SFW Capital Partners has closed the sale of Micromeritics Instrument Corporation to publicly traded Spectris for $630 million.
Under the terms of the sale, the transaction includes earn-out language that provides up to $53 million in additional consideration based on Micromeritics’ financial performance in 2024 and 2025.
Micromeritics specializes in developing analytical instruments used for material characterization –analyzing and measuring materials’ properties such as particle size, surface area, porosity, density, and chemical activity – to better understand their composition, structure, and performance.
SFW acquired Micrometrics in December 2019 in partnership with Micromeritics’ President, Preston Hendrix, and his family. At that time, Terry Kelly, an operating partner at SFW and the past president of TA Instruments, a Delaware-based manufacturer of analytical instruments used for thermal analysis, rheology, and microcalorimetry, became the new CEO of Micromeritics. At the same time, Mr. Hendrix transitioned to the role of chairman of the board.
“We are incredibly proud of the transformational growth Micromeritics has achieved,” said Mr. Kelly. “SFW’s sector-focused approach, business-building support, and expertise proved incredibly valuable to Micromeritics as we broadened our product and service offerings and expanded our presence in high-growth markets worldwide. We are excited to partner with Spectris and build on this success.”
Since its acquisition by SFW, Micromeritics has maintained its performance in the industrial technology and materials science markets and has grown revenues by entering clean technology markets, including battery technology, hydrogen, and carbon capture.
Micromeritics has more than 1,000 industry, academic, and government laboratory customers. More than 80% of sales are sold directly to customers, with 40% of sales to clean-tech-focused customers operating in the battery, hydrogen/fuel cells, and carbon capture/storage sectors; and 60% of sales to industrial-technology customers in the chemicals, pharmaceuticals, semiconductor, and other high-growth industrial technology end markets. Micromeritics was founded in 1962 and is headquartered near Atlanta in Norcross, Georgia, and operates fee-for-service laboratories in Georgia, China, and Germany.
In 2023, Micromeritics had revenues of $117 million and EBIT of $30.5 million. In 2024, Micromeritics is expected to earn $33.4 million in EBIT. Over the period from 2021 to 2024, Micromeritics has a sales CAGR of 17% and is expected to continue this double-digit growth over the next five years.
The $630 million in consideration for Micromeritics, excluding possible earnout payments, equals 18x 2024’s expected EBITDA of $35 million. If projected run-rate cost synergies of $12 million, estimated by Spectris, are included, the multiple declines to 13.4X.
“Our partnership with Terry Kelly and the world-class executive leadership team at Micromeritics enabled the business to execute a strategic growth plan successfully,” said Ahmad Sheikh, a partner at SFW. “When we acquired the company, the business had market-leading technology and deep customer relationships, and the team was able to build on that strong foundation to achieve industry-leading growth and profitability. We are confident that the business is positioned for continued growth and development well into the future.”
Spectris (LSE: SXS) manufactures instrumentation and controls used in various industries, including pharmaceuticals, manufacturing, and materials science. The company was founded in 1915 and is headquartered west of London in Egham, United Kingdom.
“The acquisition of Micromeritics fits perfectly with our strategy to build world-class businesses compounding growth and generating strong value creation for our customers and shareholders,” said Andrew Heath, the CEO of Spectris. “Micromeritics is a high-quality business with a strong track record of growth and innovation with excellent growth prospects.”
SFW invests from $25 million to $200 million of equity in industrial and life sciences technology companies with revenues of $10 million to $500 million. The firm is headquartered in Rye, New York.
© 2024 Private Equity Professional | August 27, 2024
