Strength Capital Completes Sale of ARCH Global Precision
Birmingham-based Strength Capital Partners LLC (“Strength”) is pleased to announce the sale of ARCH Global Precision, LLC (“ARCH” or the “Company”) to The Jordan Company, a leading middle-market private equity firm with offices in New York and Chicago.
ARCH is a diversified manufacturing platform focused on three core markets; consumable cutting tools, medical implants / instruments and high precision components for aerospace & defense. The Company has approximately 1,000 employees across their coast-to-coast manufacturing footprint with facilities in 13 states.
The ARCH platform was formed by Strength in 2011 with the acquisition of three business units from Tri-Mas Corporation. At that time, the platform was ~$45M in revenue split between precision automotive components (55%) and cutting tools (45%). The platform was formed with the vision of performing a series of strategic acquisitions to grow the Company into a more diversified platform.
From 2011 through 2015, the Company completed eight add-on acquisitions in the precision components and cutting tool sectors. The acquisition strategy, coupled with organic growth initiatives, resulted in exceptional growth over that timeframe with revenue increasing by over 2.5x and EBITDA increasing nearly 3x.
In August 2015, Strength led a recapitalization of the Company to bring in additional capital and position the platform for its next stage of growth. At the time of the recapitalization, ARCH had $120M+ in revenue split between cutting tools (50%), precision automotive components (35%) and precision components for other industries (15%).
The recapitalization resulted in a 5.6x multiple of capital and a 60%+ IRR for the investors. The majority of the initial investors, including all the principals of Strength Capital, retained significant ownership in the recapitalized entity.
After the recapitalization, management and Strength continued to focus on executing the buy-and-build strategy and ongoing organic growth initiatives. The acquisition strategy was refined to focus primarily on medical, aerospace & defense and cutting tools acquisitions. The Company completed seven acquisitions between the recapitalization and 2017.
In September 2018 ARCH sold Hi-Vol products, the Company’s automotive subsidiary, to LISI Automotive, a French public company.
Between December 2018 and February 2019, the Company completed three additional acquisitions.
In April 2019, ARCH was sold to The Jordan Company.
Between the recapitalization and the ultimate sale in April 2019, ARCH’s revenue and EBITDA more than doubled. The Company’s revenue mix transformed to align with the renewed organizational focus; 40% cutting tools, 30% medical implants / instruments, 20% aerospace and defense components and 10% components for a variety of other end markets.
The April 2019 sale resulted in a 2.3x multiple of capital and a 25%+ IRR for investors.
ARCH experienced incredible growth and transformation during Strength’s 7+ year holding period. The Company has completed 18 acquisitions since it was formed in 2011. Revenue grew nearly 10x over that timeframe. The Company grew from four facilities in two states to a nationwide manufacturing footprint spanning across 17 facilities in 13 states.
Per Mark McCammon, one of the founding partners of Strength Capital; “The sale of ARCH is a milestone achievement for Strength Capital. None of this could have been accomplished without ARCH’s best-in-class team. We would like to express our sincerest appreciation to the ARCH team for their hard work and dedication to the platform over the past seven years. We believe The Jordan Company is the perfect partner for ARCH to execute on its next chapter of incredible growth. Our investors will receive a very good return on their investment and we couldn’t be more pleased by the outcome.”
Lincoln International was the financial advisor to ARCH on this transaction and Jaffe Raitt Heuer & Weiss provided legal counsel.