Four-Party, Multi-Year Transaction Reveals Path Forward for Companies to Gain Scale and Leverage Through Consolidation
SAN JOSE, Calif., July 23, 2019 /CNW/ -- International auto industry advisor Capstone Financial Group, Inc. and its investment banking subsidiary Mobility Securities, LLC recently completed a complex transaction in which Adell Group Inc., a Texas-based automotive OEM supplier and portfolio company of Kinderhook Industries, LLC, simultaneously acquired three vertically integrated manufacturers and distributors of trim products sold to auto manufacturers through the Original Equipment Service channel. The transaction demonstrates the growing importance of consolidation in the auto supplier sector.
"Vertical integration and auto supplier consolidation is inevitable and growing," said Dan Smith, Capstone's CEO. "All companies need scale and negotiating power, and the best path for many is vertical integration. We will see more deals involving multiple parties, particularly now that auto sales have declined. To take on these more difficult deals, investment banks will need specialized skill sets involving intimate knowledge of and deep experience in the automotive industry."
The deal was exceptionally complex, involving three suppliers in two countries. It included two asset sales, a stock sale, two currencies, financial statements and documents in two languages, two sets of Canadian provincial laws, and four taxing jurisdictions. Capstone had five personnel on the deal team, including Carl Norman, the firm's managing director.
The sellers were three separate entities: Powerflow Inc., of Buffalo, NY; Powerflow Products Ltd., of Toronto; and Solutions Plastik Inc., of Magog, Quebec. Capstone provided independent, in-depth financial analysis and accounting functions for the three entities in preparation for the deal.
"Capstone possesses unique skill sets plus the deep industry expertise and relationships necessary to structure a transformative deal like this," said Doug Ward, Powerflow's founder. "Deals like this don't get done often because there are so many moving parts and most investment bankers don't understand the automotive industry and its distribution," Smith said.
About Capstone
Capstone, based in San Jose, CA, has provided guidance to the automotive industry since 1990, with a recent focus on the burgeoning auto tech space. It uses a consultative business model built on deep knowledge of the automotive industry and an extensive database of industry contacts that help facilitate successful transactions within the automotive industry.
Securities offered through Mobility Securities, LLC, Member FINRA/SIPC, and a wholly-owned subsidiary of Capstone.
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SOURCE Capstone Financial Group
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