HILTON HEAD, SC Capstone Financial Group has completed the sale of its client, Extang Corp., a manufacturer of soft tonneau covers for light trucks, to an affiliate of Kinderhook Industries. In addition, Capstone represented Kinderhook in the purchase of TruXedo, another manufacturer of soft tonneau covers. Both transactions took place on Nov. 16.
Capstone was contacted by Extang to discuss strategic alternatives that would allow for a divestiture of the founding shareholders’ interests while keeping the company’s management team intact. Due to the heightened interest in the truck accessories segment, Capstone entertained several bids for the purchase of Extang from a variety of prospective purchasers, both financial and strategic. Kinderhook emerged as the winning bidder during final rounds of negotiations and subsequently completed a purchase of all of Extang’s issued and outstanding shares.
Simultaneously, Capstone was asked by Kinderhook to assist in the acquisition of TruXedo, a transaction which would give the combined companies approximately 40 percent market share in soft tonneau covers, one of the most popular add-on accessories for light trucks.
Capstone’s President Dan Smith commented on the significance of these transactions.
“We see these consolidation plays in every auto aftermarket segment performance parts, chemicals, appearance products and certainly truck accessories,” Smith stated. “The industry is undergoing more fundamental changes than we’ve seen in our 20 years of covering it. Indeed, there is a paradigm shift happening across multiple distribution channels, and, as the rule goes, when a paradigm shift occurs, everybody is set back to zero, creating a new level playing field and new starting block. These deals become the basis of the new playing field.”
According to Captsone, these concurrent transactions are further evidence of the “changing of the guard” throughout the auto aftermarket industry, particularly as they relate to the immense amount of dollars invested in the industry by private equity firms. Many of the original owner-operated companies such as Extang have morphed from purely entrepreneurial enterprises to organizations that are professionally managed, sophisticated, and now backed by institutional investors with an emphasis on maximizing shareholder value.
For more information about Extang Corp., visit: www.extang.com.
For more information about TruXedo, go to: www.truxedo.com.
To learn more about Capstone Financial Group, visit: www.capfg.com.