MPE Partners has sold a majority equity interest in Trachte USA, a manufacturer of preassembled and modularized control buildings, to Palladium Equity Partners.
Trachte’s buildings are used by utilities to house electrical components that control and protect electrical infrastructure, such as transmission and distribution substations.
Beyond the utilities’ market, Trachte buildings are used in industrial applications to house equipment such as relay and protection controls, switchgear, battery systems, servers, and data center hardware that control and protect electrical infrastructure and equipment. The company, led by CEO Jim Gross with 200 employees, is headquartered 13 miles south of Madison in Oregon, Wisconsin with an additional manufacturing facility 100 miles northeast of Atlanta in Eastanollee, Georgia.
“MPE has been a valuable business partner to Trachte as we transitioned from family ownership and worked to enhance our technology platform and manufacturing capabilities, including the expansion of our production capacity to better serve our customers,” said Mr. Gross. “We have enjoyed the partnership with MPE and are proud of the strong foundation we have built together which positions us well for continued future growth.”
MPE acquired Trachte in October 2015 in partnership with its existing shareholders including retiring President Randy Trachte and retiring VP of Sales Ron Trachte, as well as other members of the company’s senior management team. Randy and Ron Trachte were third-generation owners of the company which was founded in 1919 by George and Arthur Trachte.
Members of the Trachte family will continue to be investors in the business in partnership with Palladium and MPE will maintain a minority equity interest in the business.
“We look forward to supporting Trachte in writing the next chapter in a great American success story which began more than a century ago,” said Marcos Rodriguez, chairman and chief executive officer of Palladium. “The company’s rich history as a technological innovator began with the Trachte brothers’ first patent in 1910. We are delighted to be partnering with this team in their mission to upgrade, protect and harden the country’s electrical grid while making it more efficient by ensuring the delivery of safe, clean energy. We also are pleased to make an investment that represents a commitment to U.S. manufacturing jobs at this challenging time.”
New York City-based Palladium invests from $50 million to $150 million of equity in companies that have $10 million to $75 million of EBITDA. Sectors of interest include consumer, services, industrials, and healthcare. In July 2019, Palladium held a final close of Palladium Equity Partners V LP with commitments of $1.56 billion.
“We have been proactively seeking an investment in the power and utility space and believe that Trachte is an ideal growth platform to execute this strategy,” said Caleb Clark, a partner at Palladium. “Trachte provides a highly engineered, total solution to its customers. The company’s design engineering, project management and related value-added services and reputation for quality make it the provider of choice for leading utilities and equipment OEMs.”
“Over the course of MPE’s ownership, Trachte successfully transitioned from a family-owned business to an institutionally-owned and professionally-managed enterprise,” said Joe Machado, a partner at MPE. “We preserved the knowledge, culture, and reputation instilled by the founding family, while at the same time investing in new technology platforms, manufacturing capacity, and organizational development to take the company to the next level. We are proud to have been partners with the management team on this amazing journey.”
MPE invests in lower middle-market companies that are valued from $25 million to $150 million and have EBITDAs between $5 million and $20 million. Sectors of interest include high-value manufacturing, and commercial and industrial services. The firm has offices in Cleveland and Boston.
“Palladium brings a wealth of knowledge, expertise, and resources to Trachte,” added Mr. Machado. “We are also impressed with their ability to close a negotiated transaction during the COVID pandemic. MPE will continue to support Trachte as a co-investor alongside Palladium.”
Stephens was the financial advisor to Trachte on this transaction and Stifel advised Palladium.
Private Equity Professional | September 23, 2020