Capstone Financial Group, Inc. is pleased to announce the completed sale of its client, Extang Corporation (“Extang”), the world’s leading manufacturer of soft tonneau covers for light trucks, to an affiliate of Kinderhook Industries, LLC. (“Kinderhook”), as well as Capstone’s representation of Kinderhook in the purchase of TruXedo, another leading manufacturer of soft tonneau covers.

Transaction Details

Capstone was contacted by Extang to discuss strategic alternatives which would allow for a divestiture of the founding shareholders’ interests while keeping the company’s talented professional management team intact.  Due to the heightened interest in the truck accessories segment of the auto aftermarket industry, Capstone entertained several bids for the purchase of Extang from a variety of prospective purchasers, both financial and strategic.  Kinderhook emerged as the winning bidder during final rounds of negotiations and subsequently completed a purchase of all of Extang’s issued and outstanding shares.

Simultaneously, Capstone was asked by Kinderhook to assist in the acquisition of TruXedo, a transaction which would give the combined companies approximately 40% market share in soft tonneau covers, one of the most popular add-on accessories for light trucks.  This combination of companies is particularly relevant in light of the burgeoning consolidation trend among manufacturers of aftermarket products which has partly been necessitated by the shrinking of their customer base and shifts in traditional distribution methods.

Capstone’s president, Dan Smith, emphasized the significance of these transactions.  “We see these consolidation plays in every auto aftermarket segment – performance parts, chemicals, appearance products, and certainly truck accessories,” Smith stated.  “The industry is undergoing more fundamental changes than we’ve seen in our 20 years of covering it.  Indeed, there is a paradigm shift happening across multiple distribution channels, and, as the rule goes, when a paradigm shift occurs, everybody is set back to zero, creating a new level playing field and new starting block.  These deals become the basis of the new playing field.”     

These concurrent transactions are further evidence of the “changing of the guard” throughout the auto aftermarket industry, particularly as they relate to the immense amount of dollars invested in the industry by private equity firms.  Many of the original owner operated companies such as Extang have morphed from purely entrepreneurial enterprises to organizations that are professionally managed, sophisticated, and now backed by institutional investors with an emphasis on maximizing shareholder value.

About Extang Corporation
(www.extang.com)

Extang was founded in 1982 as a mail order business selling head light covers through magazine advertisements.  In 1984, Extang started producing tonneau covers that attached to pick-up trucks with a clamping rail system.  This was a great improvement over the industry standard practice of drilling into the truck and attaching rivets (which damaged the truck). 

From 1990 to 1994, explosive growth was achieved by the introduction of several new products. Throughout the 1990s, Extang increased the sophistication of its machinery and production processes to accommodate its prolific growth.

Today, Extang designs and manufactures a broad range of soft tonneau covers at its facilities in Ann Arbor, MI, and holds 35 patents on its highly-engineered products.

About TruXedo
(www.truxedo.com)

TruXedo, formerly a division of Shur-Co., is a manufacturer of soft roll-up tonneau covers for light trucks.  The company’s products are manufactured at its facilities in Yankton, South Dakota, and can be used with every major brand of pickup truck available for purchase in North America.

About Kinderhook Industries, LLC
(www.kinderhook.com)

Founded in 2003, Kinderhook Industries is a New York-based private equity firm that manages $470 million of committed capital. The firm was established to capitalize on the principals' expertise in acquiring middle market companies. Kinderhook primarily makes control investments in companies with transaction values of $10-$75 million where the firm can achieve significant financial, operational and growth improvements. 

Kinderhook’s principals have completed in excess of fifty transactions, investing over $1 billion throughout their investment careers.

For more information about this transaction, please contact:

Mike Nelson (mnelson@capfg.com)
Capstone Financial Group, Inc.
11 Palmetto Parkway, Suite 104
Hilton Head, SC 29926
T (843) 689-6450
F (843) 681-5938