Gabriel Ride Control PDF

Acquired : June 29, 2009
Acquired From : ArvinMeritor
Industry : Automotive
Transaction Type : Corporate Carve-out
Realized : December 10, 2012
Sold To : MAT Holdings
Headquarters : Troy, Michigan
Investment Strategy : Turnaround

Gabriel Ride Control is a designer, manufacturer and distributer of struts and shocks for original equipment manufacturers and aftermarket customers. Headquartered in Troy, Michigan, Gabriel also has distribution operations in Oklahoma and a manufacturing facility in Queretaro, Mexico. Gabriel’s products include twin tube dampers, monotube dampers, adjustable damping, shock spring modules, automotive struts and modules and specialty shocks for antique automobiles and load carriers. The Company’s customers include North American commercial, industrial and recreational vehicle manufacturers.

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Sourcing

Through its industry research, OpenGate formed the view that the automotive industry, including the automotive aftermarket, was at or near the bottom of a cycle and began seeking potential acquisitions.

Transaction Highlights

In 2008, ArvinMeritor, owner of Gabriel, made several unsuccessful attempts to divest the Company.  OpenGate learned of these failed processes and contacted ArvinMeritor, who directly managed a limited sales process in 2009.

Investment Merits

  • Automotive industry at the bottom of a cycle, presenting attractive purchase valuations
  • Poorly executed restructuring plan left business struggling for two years prior to OpenGate’s acquisition
  • Market-leading manufacturer of shocks and struts with long standing, blue-chip customer base and strong brand name
  • Misaligned operations with an opportunity to reduce operational expenses and improve profitability
  • Decentralized operations requiring an overhaul to reorganize the manufacturing process

Stabilization

  • Installed new leadership team to drive growth; fostered an efficient, streamlined and motivated organization
  • Within seven months of the investment, cost reduction efforts and sales increases resulted in Gabriel returning to operating profitability
  • Developed new raw material purchasing strategy which reduced millions of dollars of costs
  • Implemented strict oversight in production and engineering processes and costs, drastically improving quality and TtoD
  • Restructured working capital management practices, in particular inventory management, to achieve cash savings

Growth

  • Developed a more favorable product mix for retailers which increased sales by 1.2 million units in 2010
  • Focused on customer maintenance and refining operational processes to take advantage of improving economic conditions in the automotive industry
  • Increased sales of higher margin products to largest customer, AutoZone, after fixing quality and delivery issues
  • Reconfigured sales team compensation plan to a lower base, higher commission model to increase sales efforts

Exit

After three years and substantial revenue and EBITDA growth, OpenGate sold Gabriel through a competitive sales process to MAT Holdings, a strategic acquirer.

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