Merchant Banking Investment

American Builders Supply

America Builders SupplyINVESTMENT OVERVIEW

In 2011, an investment affiliate of Carbide Partners, in partnership with private equity firm Blue Wolf Capital Fund II, L.P. and management, acquired the assets of American Builders Supply, the largest independent supplier of doors, windows and trusses to homebuilders in Florida.  Following the acquisition, Paul Haefcke, Senior Advisor of Carbide Partners, was named CEO of ABS, supporting the company’s existing management team.

INVESTMENT RATIONALE

American Builders Supply represented an attractive investment opportunity for several reasons:

  • Cyclical recovery – Current residential construction activity in Florida is extremely depressed relative to long-term demographic drivers of housing demand.  Carbide Partners believes that the deep industry downturn in the building products sector represents a compelling opportunity for capital appreciation.
  • Attractive acquisition valuation – As a result of the capital structure challenges facing ABS in early 2011, Carbide Partners and Blue Wolf were able to acquire the assets of the business at a favorable valuation.
  • Operational improvements – With the help of Paul Haefcke, the ABS management team is implementing a number of operational improvements, including rationalization of facilities, restructuring of lease terms, improvements in purchasing terms and rebates, and reductions in corporate overhead.
  • Industry consolidation – With a debt-free balance sheet and access to substantial additional capital, ABS is actively reviewing add-on acquisitions to expand geographically, broaden its product lines, and target new end markets, including the renovation/remodeling, multi-family, and commercial sectors.


ADD-ON ACQUISITIONS

American Builders Supply seeks potential acquisition candidates that could benefit from the capital and strategic resources of Carbide Partners and Blue Wolf.  ABS is interested in:

  • Distributors of complementary building materials, including doors, windows, trusses, lumber and related products
  • Providers of installation and contracting services, including shell contractors, that serve the single family, multi-family and renovation/remodeling construction markets
  • Preference for businesses in existing or adjacent geographic territories in Florida and the Southeast
  • EBITDA ranging from negative to $10 million; ABS is willing to invest in companies in bankruptcy and financially or operationally distressed situations