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Innovest Global seeks buys in existing and new verticals including US auto dealerships, president says


Jan. 18, 2019 (MERGERMARKET) -- Innovest Global [OTC Markets:IVST], a Chesterland, Ohio-based diversified holding company with construction, energy and health divisions, is actively seeking buys in current and new verticals including automotive dealerships, said President Damon Mintz.

Innovest seeks to enter the dealership business in a major way and hopes to have acquired at least three dealerships by the end of 2019, the executive said. The market is highly fragmented and ripe for consolidation as many independent dealers approach retirement age, he said. The goal is to acquire domestic automotive dealerships in Ohio and surrounding states and ultimately secure a national presence.

“There is an opportunity right now in the industry, and our goal is to become a large national auto group dealer,” he said. “We’re not in this to have five dealerships.”

Dealerships have been changing hands at a rapid pace, with buy/sell transactions increasing 20% year-over-year through the 3Q18, according to California-based Kerrigan Advisors, an industry sell-side advisory firm. Private dealership groups continue to be the primary consolidators. Of the estimated 296 franchises which changed hands in the first nine months of 2018, 271 were acquired by existing private dealers and new private capital entrants to the market, according to the firm’s quarterly Blue Sky Report.

Meanwhile, the number of groups with 10 or more dealerships has grown 50% since 2012. One reason for the trend is that much of auto retail is family-owned with most dealers being second generation or greater. The report noted that an estimated 50% of dealers are currently in the process of transitioning generations.

Innovest was formerly known as Aurum Resource and Asset Management, a public company, and was acquired in late 2016 and repositioned as a diversified holding company by Chairman and CEO Daniel Martin, a former executive with Just Energy [NYSE:JE]. The company has made five acquisitions since October 2017 and also acquired a 20% stake in the biotechnology company StemVax.

Innovest began 2018 with a revenue run rate of USD 500,000 and ended it with USD 50m run rate, said Mintz, who was previously president of Chagrin Falls, Ohio-based Shepherd Energy Solutions, which was acquired by Innovest in January 2018. Since joining the company, Mintz has taken the lead in M&A efforts.

Existing vertical buys

In addition to auto dealerships, Innovest actively seeks buys in two of three existing verticals: construction and building materials, and energy efficiency and lighting.

Innovest completed two construction and building materials buys in 2018 (Cleveland, Ohio-based Midwest Curtainwalls and Akron, Ohio-based Authority National Supply), and would like to acquire two more companies this year. Ideal targets will be profitable and have revenue of at least USD 15m but with a preferred sweet spot of USD 30m to USD 50m, Mintz said.

For its energy group, Innovest seeks bolt-ons with revenue of at least USD 2.5m in areas such as energy efficiency, lighting, infrastructure and energy procurement for commercial and industrial customers, he said. Most of its energy services business is currently conducted in Ohio, Michigan and Pennsylvania.

Additional deals are being sourced internally, he said, and acquisitions will be financed with cash, stock or a combination.

by Jeff Sheban in Chicago