Stainless Tubular Products

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MidCap Advisors Sells Leading Metal Service Center to Strategic Buyer Exceeding Client’s Expectations

Client: Stainless Tubular Products
Business Category: Stainless Steel Metal Service Center

Transaction Background
Stainless Tubular Products, Inc (STP) was founded in 1979 and is a leading metal service center in the U.S. specializing in stainless steel tubing, pipe, fittings and bar. STP carries the nation's largest and most diversified inventory of ornamental stainless tubing, which includes round, square and rectangular shapes.

The acquisition of STP was an opportunity for TW Metals (TW), a member of the O'Neal Steel family of companies, to increase its dominance as one of the largest providers of stainless steel, nickel alloys, aluminum, carbon alloys, brass and copper, in tube, pipe, bar, sheet, extruded and roll formed shapes. With facilities in the United States, Asia and throughout Europe, TW's reach is worldwide.

STP had originally elected to do a transaction with another strategic buyer MidCap identified. However, when that buyer developed cold feet due to the contracting credit markets, MidCap quickly found another strategic buyer for whom the transaction made even more sense. This buyer had the foresight and ability to make strategic acquisitions even in a softening economy.
"The combination of STP and TW Metals made complete sense on multiple levels so we were able to close the transaction in less than 40 days from the initial proposal," said Doug Hendrickson, a partner with MidCap Advisors. "All of the executives and professionals involved worked diligently and communicated effectively to make this transaction happen in such a short period of time."
Why The Client Retained MidCap Advisors

James Goldsmith, co-founder of STP, initially responded to a letter he received from MidCap Advisors. After interviews with several investment bankers, MidCap Advisors was awarded the engagement because of its:
Experienced and seasoned team of investment bankers
Proven ability to identify and negotiate successful transactions with strategic buyers and private equity groups
"Good fit" on a personal level with STP's co-founders and management team

The MidCap Advantage
MidCap Advisors worked with STP's management team to:
Position the business as a unique opportunity for both strategic and financial buyers
Demonstrate and document the company's future growth plans
Enhance the company's value by restating its financial statements with documented owner add-backs and adjustments
Prepare a professional offering package that presented the company's strengths and value drivers
Identify and contact a handful of carefully selected financial and strategic buyers
Maintain project momentum so that the company's management team could continue to focus on performance
Handle negotiations on price and terms with several sophisticated buyers
Deal Summary and Results
The results of this highly successful transaction, included:
STP was purchase by TW Metals
MidCap delivered 3 offers from prospective buyers
MidCap delivered a final purchase price and terms that exceeded the client's original expectations
A 100% cash transaction

Client Response
According to Jim Goldsmith at STP, who conducted the original search for an investment banker, "It came down to a couple of companies that I was interested in and MidCap Advisors was one of them. When I met the folks at MidCap and learned about their backgrounds there was no question at all. They clearly had what it was going to take to get the best price for my company."
After the sale was completed, Gerald Hallisey, co-founder of STP, stated, "I highly recommend MidCap...we couldn't be more pleased with the way they handled things."