Post-Katrina startup sales top November M&A activity

By: G. F. Gay Le Breton and Ryan Gerton 
December 15, 2021
https://bit.ly/31WhF5V

Three more post-Hurricane Katrina startups agreed to sell in November, including Mandeville-based Sunpro Solar.

Sunpro signed a deal with national home-security company ADT Inc. for an estimated purchase price of $825 million in cash and stock. Sunpro founder and CEO Marc Jones and his management team will stay with ADT to lead a new division focused on renewable energy. Sunpro will be rebranded as ADT Solar.

With the acquisition of Sunpro, ADT will add rooftop solar and energy storage solutions to its smart home and small business security portfolio. Sunpro designs, installs and maintains solar panel arrays on homes and businesses. The company was founded in 2008 and has grown to 56 locations in 22 states, with a 3,600-person workforce. The headquarters is expected to remain in Mandeville.

The deal comes just over a year after Jones sold a 51% interest in Sunpro to a group of investors led by St. Louis private equity firm Compass Group for an undisclosed price. Investors were attracted by Sunpro’s cash-flow-positive, asset light business model and its high growth potential. Sunpro’s management team has delivered on a strategic plan that generated explosive growth over the past year, according to John Huhn, Compass Group managing partner. The company added over 1,700 jobs in 2021, according to Jones, and grew installations by 90% in 2020.

“We believe that we have the potential to grow ADT Solar into a multibillion-dollar business over time as we increase the accessibility and penetration of residential solar across America,” Jim DeVries, ADT president and CEO, said. “Residential solar represents a $15 billion annual market, but is still only in 3% of all U.S. homes.”

With its 6 million customers, and sales force and marketing channels, ADT believes it will be well positioned to scale ADT Solar while lowering customer acquisition costs and accelerating overall solar adoption.

The sellers will receive approximately 77.8 million shares of ADT stock, worth just under $700 million as of the Nov. 8 deal announcement, plus $160 million in cash that will be used largely to settle Sunpro’s debts. The transaction price represents approximately 10x Sunpro’s estimated standalone next 12 months’ EBITDA.

Also in November, Kickboard, a New Orleans-based provider of K-12 education behavior management solutions, agreed to sell to publicly-traded PowerSchool Holdings in a $15 million all cash deal. Founded by Jen Medbery in 2009, the company’s online application enables teachers and administrators to collect and analyze academic and behavioral performance in real time. Its software also offers solutions that help educators effectively manage social-emotional learning and multi-tiered systems of support to help improve student well-being, school culture and more equitable outcomes.

Joining the exit parade, Big Easy Bucha, a New Orleans-based probiotic drinks manufacturer and bottler, sold to leading Latin-America beverage producer Beliv. Terms of the transaction were not announced. Big Easy Bucha was founded in 2014 by Austin Sherman and Alexis Korman. The acquisition by Beliv is expected to accelerate Big Easy Bucha’s growth. The company will expand its local production facility, retaining 47 current employees and creating an additional 50 new direct jobs.

Baton Rouge also saw a hefty transaction in November. Guitar and amplifier icon Fender Musical Instruments Corp announced it will acquire Presonus Audio Electronics, a leading designer and manufacturer of speakers, headphones, microphones and music creation software. According to Moody’s Investor Services, the $434 million purchase price will be used to fund the acquisition and refinance Presonus’ existing debt.

According to its announcement, “Fender envisions an ecosystem that seamlessly integrates hardware and software to create an effortless end-to-end experience for customers at all levels in their creative journey, and joining forces with PreSonus makes that possible.”

The industry boomed following the COVID outbreak as home studios became more and more popular for a number of reasons, including lowering the cost of recording music at home rather than expensive professional recording studios. Even pre-COVID, computers were playing a bigger role in the music creation and distribution chain. PreSonus said that while most guitar and bass players still plug into traditional amplifiers, many musicians also plug their instruments into computer interfaces, such as the ones PreSonus designs, using virtual amplifiers and effects to create their sounds.

Presonus was founded in 1995 by Jim Odom and Brian Smith. According to Moody’s, the company has approximately $100 million in revenue.

G.F. Gay Le Breton is managing director for Chaffe & Associates Inc., responsible for the merger and acquisition activities of the firm. Ryan Gerton is an associate with the firm.

Investment banking services are provided by Chaffe Securities Inc., member FINRA/SIPC.