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American Tin Ceiling Co.

Closing Date: 7/31/2013

Acquired by Net Direct Merchants | Industry: Building Products | Sub-Industry: Tin Ceilings

 

Deal Overview

American Tin Ceiling Co., located in Bradenton, Florida, is the leading manufacturer of tin ceiling tiles and sells them exclusively through its Internet e-store. The owner started the business in 2002 as a tin ceiling installation company on the West Coast of Florida after a grueling process to order and install his own tin ceiling. The CEO and Owner quickly realized the small area in which he started his business was not ready for the resurging tin ceiling trend. He transformed the business in 2004 to stamp and powder coat the tin in-house and sell it to consumers around the world online.

Ultimately, after running an extremely competitive process our client opted to go with the quasi-strategic group in NetDirect Merchants, a portfolio company of The Mustang Group. NetDirect Merchants also focuses their marketing and selling effort on the Internet with electric fireplaces, mantels and shelving. The pairing was successful and the deal was consummated on July 31, 2013.

From engagement letter to closing, the process only lasted five months. There were not monumental challenges to complete this deal. However, there were three areas that did put stress on the process. First, the seller was in his mid-60s and facing certain health issues with older age. This made it difficult to schedule management meetings. He only had the energy to participate in one per day, and doing meetings on consecutive days was challenging for him to keep his energy level up. Second, the CEO’s unfamiliarity with how financial sponsors finance and complete M&A transactions created a set of challenges related to deal structure, timing and who was the most appropriate buyer to handle the seller’s concerns. During a follow up meeting with one of the six potential suitors, the seller was shown a leveraged buyout model for American Tin Ceilings and balked at the cost of the debt that would be placed on his business. It took several days, many phone calls, and email exchanges to get our client comfortable with the way financial sponsors complete transactions. Lastly, there was one finding in diligence around the accounting of payroll taxes. This finding shifted some of the cash at closing to the earn out and caused little consternation on the process.

 

  • 2012