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OCTOBER 6, 2005
CHATTANOOGA, TENNESSEE
FOR IMMEDIATE RELEASE
Decosimo Corporate Finance (DCF) announced today the closing of a strategic sale valued at $50 million.
Machining Technology Group, LLC acquired by Accellent, Inc.
Machining Technology Group, LLP (“MTG”) provides
development, engineering, rapid prototyping and manufacturing of
specialized instruments for the world’s major orthopedic medical device
companies.Transaction Snapshot: DCF structured a confidential
marketing process to target private equity firms that fit both MTG’s
profile and its owners’ objectives. In view of recent industry
developments pointed out by DCF, the owners decided to add a few select
strategic buyers to the process. On October 6, 2005, MTG was sold
to Accellent, Inc., a leading provider of integrated contract
manufacturing and design services to the medical device industry.
This transaction value of over $50 million represents a multiple of
7.6x MTG’s projected 2005 EBITDA.
Transaction Highlights
Seizing an Opportunity
MTG’s
owners engaged DCF to value the company for general corporate planning,
including updating their key man life insurance. While delivering its
valuation, DCF presented the idea of a private equity recapitalization
both to achieve personal liquidity and diversification and to best
position MTG to meet the demands of a soaring market for spinal devices.
Effective Positioning
MTG
faced the challenges of over 90% customer concentration and a growing
need for capital expenditures. DCF helped articulate and present
a compelling story of the company’s strengths and opportunities to
potential investors.
Competitive process
Having
received indications of interest from several financial and strategic
buyers, DCF arranged visits with the top prospects. After helping
MTG’s owners weigh the pros and cons of a strategic vs. financial
transaction, DCF negotiated a transaction price that more than doubled
management’s original expectations.
Excellent Results
In
addition to $33 million cash and a significant amount of Accellent
preferred stock, the owners gained key executive positions at
Accellent, provided job security and professional growth opportunities
for MTG employees and positioned MTG as a key component in Accellent’s
plans to rapidly grow its orthopedic division.
Postscript
On October 10, 2005 Accellent announced that it had agreed to
be acquired for $1.27 billion by Kohlberg Kravis Roberts & Co., one
of the world’s oldest and most experienced private equity firms.
This subsequent transaction will further enhance Accellent’s strength
and significantly increase the value of the MTG owners’ preferred
stock.
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