RV PRO

October '20

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26 • RV PRO • October 2020 rv-pro.com firm Baird noted in a report it issued in January titled, "North America M&A Activity and the RV Market." That report tracked 88 supplier-related mergers and acquisitions between 2009 and 2019, with the bulk of the transac- tions occurring in the past five years (see Figure 2 below). However, the Baird report did note, "Consistent with OEM activity, supplier acquisitions declined in 2019 in the face of softer market conditions and fewer targets." Diversifying into Adjacent Industries As LCI increases its footprint in the RV industry with more products and a growing percentage of content in RVs, it also is lessening its reliance on the RV industry for top-line growth. Once dependent on sales to RV and manufactured housing OEMs, LCI has diversified by reaching into adjacent mar- kets, such as marine, bus, freight/fleet, heavy truck, cargo and trains, as well as growing via overseas acquisitions. The company now operates more than 90 manufacturing and distribution facilities in North America and Europe. This diversification mitigated the slow- down in the RV industry prior to the COVID-19 outbreak: while RV whole- sale shipments were down by 16 percent in 2019, LCI's consolidated net sales for the year decreased by a scant 4 percent, to $2.4 billion. In a Feb. 11 conference call with Wall Street investors, Jason Lippert noted, "We ended 2019 strong as we saw a return to sales growth in the fourth quarter, increasing 5 percent to $564 million, while the broader industry experienced a decline of 8 percent. Turning to the year, revenues reached $2.4 billion in 2019, which given that the industry RV shipments were down 16 percent in 2019, underscores how crit- ical our strategy has been in supporting the long-term success of LCI." Jason Lippert added, "In 2019, North American RV OEM sales represented 58 Figure 2 RV Supplier M&A Activity: 2009-2019 Year # Deals 2009 ....................................... 0 2010 ........................................2 2011 ..........................................6 2012 ......................................... 7 2013 ......................................... 7 2014 ...................................... 10 2015 ......................................... 7 2016 ........................................11 2017 ...................................... 18 2018 .......................................13 2019 ......................................... 7 Source: Baird 'Aspirational' RV 'Aspirational' RV Industry Attracts Industry Attracts Business Buyers Business Buyers By Bradley Worrell When it comes to merger and acquisition activity in the RV industry, big companies swallowing up smaller competitors tends to garner the most attention, but that's not totally reflective of what is happening in the market, according to Rich Jackim, managing partner of Jackim Woods & Co., whose Libertyville, Ill.-based firm acts a broker between sellers and buyers for a variety of companies, including RV businesses. "The nice thing about the RV space is that, in addi- tion to the opportunity to make money, it's an enjoy- able industry to be in," says Jackim. He adds there are plenty of people who love the RV lifestyle and who want to make it their livelihood, calling it an "aspirational business". Jackim Woods & Co. typically represents sellers of RV dealerships and small suppliers whose companies are typically valued between $1 million and $5 million, according to Jackim. Most of those sellers are selling because they are ready to retire, he says. As for buyers, while private equity firms and corporate giants are active in the RV sector, Jackim says those businesses typically are not interested in acquiring what might be considered mom-and-pop owned dealerships and suppliers. Instead, the prime buyers for those types of businesses tend to be entrepreneurs, high-net-worth individuals and strategic buyers who are looking to expand their territories or offerings, according to Jackim, who has more than 20 years of experience in the M&A and investment banking sectors. He adds that smaller acquisitions are much more prevalent than blockbuster deals. However, bigger deals naturally draw more attention, partly because of their size, and also partly because, in his experience, new owners of smaller businesses often prefer not to trumpet their purchases, Jackim says. Jackim, whose firm assists sellers with business valuations and exit planning services as well as broker services, says the RV M&A market for the types of clients his firm typically represents has stayed roughly even over the past five years or so. "There's generally no shortage of buyers," he says, adding, "It's simply a matter of matching up buyers and sellers, which is where hiring a broker can help." Jackim

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