AEA

Relationships Matter

There is a simple reason our investment principles have worked for 50 years: We believe in a relationship-driven approach to investing through partnering with exceptional management teams of middle market companies to help them build and improve their businesses.

 

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AEA invested in Industrial Controls Distributors (“ICD”), a leading independent distributor of process controls, HVAC controls, and automated industrial valves in the Midwest and Eastern regions of the United States in December 2006. The company primarily serves the maintenance, repair, and overhaul markets and sells to installers, contractors and end-users directly.

AEA DIFFERENTIATOR: INDUSTRY RECOGNIZED EXPERTISE
  • AEA’s broad expertise in both the distribution and industrial sectors, supported by a strong track record growing businesses through acquisition, was a differentiating factor with ICD management.
  • AEA’s favorable reputation in the market coupled with AEA SBF’s unique focus on lower middle market sized companies provided a greater level of certainty for ICD’s sellers, allowing AEA to become the first choice among a competitive buyer group in a highly active market environment.
AEA VALUE CREATION
  • Sourced multiple add-on opportunities resulting in three major accretive acquisitions which expanded both geographic and product footprints.
  • Analyzed and supported significant investments in organic growth to transform ICD from a field sale model to a multi-channel marketer. Major initiatives included:
    – Launch of eCommerce and catalog programs leveraging experience and advisors from In The Swim and Colony Hardware
    – Launch of dedicated outbound marketing efforts in gauges and HVAC
    – Opening of greenfield offices in New England and North Carolina

  • Built an experienced and talented Board of Directors from the AEA network, further expanding the distribution services industry knowledge base.
RESULTS
  • AEA completed the sale of ICD to a strategic buyer in 2011.
  • The sale was in line with AEA’s initial investment thesis of growing ICD to an integrated platform that would serve as an accretive add-on for a larger strategic.

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AEA invested in PLZ Aeroscience Corporation (“PLZ”), a combination of Plaze, Inc. (“Plaze”) and Claire-Sprayway, Inc. (“Claire-Sprayway”) in August 2005 and November 2005, respectively. The Plaze division is a full-service outsourced contract packager of short-run aerosol products and the Claire-Sprayway division is a leading manufacturer and marketer of branded and private label aerosol cleaning agents, disinfectants, air fresheners, adhesives, lubricants, insecticides and automotive detail products. The Plaze division serves consumer and institutional products companies that outsource the formulation, filling and packaging of their aerosol products while the Claire-Sprayway division sells principally to the institutional market.

AEA DIFFERENTIATOR: AEA SOURCING EDGE
  • PLZ was a proprietary transaction sourced through the Chairman of Kranson Industries, Inc., an AEA Middle Market Fund portfolio company at the initial time of investment.
  • AEA SBF was able to effectively leverage the firm’s Executive and Participant deal network and industry knowledge in order to successfully complete an investment in PLZ. Post acquisition, AEA also included two of its Participants on the company’s Board of Directors.
  • AEA’s extensive network involvement within this transaction highlights the importance and advantage of AEA’s long-standing, expert relationships in various stages of the investment process.
AEA VALUE CREATION
  • Organized and negotiated the acquisition of Claire-Sprayway, doubling the size of the business and generating significant synergies. AEA subsequently led the acquisitions of CPC Aeroscience, Holy Cow and Camie Campbell, greatly expanding PLZ’s product footprint.
  • Supported development of retail sales channel, including distribution wins at big box retailers such as Walmart, Safeway and Target, while also expanding branded product offerings.
  • Analyzed and supported multiple plant consolidations and expansion projects to double capacity. This resulted in the consolidation of two older facilities at Claire-Sprayway and CPC into a new plant in Pacific, MO.
RESULTS
  • AEA recapitalized PLZ in 2007 and issued a dividend to investors.
  • AEA successfully closed the recapitalization of PLZ with another financial sponsor in 2011. Through this second recapitalization, the financial sponsor took majority control with the existing shareholders (including AEA SBF) remaining as minority investors.

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AEA invested in In The Swim (“ITS”), the largest direct marketer of swimming pool supplies to residential and commercial consumers in the United States in February 2005. The company offers an extensive selection of chlorine and specialty chemicals, pool equipment (such as pumps, filters and heaters), pool covers, liners and other accessories, and prospects through its traditional catalog program, via the internet, and through an outbound telesales effort.

AEA DIFFERENTIATOR: LEVERAGING THE AEA NETWORK
  • During the diligence process, AEA worked with a Participant to evaluate ITS’ competitive position in terms of pricing and cost structure. AEA also leveraged another Participant’s relationships in the hotel industry to assess and capitalize on the opportunity to grow ITS’ commercial business post-transaction.
  • Post-transaction, AEA built an experienced and talented board of directors from the industry relationships who worked actively alongside the deal team during the acquisition process. The addition of the two Participants who helped during the diligence process to the board provided both industry expertise and assistance in the development of a successful business to business program for the hospitality market.
AEA VALUE CREATION
  • Led a detailed strategic planning process, researching and identifying 14 organic and 40 acquisition opportunities.
  • Sourced and completed two add-on acquisitions, Spectrum Aquatics and Specialty Pool Products, which strengthened ITS’ competitive position in the commercial and internet markets, respectively.
  • Operationally, the AEA network provided ITS with new proprietary sources of customer acquisition. In addition, AEA augmented senior management through the hiring of senior executives in IT and internet marketing and was able to prioritize key operational and infrastructure improvements, namely in IT and systems, to support growth.
RESULTS
  • AEA completed the sale of ITS to a financial sponsor in 2008.
  • Under AEA ownership, ITS was able to increase both net sales and EBITDA by over 60% in just over three years.

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AEA invested in SRS Distribution Inc. (dba SRS Roofing Supply), a family of industry-leading, independent roofing distributors, in 2008. The company is now one of the five largest roofing distributors in the nation with a complete line of roofing products for residential and commercial applications.

AEA DIFFERENTIATOR: PARTNERSHIP WITH MANAGEMENT
  • AEA partnered with an executive who previously who led two successful consolidations and had strong industry relationships with both suppliers and acquisition candidates.
  • Together, AEA and management set an investment thesis to consolidate the roofing distribution industry.
AEA VALUE CREATION
  • Recruited proven management team to lead a consolidation in the roofing distribution industry.
  • Acquired original platform out of bankruptcy and since supported the acquisitions of numerous other businesses which established the company as a national player and one of the ten largest roofing distributors in the country.
  • Led revitalizations of original business, including management upgrades, working capital investment and the closing of underperforming locations.
  • Arranged an asset based loan and subsequently expanded it to $60 million in order to provide funding for acquisitions.
  • Opened greenfields and made acquisitions in key locations that capitalize on storm markets.
RESULTS
  • AEA sold SRS to a financial sponsor in 2012.
  • Under AEA’s ownership, despite a relatively flat roofing market, SRS was able to grow its business and create value by acquiring businesses, opening greenfield sites, and taking share. The company completed 27 acquisitions, opened 36 greenfield locations opened and grew to 5th largest roofing distributor in the US.

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AEA invested in Burt’s Bees, a leading manufacturer and marketer of natural personal care products in November 2003. The company offers a broad line of natural skin care, lip care, hair care, baby care, natural remedy, grooming and cosmetic products.

AEA DIFFERENTIATOR: ABILITY TO TRANSFORM A FAMILY-OWNED BUSINESS
  • AEA recruited and developed a professional management team and facilitated the ultimate CEO transition from the company’s founder, Roxanne Quimby, with a focus on preserving the value of the brand.
  • In addition, AEA helped fill all key positions on the leadership team including a Chief Financial Officer, Chief Marketing Officer, Head of Research and Development and Head of Manufacturing.
  • The AEA Participant model enabled AEA to populate the Burt’s Bees Board of Directors with high quality expertise and experience necessary to transition the company from a small family run business to provider of consumer products through mainstream channels and mass retailers.
AEA VALUE CREATION
  • Provided strategic guidance and support to management during the successful expansion from Burt’s Bees’ traditional base of health food and specialty channels to mainstream food, drug, and mass retailers.
  • Significant new product launches during AEA’s ownership, including in strategic personal care categories, such as hair care, sun care, hand washes and high end facial care.
  • Worked with management on a variety of strategic and operational improvements, particularly as it related to pricing optimization, working capital management, logistics and the supply chain. As part of these activities, AEA supported the company in its transition to a new warehouse and manufacturing facility. All of these efforts improved profitability, efficiency, quality and enabled the company to meet its growth demands.
RESULTS
  • AEA sold Burt’s Bees to a strategic buyer in 2007.
  • Under AEA ownership, Burt’s Bees nearly tripled its revenue and EBITDA and became one of the most recognizable natural skin care brands on the market.

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In 2007, AEA invested in Houghton International (“Houghton”), a leading global provider of specialty chemicals and technical services for metalworking applications. Founded in 1865, Houghton is headquartered in Valley Forge, Pennsylvania and operates 12 production facilities located in nine countries on five continents supported by more than 2,000 employees. The company’s broad range of specialty chemicals are used to lubricate, cleanse, harden, cool and protect metal components as they are being processed and treated.

AEA DIFFERENTIATOR: AEA INDUSTRY EXPERTISE
  • AEA’s extensive knowledge of various segments of the chemical industry, identified metal working sector as an area of interest years before Houghton was for sale.
  • AEA’s experience from a similar chemical segment, water treatment chemicals, provided targets for margin potential and business model attractiveness.
  • AEA Operating Partner had past experience in lubricants and water treatment.
AEA VALUE CREATION
  • Began to implement its strategic vision for Houghton by hiring from the AEA network, including a new CEO.
  • Under the leadership of AEA and the new CEO, Houghton successfully integrated two significant acquisitions and embarked on a broad reaching operational excellence program. AEA was critical in identifying, negotiating and executing both acquisitions, which were highly synergistic and created significant equity value.
  • Helped instill many of the safety, environmental, cash flow management, and reporting initiatives that have helped drive the company’s transformation.
  • AEA’s Asian operations were critical in all phases of the Houghton investment including initial diligence, acquisition evaluation and integration, divestiture of an unused Shanghai facility, and other strategic initiatives.
RESULTS
  • In December 2012, AEA sold Houghton to a strategic buyer.
  • Houghton successfully integrated two significant acquisitions and embarked on a broad reaching operational excellence program. These initiatives drove the realization of over $70 million in cost savings and helped the company successfully weather the global financial crisis of 2008-2009.
  • Under AEA ownership, Houghton nearly doubled its revenues, increased EBITDA by 2.5x, increased EBITDA margins by 500 bps, and nearly doubled Houghton’s market share in the metal working fluids industry, cementing Houghton as the clear market leader.

  • $15b

    With over $15 billion under management, AEA is a leader in global, middle-market private investing.

  • 125+

    With approximately 130 employees, including over 80 investment professionals, AEA’s experienced and focused team leverages deep industry knowledge and exceptional operational expertise.

  • 5/3

    With five offices across three continents, AEA has an unparalleled global network of relationships with family owners of industrial companies, business executives and influential government leaders.

  • 1968

    Founded in 1968 by members of the world’s leading industrial families, AEA is one of the oldest and most experienced private equity firms with a long legacy of success.

  • 75

    AEA has more than 75 Participants, who include some of the world’s pre-eminent industrial families, business executives and former government leaders.