Case Studies

Automotive — Acquisitions & Operating Restructuring

SITUATION OVERVIEW

In 2005, Carbide Partners’ Senior Advisor, Mark Simon, acquired a $120 million supplier of automotive pedals and steering systems with the backing of a middle market private equity sponsor that focuses on distressed situations. As CEO of the company, Mr. Simon developed a strategy to consolidate the automotive electro-mechanical driver controls industry and improve the operating and financial performance of the business.

CHALLENGES

Mr. Simon faced a number of challenges in implementing his strategic vision:

  • Core business operated below break-even EBITDA
  • Prior owner had under-invested in product development and new technology
  • Company suffered from a disadvantageous cost position in comparison to low cost country competitors
  • Business was over-reliant on a small number of customers and end markets

RESULTS

After acquiring the core pedals and steering systems business, Mr. Simon transformed the company strategically, operationally and financially:

  • Increased group sales to over $300 million within 24 months through the acquisition of two complementary businesses with combined $190 million of revenues and $(9) million EBITDA loss
  • Directed an aggressive operational structuring of the combined companies, eliminating $30 million of costs
  • Drove the combined business to profitability by consolidating suppliers, outsourcing non-strategic operations, re-negotiating prices, reducing headcount, lowering scrap and transportation costs, and consolidating manufacturing facilities globally
  • Improved liquidity by reducing inventories
  • Established a low cost country manufacturing facility in China and developed strategic manufacturing alliances in Turkey, Thailand, Korea and India
  • Diversified customer base by focusing sales and engineering resources on new “blue chip” customers, resulting in award of additional programs
  • Improved business relationships with existing OEM customers by enhancing delivery, quality and cost performance, leading to additional business awards