M&A as a tool for turnaround
Capstone Headwaters, announced that it has successfully advised Arbor Contract Carpet, Inc. on a Management Buyout supported by a non-control investment of preferred stock and subordinated debt from Cyprium Partners. The terms of the transaction were not disclosed.
Arbor, founded in 1982 and headquartered in Irving, Texas and Denver, Colorado, replaces and installs a wide range of flooring options from its twelve locations in Texas, Florida, Colorado, California and Nevada. A significant portion of the Company’s revenue is derived from the replacement of existing flooring, which typically occurs every three to five years in well-maintained apartment communities, with new construction projects comprising the balance of the business.
Cyprium Partners is a private equity and mezzanine firm focused on non-controlling investments in profitable middle-market companies, allowing company owners and their management teams to retain a controlling interest in their businesses. Cyprium provides common equity, preferred stock, subordinated debt or any combination thereof, offering flexibility and increasing the certainty of close. The Cyprium team has completed 76 non-control investments over its 21-year history.
Darin Good, Managing Director for Capstone Headwaters’ Building Products and Construction Services Team, said
“We are pleased to complete the preferred transaction for the founder and management team, a management buyout. Arbor’s founder empowered his management team in 2011 to facilitate growth and national expansion. Nearly ten years later, and revenue growth of 250%, it is fitting for the management team to take a controlling interest in Arbor while facilitating his exit.”
Paul Devereux, Founder and Chairman of Arbor, commented
"The Capstone Headwaters team was very thorough in its analysis of Arbor and provided us with the pros and cons of all potential transaction options to assist in our decision making. They were instrumental in structuring a transaction that both maximized value and allowed the existing management team to obtain control. Capstone Headwaters’ experience in the industry, buyer universe and lending markets was invaluable at every key milestone on the path to closing."
Matt Gilbreth, President of Arbor, added
"We are excited to partner with Cyprium and to begin the next chapter in Arbor’s legacy. Our current management team has driven substantial growth in Arbor for the past nine years and we look forward to continuing growth and opportunistic expansion moving forward."
Dan Kessler, Partner at Cyprium, stated
“The Arbor management buyout is another example of the many ways junior capital can be used to structure an investment that keeps management in economic and operational control.”
M&A as a tool for turnaround
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