Deal Type
Sell-side transaction

Deal Team
Andy Stockett, Andrew Allred, John Kirkland, Andrew Ball

Company Overview
American Bedding Manufacturers (ABM or “the Company”) is a manufacturer and distributor of mattresses, bed frames, and case goods to institutional end markets. Based in Athens, TN, ABM’s mattresses are custom made and highly durable, flame retardant, bed bug proof, waterproof, and antimicrobial for high-use facilities. The Company primarily sells to government and military customers, missions and rehab facilities, camps, and education institutions.

Situation
ABM was owned by brothers Boyd and Dale Reynolds for over 25 years. They initially bought the assets out of bankruptcy and successfully grew the Company through expansion into new end markets, further penetration of its core end markets, and an increase in production and warehouse capacity. ABM eventually established itself as a market leader in the summer camp and mission / rehab segments. 

FourBridges was engaged by the family to sell the business to create liquidity and provide an opportunity for the brothers to transition away from the day-to-day operation of the business.

Challenge
ABM’s strong historical financial performance, high level of repeat purchases by satisfied customers and growing end markets all served to attract a wide number of potential buyers, including private equity funds and strategic buyers. However, Boyd and Dale wanted to focus on buyers who would allow them to transition out of their roles in the near term, while providing continued opportunities for their employees, many of whom were friends, family and fellow church members.

FourBridges was tasked with finding and negotiating with a buyer that would provide maximum value, offer the desired transition process, and maintain ABM’s strong culture and values.

Process
FourBridges analyzed the company’s financial statements and created a thorough Confidential Information Memorandum that told the Company’s story, profiled its customers and end markets, analyzed the Company’s margin profile, and detailed the various growth opportunities for a new investor. 

Knowing that a strategic buyer would probably fold a substantial amount of ABM’s operations and employees into an existing facility, FourBridges decided to run a broad process with a focus on financial buyers with experience in niche manufacturing and/or distribution. As part of the process FourBridges conducted an analysis of customer purchase behaviors going back to 2008, which highlighted the fact that 70% of annual sales come from existing customers.

During the marketing process, FourBridges fielded over 60 Zoom calls and provided written responses to over 200 questions, leading to over 20 attractive bids from potential suitors.

Result
Dallas-based private equity fund Valesco Industries (Valesco) was identified as the best partner for ABM. Valesco has been investing in the lower middle market for over 20 years and has experience growing manufacturing and distribution businesses in the southern United States.

For Boyd and Dale, the transaction provided liquidity and a short-term transition plan. The family was also able to retain a minority equity investment to participate in the future growth of ABM. For the buyers, the transaction provides a new bedding and furniture platform investment that can capitalize on multiple near-term growth opportunities and industry tailwinds.