C. H. Brigg’s Hardware Company, Inc. is a third generation family owned business. It provides a full range of building supplies to cabinet makers, which includes hinges, catches and locks, fasteners and fittings, decorative hardware, solid surfacing materials and more. Its industry has been consolidating and customers have been seeking to simplify their supply chain requirements by securing more support from fewer providers. The Company had been innovative and was an early adopter of Internet-based information technology support for its customers. However, in order to continue to grow, the Company needed to expand its territory and product lines. Growth through acquisitions had to be considered.

But how could they find the right acquisition target? How to value and finance the acquisition? C. H. Brigg’s turned to Source Capital, Ltd. for experienced guidance. The first step was to complete research on possible acquisition targets including who owned the companies. In addition, regional demographics and economic forecasts had to be considered. Next, Source advised that recent capital market conditions (e.g. low cost debt, accommodative lenders and an over-supply of buyout capital) had caused the purchase price of companies to be inflated. The key was to find a good strategic fit and an owner who would be motivated to sell for the right price.

The process took nearly two years. Several target companies were evaluated but rejected along the way. Source’s willingness to price its services to minimize fixed cost to the Company, and to underscore Source’s confidence in achieving the result, made the process affordable. In the end, Source helped the Company negotiate the acquisition of several divisions of a company from New England, which had tried to expand too rapidly into the Middle Atlantic States. Further, the new England-based company was owned by a buyout fund, which Source had determined would begin liquidating its portfolio companies over the next few years. The Company was able to acquire these divisions quickly, quietly and without the need to participate in an auction. Even better, the purchase price was based upon book value, which meant no money spent on goodwill! All-in-all, an excellent outcome for C. H. Briggs.

When your growth plans need to include acquisition strategies, you can count on Source. Source Capital, Ltd. has been providing, since 1982, growth strategy, investment banking and merger and acquisition assistance to clients.