, the buyer of TaylorMade, makes buyout and growth investments in a range of sectors – including the consumer discretionary sector – across South Korea, China, and the U.S. The firm was founded in 2015 and is headquartered in Seoul, Korea.

Morgan Stanley and Allen & Co. are the financial advisors to KPS and TaylorMade.

The sale of TaylorMade to Centroid is expected to close by the end of July.

© 2021 Private Equity Professional | May 13, 2021

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