The Selling Company: ETMA is a contract electronics manufacturer for OEM customers in the computer/server, medical monitoring and internet security industries. ETMA operates six surface-mount manufacturing lines and automated printed circuit assembly lines, provides engineering support, systems integration and box build, and turnkey packaging and fulfillment services.
Why the company was sold: The two shareholders were only active part-time in the company and wanted to pursue other business opportunities. A strong management team allowed an immediate exit for the shareholders. The buyer’s business model meshed perfectly with the sellers’ and the buyer was able to envision how their overseas capacity could be utilized.
Capital Alliance’s Performance: Capital Alliance was brought in when a private equity buyer reneged on its LOI price. Capital Alliance arranged a buyer’s visit within 2 weeks and a letter of intent was delivered within 24 days. The transaction closed 2 months and 5 days after engaging Capital Alliance. The closing price was 5 times book value and 33.6 times last years’ operating profit. In-depth knowledge of the seller’s business and potential buyers was the key to getting this transaction closed.
Terms of the Transaction: This was a $38 million all cash transaction. The value was 25% higher than the letter of intent from the financial buyer that was submitted prior to our involvement.
The Acquiring Company: Three-Five Systems, Inc. is a publicly traded electronics manufacturing company and a leading manufacturer of display products and systems. The company had excess capacity in China and the Far East, and was pursuing synergistic electronic manufacturing additions to its product lines.
