Graham Partners Drives It Home
August 22nd, 2014
Graham Partners is pleased to announce it has successfully sold Innovative XCessories & Services, LLC (“IXS”), a leading designer and manufacturer of specialized products that provide vehicle customization opportunities to OEMs, dealers, and consumers.
Today, IXS generates sales that are nearly 6x higher than the original platform business Graham Partners acquired in 2005 and now consists of complementary Aftermarket and OEM divisions. IXS’ Aftermarket Division has been built around its well-known LINE-X brand and a leading network of North American automotive upfit franchise locations (440) and international licensees (in over 50 countries). IXS’ OEM Division, Ground Effects, serves highly coveted, blue-chip OEM customers, principally through co-located facilities. Under Graham Partners’ ownership, these previously independent businesses were transformed into the only end-to-end vehicle customization platform capable of providing products and services in each channel.
The sale of IXS represents the sixth portfolio company exit completed by Graham Partners since May 2013.
ACTIVIST OWNERSHIP AT WORK
IXS is the result of a remarkable turnaround executed by Graham Partners, coupled with a series of game-changing acquisitions. The company is a validation of Graham Partners’ commitment to protect the interests of its investors and maximize investment returns, while at the same time delivering active support and resources to its portfolio companies during both favorable and more challenging economic periods.
Validation of Investment Thesis. In 2005, Graham Partners acquired LINE-X, which at the time principally offered spray-on pick-up truck bedliners through a franchise network targeting the aftermarket. Graham Partners’ investment thesis hinged on the continued adoption of spray-on bedliners at the expense of drop-in liners. This fundamental thesis has proven valid, and IXS continues to experience growth fueled by this ongoing shift.
Opportunistic, Tenacious Investment Approach During Economic Downturn. From late 2007 through 2008, the U.S. economy exhibited signs of weakness, pick-up truck sales decreased, and (despite spray-on share gains) LINE-X faced declining sales. Capitalizing on the recessionary downturn, Graham successfully navigated potential liquidity issues and completed a discounted repurchase of LINE-X’s third party debt.
Renewed Growth Fueled by Organizational Makeover. With a new, conservative capital structure in place, Graham proceeded to execute a key strategic initiative by consolidating LINE-X’s distribution channel. The elimination of this middle layer enhanced the company’s ability to work directly with its franchisees, implement national franchisee growth initiatives, and retain top-performing executives as members of LINE-X’s corporate leadership team.
Transformative Game-changing Add-on. As it exited the recession, LINE-X began to experience renewed growth, allowing Graham Partners to turn its attention to new strategic initiatives for the company. Graham Partners identified a larger, rapidly growing, automotive OEM accessory designer and manufacturer, Ground Effects, and negotiated a merger of the two companies. The combination of LINE-X and Ground Effects proved to be powerful, yielding substantial cost-savings and cross-selling opportunities, among other synergies.
AN EXCELLENT OUTCOME FOR GRAHAM PARTNERS AND ITS INVESTORS, AS WELL AS IXS
“We are proud to be the catalyst for the transformation of IXS, which has resulted in tremendous value creation for our investors,” stated Josh Wilson, Managing Principal at Graham Partners. “Even when the near-term outlook for the company was uncertain, we maintained a longer term vision — recognizing the company’s potential. We are very grateful to the entire IXS team for their collective effort and wish them continued success under new ownership.”
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