• Corporate Finance Transactions

BGL Client ECS Tuning Seeks Acquisitions - Mergermarket

September 10 2014

ECS Tuning, an online seller of aftermarket auto parts, plans to embark on its first acquisition now that it is owned by Bertram Capital, said Ryan Craig, partner with Bertram.

Craig said the company serves individuals as well as independent body shops. The industry has low margins and a couple of companies have struggled, but ECS is an e-commerce company and has “the right skill set to run a very efficient and profitable" business, Craig said.

Wadsworth, Ohio-based ECS is already beginning to reach out to targets and Craig welcomes ideas. Add-on acquisitions can have between USD 3m and north of USD 100m in revenue, he said. The company is looking globally for targets, as it has significant customer relationships outside the US. Targets in English-speaking countries would be easier to digest, he said.

The acquisition search is focused on German auto makes, but the company will also look at targets focused on Japanese, American and motocross cars. It would  also look at catalogs, as well as e-commerce businesses, Craig said. While public companies such as US Auto Parts trade at multiples of about 15 times, multiples for private companies are "kind of all over the place," he said.

John Tilson, managing director of Brown Gibbons Lang & Company, which advised ECS on the sale, said although the private equity firm owns the majority, the company's shareholders, Brian and Tom Demrovsky, co-CEOs, will drive the future direction of the business with Bertram's help.

Tilson said acquisitions will be a big part of the company's strategy going forward and that the market is very fragmented. The company is dominant in German automotives. Part of its strategy is to "expand to other brands and nameplates," such as domestic cars and Japanese cars. It could do this through mergers and acquisitions by acquiring websites used by consumers who own these cars, he said. The websites provide performance parts to make the car drive faster, handle better and provide greater fuel efficiency, he said.

"It's an exclusively enthusiast-driven business," Tilson said, noting that some customers are weekend racers. ECS competes with a large number of smaller players.

The auction process for ECS included only financial sponsors because the shareholders wanted to remain involved in the business, Tilson said.

David Lewis and Christopher Hunt of Krugliak, Wilkins, Griffiths & Dougherty were ECS’s lawyers. Perkins Coie advised Bertram. Grant Thornton was the PE firm’s accountant.

by Marlene Givant Star
 

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