Monomoy Capital Partners Agrees to Sell Sportech to Patrick Industries for Approximately $315 Million

Rhea-AI Summary

Monomoy Capital Partners (MCP) (NASDAQ: PATK) announces the sale of Sportech, a leading designer and manufacturer of cab components, to Patrick Industries, Inc. The transaction is expected to close on or before January 24, 2024, subject to customary closing conditions and regulatory approval. Monomoy invested in Sportech in 2019 and worked on significant revenue growth and operational improvements. Sportech is a premier powersports platform, providing integrated door systems, windshields, roofs, canopies, and more across various end markets.

Insights

Market Research Analyst

The sale of Sportech by Monomoy Capital Partners to Patrick Industries represents a significant event in the middle-market M&A landscape, particularly within the manufacturing sector. The strategic divestiture by Monomoy, after a period of operational enhancements and organic growth initiatives, indicates a successful value-creation effort that could be a case study for private equity investment in founder-owned businesses.

From a market research perspective, this transaction might signal a consolidation trend in the powersports components industry, as larger entities like Patrick Industries absorb specialized manufacturers to diversify product offerings and strengthen market positioning. The deal may also reflect the attractiveness of companies with a robust operational backbone and a clear strategic vision, as evidenced by Sportech's growth trajectory post-Monomy's involvement.

Stakeholders in Patrick Industries may anticipate potential synergies and increased market share, but should also be mindful of integration risks and the challenge of maintaining the innovative spirit of a founder-owned business within a larger corporate structure.

Financial Analyst

From a financial standpoint, the acquisition of Sportech by Patrick Industries is likely to have material implications for both entities' financials. For Patrick Industries, the acquisition cost, financing methods and subsequent integration expenses will be key factors to watch in the short-term. Investors should scrutinize the deal's impact on Patrick's balance sheet, cash flows and earnings per share, considering potential revenue synergies and cost savings.

Long-term benefits for Patrick Industries could include diversified revenue streams and enhanced economies of scale. However, the success of the acquisition will largely depend on Patrick's ability to effectively leverage Sportech's operational strengths and market presence without disrupting its existing business model.

The transaction metrics, such as the purchase multiple paid relative to Sportech's EBITDA, will be critical to evaluate the financial prudence of the deal. A comparison with industry norms for such transactions could provide insights into the strategic value Patrick Industries sees in Sportech.

Legal Expert

The legal intricacies of the Sportech sale, with Kirkland & Ellis LLP as legal counsel, underscore the complexity of M&A transactions in the manufacturing sector. Regulatory approval and customary closing conditions are standard hurdles that could affect the timing and finalization of the deal.

Legal due diligence is paramount in such transactions to uncover any potential liabilities or compliance issues that could affect the valuation or post-acquisition integration process. Additionally, the legal structure of the deal could have tax implications for both Monomoy Capital Partners and Patrick Industries, influencing the net financial benefit of the transaction.

It will be important for stakeholders to understand the warranties and indemnities agreed upon in the sale, as these can have long-term legal and financial consequences. The role of legal advisors in navigating these complexities cannot be overstated, as it ensures a smooth transition and minimizes post-closure disputes.

Monomoy worked alongside the management team of the previously founder-owned business to drive organic growth

NEW YORK--(BUSINESS WIRE)-- Monomoy Capital Partners, a private investment firm focused on private equity and credit investing in the middle market, is pleased to announce it has entered into a definitive agreement to sell Sportech, a leading designer, manufacturer and assembler of cab components and assemblies for a wide range of OEM customers, to Patrick Industries, Inc. (NASDAQ: PATK). The transaction is expected to close on or before January 24, 2024, and is subject to customary closing conditions and regulatory approval. Monomoy invested in the founder-owned business in 2019 and has since worked alongside the management team, many of whom have been with the company for multiple decades, on significant revenue growth and operational improvement initiatives that positioned the company to be recognized as one of the premier powersports platforms in the country.

Headquartered in Elk River, Minn., with three manufacturing locations across the state, Sportech provides integrated door systems, windshields, roofs, canopies, bumpers, fender flares and cowls across the powersport, golf and turf, industrial and agriculture end markets. Sportech proudly offers highly engineered and customized products for specific applications and end uses.

"In this journey with our valued partners at Monomoy, we found not only a team of experienced operators but also a cohort of likeminded collaborators who understood the strength of our existing leadership team’s expertise,” shared Sportech CEO Jim Glomstad, who joined the company in 2010 before stepping into the CEO role upon Monomoy’s acquisition. “Monomoy’s experience working with founder-owned companies helped us equip the legacy Sportech management team with tools to amplify the company’s success and create long-term value for our team and partners. As we begin this exciting new chapter with Patrick, we are poised to build on that momentum to become an even stronger resource and supplier to the powersports and adjacent markets.”

Monomoy’s partnership with Sportech is defined by the team’s commitment to implementing operational improvements and long-term strategic planning to drive organic growth. Monomoy believes that its nearly twenty years of experience investing in family- and founder-owned middle-market industrial and consumer businesses is the foundation of its success in implementing operations-driven value-creation strategies across its portfolio.

“Sportech’s growth underscores the unique strength of our closely integrated teams and their commitment to our supportive approach as companies make the leap from a family- or founder-led operation to an enterprise with even broader scale and breadth,” expressed Monomoy Founding Partner and Co-CEO Dan Collin. “We are honored to have worked alongside the company’s management team to exceed the goals we outlined together, and we are confident they are well-equipped for continued success as they join the Patrick family of brands.”

Baird served as the exclusive financial advisor and Kirkland & Ellis LLP served as legal counsel to Sportech and Monomoy with respect to the transaction.

Monomoy Capital Partners

Monomoy Capital Partners is a private investment firm with $3 billion in assets under management across a family of investment funds. Monomoy invests in the equity and debt of middle-market businesses that can benefit from operational and financial improvement with a focus on manufacturing and distribution businesses across industrial and consumer product sectors in North America and Europe. Please see our website at www.mcpfunds.com for further information concerning Monomoy and its portfolio companies.

Sportech

Sportech designs, manufactures and assembles cab components and systems for the powersports, golf and turf, industrial and agricultural end markets. Sportech’s design and engineering capabilities allow the company to provide complex components and assemblies to its original equipment manufacturer customers. The company is headquartered in Elk River, Minn. and operates three facilities in the state. To learn more about Sportech, please visit the company’s website at www.sportechinc.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240110089929/en/

MiddleM Creative, on behalf of Monomoy Capital Partners

Jan Morris, Vice President

Jan@middlemcreative.com | 904.210.3302

Source: Monomoy Capital Partners

FAQ

What is the latest announcement from Monomoy Capital Partners (MCP) (NASDAQ: PATK)?

Monomoy Capital Partners announces the sale of Sportech, a leading designer and manufacturer of cab components, to Patrick Industries, Inc.

When is the expected closing date of the transaction?

The transaction is expected to close on or before January 24, 2024, subject to customary closing conditions and regulatory approval.

What did Monomoy Capital Partners invest in Sportech in 2019?

Monomoy invested in Sportech in 2019 and worked on significant revenue growth and operational improvements.

What products and services does Sportech offer?

Sportech provides integrated door systems, windshields, roofs, canopies, and more across various end markets.

Where is Sportech headquartered and how many manufacturing locations do they have?

Sportech is headquartered in Elk River, Minn., with three manufacturing locations across the state.

Who is the CEO of Sportech?

Sportech CEO is Jim Glomstad, who joined the company in 2010 before stepping into the CEO role upon Monomoy’s acquisition.