Monomoy Capital Partners, a leading private equity fund focused on deep value investing and business improvement in lower middle market companies, announced it has completed the sale of Compass Automotive Group to the Shipston Group Inc. for an undisclosed amount. The Compass investment produced a 3.4x gross cash-on-cash return for Monomoy and its investors.
Headquartered in Franklin, Indiana, Compass designs and manufactures aluminum chassis and suspension components for the North American automotive industry. Monomoy formed Compass in November 2007 by combining an existing portfolio company with aluminum casting assets acquired from Alcoa Inc. Compass later acquired assets out of bankruptcy, orphan divisions of larger industrial companies and an undermanaged family-owned business. Despite the collapse of the automotive industry in 2009 and 2010, Monomoy built Compass into a valuable automotive supplier by working with the company to consolidate facilities, sell non-core assets, spin out a division into a stand-alone business and implement lean manufacturing throughout the company’s operations.
Today, Compass is one of the largest aluminum foundries in North America that supplies chassis and suspension components to the automotive industry, and the company designs and manufactures safety-critical aluminum parts for dozens of automobile and light truck models. Under the guidance of Monomoy and its world-class operations group, Compass also has become an industry leader in product design, manufacturing quality, on-time delivery and operating costs, according to Monomoy.
“While Compass faced unprecedented challenges during our ownership, we firmly believed that an operationally-focused value creation strategy would create a profitable, dynamic business out of the underperforming assets we acquired from a variety of sellers,” said Justin Hillenbrand, a partner and co-CEO of Monomoy. “We are proud of Compass’ transformation into a healthy business, and we are confident that the company is positioned for continued success under its new owner.”
“Compass offers a prime example of Monomoy’s core investment strategy,” added Stephen Presser, a Monomoy partner. “We purchased a series of orphan businesses in complex transactions, leveraged the firm’s unique operational capabilities to drive free cash flow and increase earnings and successfully sold Compass as a growing company to a strategic buyer. This approach to value creation created strong returns for our investors through an economic recession that challenged the core of the automotive industry.”
“Monomoy was an invaluable partner through the creation and restructuring of our company,” explained Craig Conaty, CEO of Compass. “Monomoy has a talented and deep bench of investment and operating professionals committed to working with middle market companies like Compass. Throughout the past eight years, Monomoy provided Compass and its management team with the resources, tools and strategic guidance we needed to navigate a difficult time in the industry and to emerge as a market leader in every respect.”
BMO Capital Markets acted as the financial adviser to Monomoy in the sale of Compass. Kevin Morris and Evan Knobloch of Kirkland & Ellis LLP provided legal counsel to both Compass and Monomoy. Ernst & Young provide quality of earnings support for Compass in the sale process and Aon Risk Management provided insurance advice to the outgoing Compass Board of Directors.
