Hohenschild Welders Supply Case Study
Hohenschild Welders Supply
CC Capital Advisors’ sell-side process assisted the owner of Hohenschild Welders Supply with the company's sale to sponsor-backed acquirer Meritus Gas Partners.
Hohenschild Welders Supply is a full-service independent distributor of packaged gases and welding supplies that has served the greater Kansas City area since 1922. Perry Johnson Sr. purchased the company in 1947, and his son Perry Johnson Jr. became president in 1985, before acquiring 100% ownership in 2005. The family-owned business is well known for its commitment to quality and service to a broad range of industries, including construction, automotive and manufacturing.
With no succession plan in place, Johnson needed assistance from CC Capital Advisors (“CCCA”) to find the right buyer for the company. Further, Johnson sought a buyer that would retain employees and allow the company to operate with the same management team. As Johnson’s advisor, CCCA’s objective was to guide him through the sell-side process and find a suitable buyer that aligned with his goals.
CCCA served as an advocate and advisor throughout the deal process, taking on the heavy lifting so Johnson could focus on running Hohenschild.
To begin the sell-side process, CCCA worked with Johnson to gather company data for a customized marketing book known as a confidential information memorandum (“CIM”). The CIM provided insight into Hohenschild’s operations, presented financial information and trends, and outlined key sales and growth opportunities. Simultaneously, CCCA curated a targeted list of potential buyers, which included private equity firms as well as likely acquirers within Hohenschild’s industry that had a track record of retaining employees on past acquisitions.
Next, the process moved to the marketing phase. CCCA distributed CIMs and met with interested parties to discuss the transaction, answer questions and provide further insight into the company. Hohenschild received interest from numerous potential buyers, and following detailed discussions with Johnson, CCCA invited a select group of the strongest buyers to advance to the second phase of marketing.
The next phase included a meeting with management and tour of the Hohenschild facility for each of the finalists. Additionally, potential buyers analyzed supplemental information made available by CCCA’s virtual data room to allow for further understanding of the business for each buyer. Buyers were then asked to submit best and final offers.
Ultimately, Johnson selected Meritus Gas Partners, a portfolio company of New York-based AEA Investors Small Business Private Equity. Helmed by industry experts with a history of successful acquisitions, Meritus was an attractive option. Crucial for Johnson, Meritus’ plan to retain all employees and allow Johnson’s management team to operate the business solidified them as the ideal buyer.
Once Meritus had been selected, CCCA assisted Johnson with every aspect of the more than 60-day due diligence process. CCCA worked with the buyer and seller’s stakeholders, coordinating with accountants, legal advisors, insurance brokers and other third-party consultants. CCCA’s active involvement from start to finish allowed Johnson to focus on operations and resulted in a successful close.
Hohenschild ultimately closed the transaction with Meritus. The outcome was a success for Johnson, as he secured a transition plan knowing that Hohenschild’s legacy was in good hands. All employees retained jobs, and the company continued business as usual in Kansas City. Johnson began transitioning his responsibilities to his upper management team, allowing for a smooth transition for when he eventually exits the business.
The acquisition of Hohenschild was also a success for Meritus, growing its portfolio of packaged gases and welding supply distributors and continuing its geographic expansion across the country.
CC Capital Advisors can play a critical role in the success of any acquisition, providing expertise and guidance throughout the process. Our sell-side process and our knowledge of multiple industries allows us to assist our client in selecting the best buyer for a successful outcome. Additionally, we work with sellers to ensure their business is salable and ready for the scrutiny of a buyer’s diligence. The more time we have in advance of a desired sale date, the better our client’s chance of achieving a successful outcome and above-market valuation. Among the areas we review are financial statement quality, management team, IT systems, growth strategy and opportunities. We articulate all of this information in a CIM that we position to a vetted list of potential buyers searching for the type of opportunity our client’s company presents, thus increasing competitive leverage and reducing risk during closing.