Partco, a business that supplied the automotive aftermarket for replacement parts, consumables, tools and equipment, had been a management buy-out in June 1986. It had been run successfully and management had proved its ability to bring efficiencies to what had originally been an underperforming operation. In September 1989 Cinven’s investors agreed to support Partco in its acquisition of Autoparts, a competitor owned by GKN. The acquisition more than doubled the size of Partco.
Partco’s management had clear objectives, which included growing sales from the combined operation, at the same time as reducing distribution costs by combining the networks of the two businesses. The combined operation would have a market share twice that of its nearest competitor. Higher volumes of central purchasing would reduce costs and greater operational efficiencies would be delivered at Autoparts.
The combined business achieved a great deal of what it had set out to do and in March 1994 it was decided to float the business.
Multiple returned on investment: 3.6x