Industry: Auto Aftermarket Distribution
Initial Ownership: 64%
Date of Initial Equity Investment: April 2005
Date of Exit: April 2010
| Business Description: | Service Champ, Inc. (“Service Champ†or the “Companyâ€) is a leading wholesale distributor of vehicle preventative maintenance and repair parts to the quick lube industry. The Company provides virtually all the products used by a quick lube center except motor oil. The Company offers over 7,000 SKU’s and services over 5,000 customers in the U.S. and Canada from 8 distribution centers. The Company has an asset-light distribution model, using third party carriers rather than owning its own truck fleet. |
| Investment Thesis: | Service Champ was an attractive platform for numerous reasons: . Strong management team with significant equity ownership; . Industry leader, approximately 1.5x the size of the #2 competitor . Good platform to make acquisitions . High return on net assets – strong margins, low capital expenditures, good working capital turnover . Low customer concentration |
| Investment Highlights: | The deal team led the process of diligencing, negotiating, and closing three attractively unique add-on acquisitions, which were funded using the revolver. These acquisitions opened up new geographic markets (particularly Canada), increased leverage with suppliers and customers, and increased EBITDA margins because of significant overhead synergies. Due to the acquisitions, continued focus by management on winning new customers, and reducing material and freight costs, EBITDA increased from $8.1 million in 2004 to $13.4 million in 2009. |
