BBA’s Divestiture of Its Automotive Friction Group

Transaction

• Divestiture of the Automotive Friction group of BBA to HSBC Private Equity for $650 million in July 2000
• The Automotive Friction group is one of the largest providers of braking systems and consumables to both OEM and aftermarket customers

Challenges

• BBA Group wanted to re-focus its business on its core business lines: Aviation and Materials Technology
• Declining multiples for automotive companies in the face of an economic downturn and the need for confidentiality meant a wide auction was not a viable option

Solution

• Principals of FocalPoint identified the most likely buyers for the Friction group and solicited letters of intent based on limited amounts of publicly available information
• We were able to create value throughout the transaction process by maintaining an element of competition by including two bidders in the negotiations, without the time and confidentiality risk of going to a wider audience
• Ultimately, we achieved a valuation for the business that exceeded analyst expectations
  • There was no change in the price between the final LOI and closing
  • Management was successfully incentivized to remain with the business
• The final purchase price represented a multiple of approximately 10x trailing EBIT