Thermal Devices Acquired by Strategic Buyer
Transaction Description
Thermal Devices (“TD” or “the Company”), a value-added distributor of industrial electric heaters, controls, thermocouples, and related products to manufacturers, was acquired by Thermal Technology Distribution Solutions (“TTDS”), a leading distributor of industrial temperature management and related products, backed by Gryphon Investors. Heat Tracing Sales, the Company’s heat trace cables, controls, and engineering support business serving mechanical and electrical contractors, was also included in the transaction.
Transaction Details
Thermal Technology Distribution Solutions
Cincinnati, Ohio
acquired
Thermal Devices
a leading distributor of industrial electric heaters, controls, and related products
Mt. Airy, MD
M&A Advisory Services to the Seller
Transaction Overview
Thermal Devices marks the fourth investment for TTDS, established in September 2023 by middle-market private equity firm Gryphon Investors through Gryphon’s Heritage Fund, the firm’s small-cap investment strategy. TTDS previously acquired Big Chief, Inc., Proheat, and Southwest Heater and Controls.
“Partnering with TTDS and Gryphon allows Thermal Devices to build upon the successful legacy and reputation that we have established in the Mid-Atlantic for over half a century,” said Rob Strayton. “My family and the TD team were impressed with the rapid growth of TTDS and are excited to work with them because of the many advantages the TTDS platform offers our customers, suppliers, and employees.”
“Completing three add-on acquisitions within months of establishing TTDS validates our position as the clear buyer of choice for thermal management product distributors,” said Jeff Pembroke, Operating Partner of Gryphon’s Heritage Fund. “We continue to pursue organic growth and acquisition opportunities with high-quality distribution partners that align with TTDS’ vision of providing the highest level of support for our customers and suppliers.”
Challenges
Thermal Devices was founded more than 50 years ago by William “Bill” Strayton. For the last 30 years, the company has been run by his son, Rob Strayton, who grew the company into one of the leading distributors of industrial electric heaters, controls, thermocouples, and related products. In early 2023, Bill and Rob began receiving a number of unsolicited offers for their business. They also noted that several of their big competitors had just been acquired.
They sensed the timing was right to consider a transaction, but were not sure where to start or how to evaluate the offers they were receiving. They wanted to make sure they maximized the value of their business when they sold, but Rob was also interested in continuing to work with the new owner, so the strategic fit and chemistry with the buyer was equally important.
Solutions
We started by preparing a creating a checklist of Bill and Rob’s exit objectives. Next, we prepared a full financial model of Thermal Devices to provide the Strayton family with a third-party, objective assessment of the fair market value of the company. This allowed them to understand if the offers they were getting were market-based and worth pursuing.
Bill and Rob received two offers that were attractive. We helped them analyze the business and non-business aspects of each offer so they could compare them side-by-side and prepare the appropriate counter proposals.
When they decided the offer from Gryphon Investors was the most attractive, we helped Rob negotiate the terms of the Letter of Intent to ensure it met all of Bill and Rob’s objectives, including a role for Rob post-closing. Once the Letter of Intent was signed, we reviewed the purchase agreement and advised Rob and Bill throughout the due diligence process.
In the end, the transaction met all of the Strayton family’s exit planning goals.
Summary
This transaction is a case study on how to sell your business the right way. The Strayton family retained qualified advisors at each step of the process and followed the advice they received. This resulted in one of the fastest and most efficient closings we’ve been involved in, while at the same time, creating an ideal outcome for both the buyer and seller.
