Tag Archive for: SellSideAdvisory

UP-RITE SYSTEMS, INC. HAS BEEN ACQUIRED BY FLETCHLINE, INC.

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ABOUT THE TRANSACTION:

Up-Rite Systems, Inc. (“Up-Rite” or the “Company”) has been acquired by Fletchline Inc. (“Fletchline” or the “Buyer”).

Established in 1993 and headquartered in Bardstown, Kentucky, Up-Rite is a nationwide material handling installation company. The Company specializes in the installation of pallet rack and related material handling equipment.

For more than two decades, Up-Rite has developed extensive experience serving customers throughout the United States. The Company has built its reputation by providing specialized installation services across a broad range of projects. Up-Rite’s nationwide capabilities have allowed the Company to support customers with material handling requirements across multiple geographic markets. Furthermore, its specialized workforce brings valuable experience to these complex installation projects.

STRATEGIC FIT WITH FLETCHLINE: 

Headquartered in Springfield, Tennessee, Fletchline specializes in conveyor system installation throughout the United States. The company has served customers across projects of varying sizes and complexity since 1988. Fletchline provides installation services for multiple conveyor systems used within distribution, manufacturing, and other material handling environments. Additionally, the company emphasizes workplace safety, quality, teamwork, and efficient project execution.

The acquisition brings together two companies with complementary capabilities within the material handling industry. Up-Rite specializes in rack installation, while Fletchline brings extensive experience installing conveyor systems. As a result, the combination broadens the range of installation services available to customers. The transaction also strengthens Fletchline’s capabilities within an increasingly integrated material handling marketplace.

Moreover, both companies bring nationwide installation experience and established customer relationships to the combined organization. Their complementary expertise creates opportunities to serve customers across a broader range of material handling projects. The transaction provides Up-Rite with the resources and capabilities of an established strategic buyer. At the same time, Fletchline expands its service capabilities through the addition of Up-Rite’s specialized rack installation expertise.

ALLSTON ADVISORY GROUP’S ROLE: 

Allston Advisory Group served as the exclusive financial advisor to Up-Rite Systems and its owners. Allston performed an Analysis of Value and prepared a comprehensive Confidential Information Memorandum. Thereafter, Allston developed and managed a confidential sale process designed to identify qualified prospective buyers. The firm evaluated potential strategic and financial buyers and coordinated communications throughout the process.

Allston also assisted the sellers with negotiations and worked alongside their other professional advisors. During due diligence, Allston coordinated information requests and helped address transaction matters as they arose. The transaction successfully transitioned Up-Rite to an experienced strategic buyer with complementary capabilities. Furthermore, the combination positions both organizations to pursue additional opportunities with the material handling industry.

ABOUT ALLSTON ADVISORY GROUP:

Allston Advisory Group is an experienced mergers and acquisitions advisory firm serving privately held lower middle market companies. The firm provides mergers & acquisitions, business valuations, and exit strategies. Allston works closely with business owners to understand their objectives and prepare their companies for the transaction process. The firm then manages a disciplined and confidential sale process from initial preparation through closing.

For additional information on this transaction, please contact one of our advisors.

THE PROSPECT VILLAGE SHOPPING CENTER HAS BEEN ACQUIRED BY KROGER

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ABOUT THE TRANSACTION:

The Kroger Co. (NYSE: KR) has acquired The Prospect Village Shopping Center from Montfort Helm Enterprises, LLC (the “Seller”).

Built in 2000, Prospect Village contains approximately 153,486 square feet of retail space. The Center is located along Highway 42 in Prospect, Kentucky. The property occupies a desirable location within one of the Louisville metropolitan area’s most affluent communities. Additionally, its location provides convenient access to surrounding residential neighborhoods and commercial areas. At the time of the transaction, Prospect Village is approximately 90 percent occupied. The tenant roster includes several national retailers and service businesses. A newly renovated Kroger Marketplace anchors the Center and serves as its primary traffic generator. Other tenants include Starbucks Coffee, Snap Fitness, Subway, Great Clips, and additional retailers.

STRATEGIC FIT WITH KROGER: 

Kroger is one of the world’s largest grocery retailers and operates stores throughout numerous markets across the United States. The company operates grocery stores, multi-department stores, convenience stores, and other retail formats. Kroger already maintains an established operating presence within Prospect Village as the Center’s anchor tenant. Therefore, acquiring the property provides Kroger with greater control over an important retail location.

The acquisition also strengthens Kroger’s real estate position within the Louisville market. Furthermore, Kroger intends to expand the property’s facilities to accommodate fuel sales. Ownership provides Kroger with greater flexibility regarding future improvements and the long=term operation of its Marketplace location. The acquisition also aligns the Center’s ownership with its principal anchor tenant.

ALLSTON ADVISORY GROUP’S ROLE: 

Allston Advisory Group served as the exclusive financial advisor to Montfort Helm Enterprises, LLC. The firm performed an extensive valuation assessment of Prospect Village before initiating the sale process. Next, Allston identified prospective strategic and financial buyers capable of acquiring the Center. The firm marketed the property to national, regional, and local investor groups.

Subsequently, Allston conducted a formal auction process designed to create competition among the prospective purchasers. Through this process, the marketplace established a premium valuation for the property. Notably, Kroger held a right of first refusal to the Center. After completion of the competitive process, Kroger exercised that right and acquired the property.

Accordingly, the competitive process provided the Seller with market validation before Kroger exercised its contractual purchase rights. In turn, Kroger secured ownership of the shopping center containing its established Marketplace location. The transaction demonstrates how a competitive sale process may establish market value even when contractual purchase rights affect the final buyer.

ABOUT ALLSTON ADVISORY GROUP:

Allston Advisory Group is an experienced mergers and acquisitions advisory firm serving privately held lower middle market companies. The firm provides mergers and acquisitions, business valuations, and exit strategies. Allston works closely with business owners to understand their objectives and prepare their companies for the transaction process. The firm then manages a disciplined and confidential sale process from initial preparation through closing.

For additional information about this transaction, please contact one of our advisors.

LYNN’S PARADISE CAFÉ HAS BEEN ACQUIRED BY FRESH CAPITAL GROUP

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ABOUT THE TRANSACTION:

The former Lynn’s Paradise Café property in Louisville, Kentucky has been acquired by Fresh Capital Group (“Fresh Capital” or the “Buyer”).

Lynn’s Paradise Café opened its doors in 1991 and became one of Louisville’s most recognizable restaurant destinations. The Café attracted a diverse clientele through its distinctive atmosphere, creative menu, and unconventional approach to dining. For more than two decades, owner Lynn Winter developed a concept centered around food, entertainment, and community. The colorful property became closely associated with the Café’s personality and Winter’s original vision. Following the Café’s unexpected closure, the property presented a unique opportunity for a new owner. However, identifying the appropriate buyer required recognizing both the property’s economic potential and its distinctive character.

STRATEGIC FIT WITH FRESH CAPITAL GROUP: 

Fresh Capital Group is a Nashville-based commercial real estate development and management company focused primarily on the Southeastern United States. At this time, the company manages a real estate portfolio valued above $350 million. Fresh Capital specializes in restaurant build-to-suit projects and multi-tenant restaurant developments. Additionally, its portfolio includes office buildings, single-tenant properties, and retail centers.

The company’s experience with restaurant properties makes the former Lynn’s Paradise Café location a natural addition to its portfolio. Moreover, Fresh Capital brings development expertise and financial resources to the property. Fresh Capital also emphasizes preserving properties that contribute economic and cultural value to their surrounding neighborhoods. That philosophy aligns well with the history and recognizable character of the Lynn’s Paradise Café property. Lynn Winter expressed confidence in the buyer’s financial resources and operating capabilities. She also emphasized the value of finding an experienced organization capable of moving the property forward.

ALLSTON ADVISORY GROUP’S ROLE: 

Following the Café’s closure, the restaurant and property remained on the market for approximately twelve months without generating a satisfactory offer. Thereafter, the sellers engaged Allston Advisory Group as their exclusive financial advisor. Allston performed an Analysis of Value and evaluated the property’s marketability under the circumstances. The firm also prepared a comprehensive Confidential Information Memorandum presenting the opportunity to prospective buyers.

Nest, Allston developed a targeted marketing process and contacted qualified buyers locally, regionally, and nationally. The outreach included prospective buyers with the financial resources and experience necessary to pursue the opportunity. Throughout the process, Allston managed communications and maintained confidentiality on behalf of the sellers. The firm also facilitated negotiations and worked with the parties as the transaction progressed toward closing.

As a result, the transaction provided the seller with the desired liquidity after an extended marketing period. The property also transitioned to an established and well-capitalized new owner with significant restaurant real estate experience. The successful transaction demonstrates the value of targeted buyer identification when traditional marketing efforts fail to produce an acceptable outcome.

ABOUT ALLSTON ADVISORY GROUP:

Allston Advisory Group is an independent mergers and acquisitions advisory firm serving privately held lower middle market companies. The firm provides mergers and acquisitions, business valuations, and exit strategies. Allston works closely with business owners to understand their objectives and prepare their companies for the transaction process. The firm then manages a disciplined and confidential sale process from initial preparation through closing.

For additional information on this transaction, please contact one of our advisors.

NEWS SOURCES:

TRAFFIC BUILDERS HAS BEEN ACQUIRED BY GS MARKETING

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ABOUT THE TRANSACTION:

GS Marketing, Inc. (“GSM” or the “Buyer”) has acquired Traffic Builders, Inc. (“Traffic Builders” or the “Company”).

Headquartered in Louisville, Kentucky, Traffic Builders is a multichannel direct marketing agency serving more than 300 automobile dealerships nationwide. The Company works with dealerships representing a broad range of automobile manufacturers. With approximately 20 full-time employees, Traffic Builders specializes in results-driven automotive marketing programs. Its programs help dealerships attract new customers, increase existing customer activity, and reengage customers who have stopped doing business. For nearly two decades, Traffic Builders has developed integrated marketing solutions across multiple delivery platforms. The Company combines automotive industry knowledge with targeted marketing strategies designed to generate measurable customer activity.

STRATEGIC FIT WITH GS MARKETING:

Headquartered in Houston, Texas, GS Marketing is a full-service direct marketing company serving the automotive industry. GSM has nearly three decades of experience working with automobile dealerships, dealer groups, and manufacturers. The company employs approximately 85 associates and operates as part of The Friedkin Goup. GSM provides marketing products and services designed specifically for automotive retailers and manufacturers.

The acquisition combines two companies with extensive experience serving automobile dealerships. In particular, Traffic Builders adds established customer relationships, integrated products, and additional marketing capabilities to GSM’s existing platform. GSM President Shelley Washburn highlighted Traffic Builders’ experience and integrated marketing products as significant benefits of the combination. She also noted the companies’ shared commitment to customer satisfaction and engaging workplace cultures.

Following the acquisition, GS Marketing continues operations in both Houston and Louisville. The two locations provide complementary capabilities within the combined organization. Specifically, the Houston offices focus on technology and digital marketing. Meanwhile, the Louisville facility concentrates on expanded print production and related marketing capabilities. The combination allows GSM to broaden its automotive marketing platform while maintaining Traffic Builders’ established Louisville presence. Furthermore, GSM expects the acquisition to strengthen its position within the automotive marketing industry.

ALLSTON ADVISORY GROUP’S ROLE:

Allston Advisory Group served as the exclusive financial advisor to Traffic Builders, Inc. and its owners. Allston performed an Analysis of Value and prepared the Company for the sale process. Additionally, Allston developed a comprehensive Confidential Information Memorandum presenting Traffic Builders’ operations, financial performance, capabilities, and growth opportunities. The firm also identified qualified strategic and financial buyers capable of completing the transaction.

Thereafter, Allston conducted a confidential and competitive sale process involving both strategic buyers and private equity groups. The process created competition while allowing the sellers to evaluate multiple potential transaction alternatives. Allston managed buyer communications, coordinated management discussions, and assisted the sellers throughout negotiations. The firm also worked alongside the sellers’ other professional advisors during due diligence and closing. As a result, Traffic Builders has transitioned to an established strategic buyer with complementary capabilities and substantial automotive industry experience. The transaction also provides GSM with additional resources, customers, and capabilities to support its continued growth.

ABOUT ALLSTON ADVISORY GROUP:

Allston Advisory Group is an independent mergers and acquisitions advisory firm serving privately held lower middle market companies. The firm provides mergers and acquisitions, business valuations, and exit strategies. Allston works closely with business owners to understand their objectives and prepare their companies for the transaction process. The firm then manages a disciplined and confidential sale process from initial preparation through closing.

For additional information on this transaction, please contact one of our advisors.

2014 M&A Market: What Deal Multiples Reveal About Business Value

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The 2014 M&A market continued to provide favorable conditions for many middle market business owners considering a transaction. Transaction activity remained strong, while reported valuation multiples increased during the second half of the year.

The Alliance of Merger & Acquisition Advisors (“AM&AA”) represents professionals serving the middle market mergers and acquisitions industry. Each year, AM&AA surveys its membership regarding completed transactions and prevailing market conditions. Through its Deal Stats Transaction Survey, AM&AA gathered information about sell-side transactions completed during the second half of 2014. The survey examined transaction volume and multiples of earnings before interest, taxes, depreciation, and amortization (“EBITDA”).

Encouragingly, both average and median EBITDA multiples increased during the survey period. The average multiple increased from 5.52 times EBITDA to 5.64 times EBITDA. Similarly, the median transaction multiple increased from 5.12 times EBITDA to 5.37 times EBITDA. Deal activity also increased, while overall transaction dollar volume remained above historical levels.

The survey reported the following average EBITDA multiples by industry:

  • Construction – 4.87x
  • Manufacturing – 5.68x
  • Wholesale Trade – 6.54x
  • Retail Trade – 6.02x
  • Professional Services – 5.32x

Of note, these industry averages provide useful market observations rather than predetermined valuation benchmarks. Individual companies may transact above or below these multiples based on their specific characteristics. The survey also identified a positive relationship between transaction size and EBITDA multiples. Generally, larger companies attracted higher valuation multiples than smaller companies.

Furthermore, company revenue showed a similar relationship with transaction multiples. These findings reflect the advantages that buyers may associate with greater scale, market position, and organizational depth. More revealingly, AM&AA members identified growth opportunities and buyer synergies as principal reasons for higher EBITDA multiples. Those findings demonstrate why buyers evaluate much more than historical earnings when determining value. A strategic buyer may identify opportunities to expand products, eliminate overlapping costs, or enter new markets through an acquisition. Correspondingly, those opportunities may allow the buyer to justify a higher valuation than another prospective purchaser.

For business owners, the 2014 M&A market reinforces a fundamental principle of preparing for a sale. Strong EBITDA matters, but the quality and future potential of those earnings also influence buyer interest. Owners should focus on sustainable growth, scalable operations, strong management, and defensible competitive advantages. An experienced M&A advisor will then position those attributes effectively within a competitive sale process.

HIKES POINT PAINT & WALLPAPER HAS BEEN ACQUIRED BY DAGES PAINT

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ABOUT THE TRANSACTION:

Hikes Point Paint & Wallpaper (“Hikes Point” or the “Company”) has been acquired by Dages Paint Company (“Dages” or the “Buyer”).

Established in 1976, Hikes Point has developed into a leading independent retailer of premium paint and decorating supplies. The Company operates three locations throughout the Louisville, Kentucky market. Over several decades, Hikes Point has built a strong reputation among professional contractors and do-it-yourself customers. The Company provides premium products, knowledgeable service, and specialized expertise for residential and commercial painting projects. Additionally, Hikes Point has become the largest Benjamin Moore account in the Louisville area. Its established locations, customer relationships, and market presence have supported the Company’s longstanding position within the community.

STRATEGIC FIT WITH DAGES PAINT:

Dages Paint has served the Louisville market since 1930 under its familiar “Keeping Louisville Colorful” slogan. The company is Louisville’s oldest independent paint retailer. For three generations, the Dages family has owned and operated the business. Throughout that history, Dages has maintained a strong commitment to personalized service and product expertise. The acquisition brings together two established independent paint retailers with deep roots in the Louisville market. Both companies have built their businesses around specialized knowledge, customer service, and long-term relationships.

In addition, Hikes Point provides Dages with three established retail locations and an expanded customer base. The transaction also strengthens Dages’ presence among professional contractors and individual consumers throughout the region. Just as significantly, Dages provides continuity for Hikes Point’s employees and customers. The new ownership shares the Company’s emphasis on service, product knowledge, and customer relationships. The combination allows both companies’ established strengths to continue under experienced local ownership. Accordingly, the transaction represents a natural strategic fit between two longstanding Louisville businesses.

ALLSTON ADVISORY GROUP’S ROLE:

Allston Advisory Group served as the exclusive financial advisors to Hikes Point Paint & Wallpaper and its owners. Allston began by performing an Analysis of Value and preparing the Company for the transaction process. The firm then prepared a comprehensive Confidential Information Memorandum presenting the Company’s operations, financial performance, locations, market position, and growth opportunities.

During the transaction, Allston managed the confidential sale process and coordinated communications between the parties. The firm also assisted the Buyer and Seller throughout due diligence and negotiations. A key transaction challenge involved securing sufficient acquisition financing despite modest available collateral. To address this issue, Allston assisted the Buyer in pursuing an SBA-guaranteed 7(a) loan. Through these efforts, the Buyer obtained the financing necessary to complete the acquisition. The financing structure helped convert a strategically compelling transaction into an executable one.

As a result, the transaction provided the sellers with their desired liquidity and ownership transition. At the same time, employees joined an established, customer-focused organization with significant industry experience. The acquisition also preserved local ownership while positioning the combined business for continued growth throughout the Louisville market.

ABOUT ALLSTON ADVISORY GROUP:

Allston Advisory Group is an experienced mergers and acquisitions advisory firm serving privately held, lower middle market companies. The firm provides mergers and acquisitions, business valuations, and exit strategies. Allston works closely with business owners to understand their objectives and prepare their companies for the transaction process. The firm then manages a disciplined and confidential sale process from initial preparation through closing.

For additional information on this transaction, please contact one of our advisors.

A. ARNOLD WORLD CLASS RELOCATION HAS BEEN ACQUIRED BY THE MANAGEMENT TEAM

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ABOUT THE TRANSACTION:

A. Arnold World Class Relocation (“A. Arnold” or the “Company”) has been acquired by members of the Company’s management team (“Buyers”).

Established in 1905 and headquartered in Louisville, Kentucky, A. Arnold has developed into a leading independent moving and relocation company. The Company serves individuals, families, corporations, and organizations throughout the United States and internationally. Through the A. Arnold Group, the Company provides a broad range of relocation, transportation, logistics, and commercial services. Its integrated capabilities allow customers to coordinate complex moves through an experienced organization.

A. Arnold World Class Relocation specializes in full-service domestic relocation for individual households and multinational corporations. The division manages relocations throughout the United States. Additionally, Sterling International, Inc. provides international relocation services for households and commercial customers. Its capabilities support clients moving employees, operations, and personal belongings across international markets. A. Arnold’s Commercial Services division provides business solutions for companies of various sizes. These services include logistics, transportation, and supply chain management.

MANAGEMENT BUYOUT AND OWNERSHIP TRANSITION:

The transaction transfers ownership to members of A. Arnold’s existing management team. As a result, the Company gains new ownership while maintaining experienced leadership already familiar with its operations. A management buyout may provide several advantages when an established leadership team is prepared to assume ownership. In this case, the transaction creates continuity for customers, employees, and other stakeholders. Moreover, the Buyers already understand the Company’s operations, customers, employees, and competitive position. Their existing knowledge helps reduce disruption during the ownership transition. The transaction also provides the sellers with a path to liquidity while preserving the Company’s established organization. At the same time, management gains the opportunity to participate directly in A. Arnold’s future ownership and growth.

ALLSTON ADVISORY GROUP’S ROLE:

Allston Advisory Group advised both parties in connection with the management buyout. First, Allston analyzed the Company’s financial performance and established a mutually-acceptable transaction value. Next, the firm helped structure a transaction that addressed the objectives of both the sellers and management team. Financing represented a critical component of making the transaction executable. Because the buyers had modest collateral available, conventional acquisition financing presented challenges. Allston therefore assisted management in obtaining financing through an SBA-guaranteed 7(a) loan. In doing so, Allston worked with the parties and financing sources to support the proposed transaction structure. The financing allowed management to complete the acquisition despite the limited collateral available.

The transaction demonstrates how thoughtful structuring may facilitate ownership succession when capable managers lack substantial personal capital or collateral. More broadly, the management buyout provided a practical succession solution for an established company with more than a century of operating history. It also positioned experienced management to lead A. Arnold through its next chapter of ownership.

ABOUT ALLSTON ADVISORY GROUP:

Allston Advisory Group is an independent mergers and acquisition advisory firm serving privately held, lower middle market companies. The firm provides mergers and acquisitions, business valuations, and exit strategies. Allston works closely with business owners to understand their objectives and prepare their companies for the transaction process. The firm then manages a disciplined and confidential sale process from initial preparation through closing.

For additional information on this transaction, please contact one of our advisors.

NEWS SOURCES:

Babson College’s 2013 Middle Market/Small Business M&A Survey

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Babson College recently examined the conditions shaping mergers and acquisitions for small and middle market businesses. Professor Kevin J. Mulvaney directed the research with participation from M&A advisors, bankers, and other transaction professionals. The survey evaluated trends affecting buyers, sellers, financing, valuations, and transaction execution.

The 2013 Middle Market M&A Survey described a market that had improved considerably following the recession. However, economic uncertainty continued to influence transaction activity. For business owners considering a sale, several findings stood out.

First, the survey characterized the environment as a seller’s market for quality companies. Strong businesses could attract buyer interest, but preparation remained essential. The same conditions did not apply equally to underperforming companies. Buyers remained selective and placed greater emphasis on sustainable earnings, growth prospects, and business quality.

Deal execution also required patience. The survey reported that transactions commonly required six to nine months from serious negotiations through closing. Some respondents expected timelines to extend another month or two. Buyer due diligence contributed to these longer timelines. Buyers increasingly used experienced teams to examine financial performance, revenue trends, and future growth potential.

Another finding involved seller participation in smaller transaction. As company size decreased, buyers generally demanded greater seller assistance. That assistance could include earnouts, deferred consideration, employment, consulting, or other continuing involvement. At the time, deferred consideration averaged approximately 20 percent of the purchase price in surveyed transactions.

Financing conditions were also improving. The survey identified greater middle market lending availability and a rebound in SBA-guaranteed acquisition financing. Meanwhile, mezzanine debt yields had declined to approximately 12% – 14%. Historical averages had previously ranged from approximately 15% – 20%.

Taken as a whole, the 2013 Middle Market M&A Survey delivered a straightforward message for business owners. Favorable conditions alone did not guarantee a successful transaction. Quality companies still required careful preparation, realistic expectations, and experienced transaction guidance. Sellers also needed the information and responsiveness necessary to withstand increasingly thorough buyer due diligence.

For owners considering a future capital event, the survey supported planning well before entering the market. Preparation allowed sellers to evaluate alternatives and approach potential buyers from a stronger position.

Allston Advisory Group is an experienced boutique M&A advisory firm providing a variety of services to lower middle market companies. See our footer for contact information.

(502) 742-2933
[email protected]
P.O. Box 21266, Louisville, KY 40221

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