VALTERRA PRODUCTS, INC.
Valterra Products, Inc.
Valterra Products, Inc. of Mission Hills, CA has been recapitalized by Scott Capital Partners, LLC of Rowayton, CT. Sperry, Mitchell & Company initiated the transaction, assisted in the negotiations, and served as exclusive financial advisor to Valterra Products.
Overview
Valterra Products, Inc. (www.valterra.com) is a leading designer and manufacturer of brand-name fluid control products for the Recreational Vehicle (“RV”), Pool & Spa, and Industrial markets. The Company offers a comprehensive portfolio of over 3,500 products, including valves, fittings, regulators, hoses, pumps, filters, and cleaning accessories. Its products are sold to a diverse, global base of over 1,200 customers.
Scott Capital Partners (www.scottcap.net) is a family investment group established to deploy Richard L. Scott’s personal capital in growing private companies across various industries. The firm takes a long-term “buy and build” approach, with no set time horizon for investments.
Situation
- The owners of Valterra first contacted us in 2005 to engage in exploratory discussions. In the intervening years, we provided periodic advice on market conditions, valuation and how to best position the company to maximize interest and value. By 2012, the owners were ready to sell.
- Of the two owners, one wanted to retire and sell his 50% stake, while the other wanted to continue to run the business and maintain a minority equity position.
- Valterra generates most of its revenue from the RV industry, which tends to be very cyclical. In addition, while the company’s headquarters are in Southern California, all of its production capabilities are at a facility in Tijuana, Mexico, which is unfairly perceived as a dangerous place to do business. Thus, a succesful sale would depend on buyers getting comfortable with these two critical issues.
Sperry Mitchell Solution
- We address major issues candidly and clearly. Rather than downplaying Valterra’s exposure to the RV market and its Mexican operations, we presented a compelling argument as to the great growth potential of both the company and the industry, as well as reasons why manufacturing in Tijuana made strategic sense. As a result of directly addressing these issues, we were able to generate more buyer interest than originally anticipated.
- We focus on favorable partnership dynamics as well as valuation and structure. Since one of the owners wanted to remain active in the business after closing, the right chemistry and fit with the buyer were very important. We facilitated a number of calls and meetings between the owners and potential buyers, allowing the owners to closely evaluate interested parties. Ultimately, by allowing the time to get to know the final suitors well, the owners made the choice to sell to Scott Capital with confidence.
