Stout’s Integrated Transaction Services Enable National Auto Parts Sale

Stout’s Integrated Transaction Services Enable National Auto Parts Sale

National Auto Parts utilized Stout’s investment banking, financial due diligence, and finance integration services in sale to Palladium.

September 11, 2023

Stout advised a western-U.S. automotive collision parts distributor, National Auto Parts, in its recent successful sale to Palladium Equity Partners (along with its joint venture affiliate Palladium Heritage) to create a combined platform named Collision Auto Parts. In addition to providing investment banking services, Stout deployed expert capabilities in financial due diligence and finance integration.

Founded in 1997 in New Mexico, the founder/family-owned distributor expanded throughout California in 2005 as additional family members and operators joined the business. Prior to the transaction, the distributor operated as three fully separate entities with independent operations, management teams, and financial reporting functions. During the marketing process, Stout successfully positioned the entities as a single, multi-unit, geographically diverse business with significant cost savings and revenue synergies to be realized if fully merged.

Stout provided an integrated set of transaction-related services to prepare for and execute the sale:

Due Diligence

At the outset of the engagement, Stout’s Due Diligence team prepared the sell-side quality-of-earnings (QofE) report. During the QofE, an inconsistent application of internal accounting policies was identified in some areas of the business, prompting the Due Diligence team to prepare a separate QoE for each entity, along with a consolidating report, which the deal team leveraged as they went to market in June 2022.

Finance Integration

Stout’s Finance Integration group then assisted National Auto Parts by preparing its first set of historical financial statements under U.S. Generally Accepted Accounting Principles. In addition, Stout furnished detailed supporting workpapers, including reconciliations of the financial statements to each entity’s internal reporting and transaction systems. The Finance Integration team also dedicated substantial resources to supporting the distributor and the deal team through a second, and ultimately successful, buy-side QoE process.

Investment Banking & Restructuring

Stout’s Investment Banking team leveraged its knowledge of the collision parts distribution segment to secure the mandate and position the distributor to buyers as a prime opportunity to create a platform uniquely poised to capture the entire western-U.S. market. Stout has now completed two of the top three private equity-backed platform sales in the collision parts segment.

What the Client Has to Say:

“Prior to our successful sale, Stout was able to identify and execute an integration path that established National Auto Parts as one of the largest, scalable collision repair parts platforms in the Western U.S. Three coordinated teams from Stout helped us effectively integrate and establish the back-end accounting, finance, and corporate development functions required to execute our M&A strategy.

“With Stout’s guidance and our new partnership with Palladium, we now have the finance operations infrastructure in place to pursue a focused growth strategy of completing more acquisitions and adding new locations to continue to provide superior availability and service to our customers.”
- Ray Tsai, Chief Executive Officer at Collision Auto Parts