Transaction Overview
- Represented Arrowhead Electrical in its sale to Pfingsten Partners.
- Arrowhead Electrical is a value-added distributor of exact replacement starters, alternators, DC motors, and related components that are manufactured under its direction at over 50 factories in Asia and India.
- Arrowhead’s products are used in cars and light trucks, heavy trucks, outdoor power equipment, agricultural equipment, construction equipment, watercraft, and power sports equipment.
- The company’s exposure to diverse end markets and the mission-critical nature of rotating electrical products result in steady demand from customers.
- Pfingsten had realized a very successful exit with a company faced with similar market dynamics; highly fragmented marketplace, non-discretionary products, and significant cost advantages in the marketplace.
Key Observations
- Arrowhead was led by an exceptionally strong leadership team that was committed to the business for another five years, giving buyers confidence that the company’s success would continue.
- Demand for Arrowhead’s products are driven by the non-discretionary purchase decision faced by equipment operators who are “down and unable to operate” because a relatively inexpensive part is needed.
- Arrowhead was one of many operating in a fragmented market.
- Pfingsten recognized that Arrowhead represented a strong operating platform that could grow via new product introductions, geographic expansion, and add-on acquisitions.