Sperry Mitchell Advises Valterra Products on its Sale to Scott Capital Partners

Valterra1New York, NY (May 31, 2013)Valterra Products, Inc. (“Valterra” or the “Company”) of Mission Hills, CA has been recapitalized by Scott Capital Partners, LLC (“Scott Capital”) of Rowayton, CT. Sperry, Mitchell & Company, Inc. initiated this transaction, assisted in the negotiations, and served as exclusive financial advisor to Valterra Products, Inc.

Valterra (www.valterra.com) is a leading designer and manufacturer of brand name fluid control products to the Recreational Vehicle (“RV”), Pool & Spa, and Industrial markets. The Company offers one of the most comprehensive lines in its respective markets, with a portfolio of over 3,500 products and accessories. Valterra’s suite of products includes valves, fittings, regulators, hoses, test kits, pumps, filters and cleaning accessories.  Its products are sold to a large and diverse base of over 1,200 customers both in the U.S. and internationally.

Scott Capital (www.scottcap.net) is a private investment firm that focuses on companies that offer the opportunity for solid, achievable growth and capital appreciation.  The firm believes in creating value by partnering with existing management teams and by taking a distinct long-term “buy and build” view with each portfolio company investment.  Scott Capital assists its partner companies with a range of operational and strategic support activities.

Sperry, Mitchell & Company, Inc. (www.sperrymitchell.com) is an investment banking firm specializing in middle-market merger and acquisition advisory services. Since the firm’s founding in 1986, Sperry Mitchell has completed hundreds of transactions in a wide range of industries, with values ranging from $10 to $450 million.

 

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RV Business

Private Equity and Venture Capital

Sperry Mitchell Advises Alex Toys on its Sale to Propel Equity Partners

Alex Tombstone Tombstone1New York, NY (May 28, 2013) Panline USA, Inc. d/b/a ALEX Toys (“ALEX” or the “Company”) of Northvale, NJ has been acquired by Propel Equity Partners of Greenwich, CT. Sperry, Mitchell & Company, Inc. initiated this transaction, assisted in the negotiations, and served as exclusive financial advisor to ALEX Toys.

ALEX Toys (www.alextoys.com) is a leading designer and producer of toys and children’s lifestyle products. ALEX products cater to the upscale specialty toy market and are sold in over 80 countries through retail stores, catalogs, and websites. The Company has received over 300 awards from toy experts and influential consumer magazines. ALEX was founded in 1986 by Richard and Nurit Amdur.

Propel Equity Partners (www.propelequity.com) is a private equity firm focused on investments in branded consumer products companies. Founded in 2012, Propel provides hands-on management to portfolio companies to professionalize operations, accelerate sales growth, and improve margins. Propel believes in building value by partnering with existing management to energize brands and invigorate new product innovation.

Sperry, Mitchell & Company, Inc. (www.sperrymitchell.com) is an investment banking firm specializing in middle-market merger and acquisition advisory services. Since the firm’s founding in 1986, Sperry Mitchell has completed hundreds of transactions in a wide range of industries, with values ranging from $10 to $450 million.

 

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Mergers & Acquisitions

Sperry Mitchell Finds Success In Europe

Morgan Construction Co. had been in the wire rod mill-making business for 120 years, or five generations of family ownership until New York investment bank Sperry Mitchell & Co. sold the steel equipment manufacturer to Austria’s Siemens VAI Metals Technologies for $165 million this spring.

Sperry Mitchell, a husband-and-wife boutique formed by Paul Sperry and Beatrice Mitchell, has four letter-of-intent proposals from private equity firms which, considering the frozen state of the credit markets, isn’t an insignificant accomplishment. Yet, it’s the selling of family held businesses like Morgan that has epitomized the strong cross-border interest the M&A boutique has garnered from European strategics this year. One such deal that happened at the beginning of the year involved the $36 million purchase by Ireland’s Clondalkin Group, a portfolio company of New York’s Warburg Pincus, of Sperry Mitchell client Accutech Films, a Coldwater, Ohio-based company.

Perhaps more importantly, the cross-border transactions are proof that the unique sell side-only approach that Sperry and his wife, who Sperry calls “the rainmaker,” works. …

 

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High Beam Research

 

Bloomberg Business: “One Stellar Seller”

Beatrice H. Mitchell, principal at New York investment boutique Sperry Mitchell, has been in the trenches making deals for small-business owners for 20 years. There may be no absolutely fail-safe way to prevent deals from crumbling, but Mitchell says sellers can increase their odds of success by hiring a good team. Then expect the unexpected.

Q: How often do deals fall apart?

A: In my experience, about 10% of the time. The most common reason is that a client doesn’t hit his numbers. Say a client has projected $5 million in earnings this year. Instead, he loses money because his company is importing from China, and suddenly the price of goods in China rises.

The buyer will want to renegotiate for a lower sale price. In those cases, a seller almost always walks away from the deal.

Q: What causes buyers to change their minds and back out?

A: In a seller’s market like this, buyers behave very carefully. But one reason is that the buyer doesn’t get all its financing. We tell them to find bridge financing. You don’t let your client take the hit.

Q: When deals collapse, second-choice buyers often lowball. Should sellers accept those bids?

A: If the second bid is within the range of what we thought the company was worth, we often recommend they do.

Some sellers will say: “Let’s take it off the market.” But that’s not a good situation. If you have to go back to the market, you often need to wait at least a year.

Q: Why do you tell sellers to hire a lawyer they haven’t worked with before?

A: A lawyer who has worked with a company for years has a vested interest in the deal not going through because he’s going to lose a client. So sometimes an attorney that has a long relationship with a company will take an extreme position, and that’s where the nail biting comes in. We refer sellers to a lawyer experienced in mergers and acquisitions.

Q: What questions should sellers ask potential brokers or bankers?

A: What are the last couple of deals you’ve done? At what multiples were they done? Can we talk to the sellers and buyers? Then ask about the firm’s success rate — what percentage of deals do they close? When you do talk to the sellers, ask how close the price they eventually got was to the value the banker had put on their company. That tells you if the banker is giving a realistic appraisal of your company, [or] if they’re just trying to get your business by quoting a high valuation.

By: Virginia Munger Kahn

 

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Bloomberg Business