Montage Partners Successfully Exits Investment in Southwest Data Products

Rhea-AI Summary

Nucor acquires Southwest Data Products for $115 million. Montage Partners successfully exits its investment in SWDP. SWDP, a leading manufacturer of data center equipment, was acquired by Nucor, a sustainable steel company. SWDP's revenue grew 5x since Montage's investment, expanding into new product lines and increasing team members by 80%.

Insights

Market Research Analyst

The acquisition of Southwest Data Products (SWDP) by Nucor Corporation for $115 million is a strategic move that taps into the growing demand for data center infrastructure. This move is likely to enhance Nucor's product portfolio, providing a new avenue for revenue growth. SWDP's specialization in airflow containment systems, server enclosures and related products is a complementary fit for Nucor's steel and steel products business, potentially leading to operational synergies.

Given the expansion of digital services, cloud computing and big data analytics, the data center market is experiencing robust growth. The acquisition allows Nucor to diversify its offerings and capitalize on this trend. The focus on high-quality, custom-manufactured products and the ability to control the process from design to installation could give Nucor a competitive edge in terms of product differentiation and customer satisfaction.

Financial Analyst

From a financial perspective, the acquisition's impact on Nucor's balance sheet and future earnings is a critical aspect for stakeholders. Nucor's investment in SWDP, which has grown its revenue by 5x since Montage Partners' investment, suggests a significant potential for return on investment. The deal's value at $115 million should be weighed against SWDP's earnings and growth trajectory to assess its financial prudence.

It is also noteworthy that SWDP has expanded its workforce by 80%, indicating not only growth but also potential increases in operational costs. Investors should monitor how Nucor integrates SWDP's operations and whether it can achieve cost efficiencies without compromising on the growth momentum SWDP has shown.

Legal Expert

The role of legal advisors in the acquisition process is crucial, ensuring compliance with regulatory standards and a smooth transition. The involvement of legal counsel from both sides, Osborn Maledon, P.A. for SWDP and Moore & Van Allen, PLLC for Nucor, highlights the importance of due diligence in such transactions. It is essential to understand the implications of intellectual property, especially in a sector where proprietary designs and manufacturing processes are key competitive advantages.

Stakeholders should be assured that the acquisition has been structured to mitigate legal risks, including potential antitrust concerns, given the size and influence of Nucor in the North American market. The legal expertise involved in this deal is indicative of its complexity and the need to navigate industry-specific regulations.

Nucor Corporation acquires the manufacturer for $115 million

SAN BERNARDINO, Calif., April 1, 2024 /PRNewswire/ -- Montage Partners, a people-first private equity firm based in Scottsdale, Arizona, today announces the successful exit of its investment in Southwest Data Products ("SWDP" or the "Company"), a leading manufacturer of branded airflow containment systems, server enclosures, security caging, and cable management systems used in the world's most advanced data centers to house and protect computer networking equipment. The Company was acquired by Nucor Corporation (NYSE: NUE) ("Nucor"), North America's most diversified and sustainable steel and steel products company, for $115 million.

Headquartered in San Bernardino, California, SWDP was founded in 1986 by Martin Ament. Today, the Company serves the world's largest and most innovative hyperscale cloud and colocation data center operators, and prides itself on its differentiated focus on offering the highest quality custom-manufactured products and speed of fulfillment from design to install. Through end-to-end control over its manufacturing and installation process, SWDP outperforms other providers in structural integrity, aesthetics, and speed of delivery.

Montage Partners invested in SWDP in 2017 in partnership with Ament.

"My story prior to partnering with Montage Partners probably sounds familiar to many founders: I was wearing many hats and working most nights and weekends; growing the Company but knowing there was so much more green grass to go for," said Ament. "I chose Montage because of their partnership approach and proven track record in helping companies scale, and it was absolutely the right choice for me and my company. I am thrilled to be able to build on that success with the Nucor team."

Since Montage Partners' investment, SWDP has grown revenue by 5x. During this time the Company expanded into three new products lines (cage, containment, and POD structures), streamlined manufacturing through process flow optimization, and developed the in-house capability to install products for customers, enabling SWDP to deliver products with industry-best lead times through controlling the process from design to install, ensuring a single point of responsibility for customers. SWDP has expanded its number of team members by 80% over the last seven years. Montage Partners helped lead recruitment processes to build out a high-caliber management team around Ament, freeing his time to focus on big-picture initiatives and scale the company rapidly.

"We're thrilled for Martin, Nick, Jesse, and the entire SWDP team as the Company joins the Nucor family," said Jordan Tate, co-Managing Partner of Montage Partners. "Our partnership with SWDP embodies what we love to do: invest in successful, founder-led companies looking to scale significantly, leveraging our resources and the Montage Partners ecosystem to accelerate growth. SWDP is positioned for a bright future, and we look forward to following the team's continued success in the years ahead."

Advisors

Lincoln International served as financial advisor to SWDP. Osborn Maledon, P.A. served as legal counsel to SWDP. Moore & Van Allen, PLLC served as legal counsel to Nucor.

About Montage Partners

Founded in 2004, with offices in Scottsdale, Arizona and Salt Lake City, Utah, Montage Partners is a people-first private equity firm dedicated to helping established businesses reach transformative growth. Montage Partners invests in companies headquartered in the U.S. or Canada with $1.5 million to $7 million in EBITDA across the business services, consumer, healthcare, industrial, and technology sectors. Above all other investment criteria, Montage Partners invests in exceptional people.

Media Contacts

Brooke Ouvarov-Bancalero
Director of Marketing & PR, Montage Partners
Email: bouvarov@montagepartners.com

Emily Rios
Vice President, Trevelino/Keller
Email: erios@trevelinokeller.com

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SOURCE Montage Partners

FAQ

What is the name of the company that acquired Southwest Data Products?

Nucor acquired Southwest Data Products.

How much did Nucor pay to acquire Southwest Data Products?

Nucor acquired Southwest Data Products for $115 million.

What is the ticker symbol for Nucor ?

The ticker symbol for Nucor is NUE.

Who founded Southwest Data Products?

Southwest Data Products was founded by Martin Ament in 1986.

What type of products does Southwest Data Products manufacture?

Southwest Data Products manufactures branded airflow containment systems, server enclosures, security caging, and cable management systems for data centers.