Based in Auburn, Washington, Imaginetics is a build-to-print precision aerospace component manufacturer with tooling, sheet metal, machining, and subassembly capabilities. Over its 20+ year history, the Company had established sophisticated manufacturing processes and advanced ERP system capabilities. Imaginetics was experiencing strong momentum having recently secured multiple new long term contracts with a variety of existing and new customers.
The shareholders approached Meridian and expressed interest in a complete exit from the business. The shareholders’ interest in selling had been driven by the recent receipt of two unsolicited bids from private equity and strategic prospective buyers. With the Company in the midst of an internal management transition plan, correctly positioning management continuity was critical.
Due to the active consolidation in the sector and significant activity from the private equity community, Meridian recommended expanding the potential investor universe in order to achieve a premium valuation. The process focused on investors with relevant aerospace experience in order to facilitate a full shareholder exit and provide resources to achieve growth opportunities.
Based on Meridian’s experience in the aerospace sector, we felt it was critical to work with the Imaginetics team to:
- Develop messaging for the executive management transition plan in order to ease investor concern regarding shareholder departure
- Properly articulated nuanced manufacturing process differentiators which create margin strength and consistency
- Demonstrate platform and part category diversification across multiple contracts and manufacturing disciplines
- Develop sophisticated models depicting sales, margin and EBITDA impact of build rate increases and key sales initiatives on customer, platform and part level basis for three-year forward looking period.
- Create part and contract level pro forma models to demonstrate the positive sales and margin impact of recently secured LTA contracts
The process yielded very strong interest from both private equity and strategic investors. In total, over 60 investors requested materials and 12 submitted preliminary indications of interest. Using criteria such as valuation, strategic alignment and cultural firm, Imaginetics selected five groups to attend management meetings.
A transaction was ultimately completed with Kidd & Company, a private equity group with a strong background in aerospace component manufacturing. As part of the transaction terms, Kidd & Company agreed to partner with the new management team. Additionally, Meridian led the Company through a complex Boeing approval process and eventually achieved a valuation 55% higher than the unsolicited offers received 18 months prior.