Prospect Partners has sold its portfolio company Velvac, acquired in August 2005, to publicly-traded Eastern Company for $39.5 million plus certain future earn-out payments. Velvac had net sales of $58.7 million for fiscal year 2016.
Velvac is a manufacturer and supplier of exterior mirror and vision systems and other component parts for the truck, recreational vehicle and specialty vehicle industries. The company has more than 3000 SKU’s and sells its products both directly to OEMs, and through distributors to the OEM recreational vehicle and truck market and aftermarket. Velvac is led by CEO Jeff Porter and is based west of Milwaukee in New Berlin, WI (www.velvac.com). At closing, Velvac became an independent subsidiary of The Eastern Company and Mr. Porter continues to lead the business.
Velvac is also an innovator of vision systems for commercial vehicles and motorhomes. The company introduced its first camera-enabled vision system in 2006 and now sells approximately 45,000 camera enabled units annually. Velvac recently introduced its Road-iQTM 360-degree view camera, recording and communication system and announced TrailerLink, a new product that supports trailer-to-tractor video and data communications (www.road-iq.com).
“Jeff Porter was a great CEO partner who built a first-class operating team and deftly guided the company into new product markets, new distribution channels, and a strong position in every segment it entered,” said Prospect Partners’ Principal Erik Maurer.
During the term of its ownership, Prospect completed two add-on acquisitions for Velvac: In March 2009 it acquired K-10 Enterprizes (based in Mission, TX) a supplier of blind-spot safety mirror systems for heavy-duty trucks; and in December 2013 it acquired the assets of the ViewMaster mirror product line from the Mirror Lite Company (Rockwood, MI). ViewMaster mirrors are used on vehicles in the refuse market, as well as other heavy and medium-duty trucks.
“Velvac has been a highly rewarding investment for Prospect Partners,” said Rick Tuttle, a Founding Principal of Prospect Partners. “It has been an honor to partner with a terrific management team, provide capital support for select strategic acquisitions, and be part of Velvac’s exciting transition from an RV-centric supplier to the leading player in multiple attractive niche markets.”
Prospect Partners focuses exclusively on management-led leveraged recapitalizations and acquisitions of niche market leaders with revenues of less than $75 million. Areas of interest include niche manufacturing, distribution, and specialty service markets. Since 1998, Prospect Partners has built 48 platforms by investing in more than 140 businesses. The firm has $470 million of capital under management and is based in Chicago (www.prospect-partners.com).
“Prospect Partners has been tremendous to work with these past 11 years,” said Mr. Porter. “They supported our management team in good times and bad. Their support during the depths of the Great Recession laid the groundwork for our emergence from the downturn as a much stronger competitor and propelled Velvac to rapid growth these last seven years. The professionalism and integrity exhibited by the Prospect Partners team during their investment period was unmatched.”
The Eastern Company (NASDAQ:EML) is a manufacturer of custom-engineered components and products, including industrial hardware, security products and metal castings that are used in the heavy and medium truck, mining, commercial laundry, electronics, military and industrial markets. The company, headquartered in Naugatuck, CT, operates from 13 locations in the US, Canada, Mexico, Taiwan and China (www.easterncompany.com).
“We are delighted to add Velvac to our portfolio of businesses,” said August Vlak, President & CEO of Eastern. “Velvac represents an excellent fit for Eastern and helps us expand our presence in the truck and motorhome markets. This transaction also adds a new growth platform, with significant potential to expand margins in the future.”
© 2017 Private Equity Professional | April 19, 2017
