INCA Molded Products, Inc. Sold to SeaStar
INCA Molded Products, Inc.
Industry/Sector: Rotational molding; marine products
Deal Type: Selling a Business
FourBridges Team: Chris Rowe, Andy Stockett
Client Profile: INCA was an early pioneer in the development of the plastic fuel tank industry and is one of the largest manufacturers and suppliers of rotationally molded tanks for the marine industry. Based in Nashville, Tenn., the company is the only marine fuel tank manufacturer that utilizes RotoLoPerm® technology, an innovative, multi-layer technology that is fully compliant with recent regulatory changes set forth by the Environmental Protection Agency. Due to its success in the marine industry, INCA has grown into an original equipment manufacturer of custom components for a range of markets, serving customers worldwide.
Client Objectives: Owner Jim Porter founded INCA in 1979. After decades of running his business, Porter was considering transitioning ownership and retiring from the business. He engaged FourBridges to facilitate a sale that would maximize the value of the business while also achieving several specific estate-planning objectives.
The Challenge: When Porter approached FourBridges, the boating industry was continuing to experience the negative effects of the recession. At the same time, the Environmental Protection Agency was increasing marine fuel tank regulations relating to containment of gas fumes. INCA’s licensing of RotoLoPerm® technology positioned the company to regain sales momentum and profitability, in spite of the slowly recovering economy. FourBridges suggested pursuing a structure that would allow Porter to capture value above what would be supported by current financials..
The Process: FourBridges compiled historical financial information and more importantly, helped management prepare a three-year forecast showing the potential of the business in a recovering boating market. Realizing that the company’s narrow product line in a cyclical industry would limit the number of private equity buyers, the process focused on strategic buyers who would view INCA as an attractive “add-on” acquisition. In addition to determining the amount of cash to be received at closing, FourBridges focused on structuring an attractive “earnout” that would provide additional value based on INCA’s performance post-closing. In addition, the team negotiated other significant financial aspects of the purchase, including Working Capital and EBITDA adjustments, which substantially impacted value.
The Result: INCA attracted the interest of several strategic acquirers. Ultimately, SeaStar Solutions, a portfolio company of H.I.G. Capital at the time, provided the best alternative for realizing Porter’s personal and financial objectives. After the initial closing, FourBridges remained involved, analyzing the company’s performance and negotiating the final “earnout” payment.
Past performance is no guarantee of future results, and there can be no guarantee that these results will be duplicated in the future. Any testimonials presented herein may not be representative of the experience of other clients.