Southern Tool Steel Has Been Sold to Ryerson

Type of Deal: Sell-side advisory

Deal Team: Andy Stockett, Chris Rowe

Client Profile: Founded in 1984, Southern Tool Steel is a distributor of metals and plastics and offers a range of value-added capabilities. The company is headquartered in Chattanooga, Tenn., and serves customers across the country in the automotive, aerospace, energy and consumer appliances industries. With two locations and approximately 90 employees serving the Southeast, the company has a broad customer base that includes machine, tool and die shops, energy providers, automotive manufacturers, appliance manufacturers and aerospace parts manufacturers.

Client Objectives: CEO and founder Arnold Erwin committed 100% of his time over the past 31 years to the business. He was interested in taking some chips off the table, focusing on the things he enjoys in business (i.e. selling) and spending more time with his family.

The Challenge: Arnold had come to a crossroads. In order to grow his business, he needed to invest in technology and equipment and train a new general manager. In addition, the industry is highly competitive and subject to swings in the economy.

The Process: After developing a “go to market” strategy that positioned the company for regional growth and played up the niche segment to which the company sold, we identified a number of industry participants that were either not in the market geographically or in the cut piece market. There were several interested parties, with which management met.

The Result:  Ryerson (NYSE:RYI), a leading processor and distributor of metals based in Chicago, Illinois, emerged as the ultimate buyer for Southern Tool Steel. The transaction strengthened Ryerson’s foothold in the Southeast and its ability to serve customers across the region, while allowing Mr. Erwin to achieve his corporate, financial and personal objectives. In addition, this acquisition fit directly into Ryerson’s corporate strategy to purchase and maintain family owned businesses across the country.