AVAD, a leading wholesale distributor for home automation and A/V gear, has been acquired by the private equity firm Kingswood Capital Management. Kingswood picked up AVAD after its parent company Ingram Micro was sold for $6 billion to the Chinese conglomerate Tianjin Tianhai earlier this year.
Ingram Micro, the giant IT distributor with revenues of over $40 billion, had acquired AVAD in 2005 for up to $200 million. Ingram had revenues of $25 billion at the time.
In acquiring AVAD back then, Ingram Micro was jumping on the “convergence” bandwagon. A/V installers were getting into the IT business and vice versa. Ditto with the cross-over between residential and commercial integrators, served by AVAD and Ingram, respectively.
Presumably, Ingram’s huge base of commercial IT dealers would buy up lots of consumer-related electronics from AVAD, while AVAD’s dealers in the residential and light-commercial sector would patronize Ingram Micro for IT-related products and services.
Ultimately, those synergies were probably modest, but AVAD at least did not seem to suffer under Ingram’s authority.
AVAD today operates out of 23 locations in the U.S. and Canada. Back in 2005 when it was acquired, the distributor had 28 offices operated by 12 independent distributors that were loosely affiliated through branding and some shared back-office operations. Revenues then were $210 million across all locations.
Ingram went on in 2007 to acquire DBL Distributing, a distributor of consumer electronics primarily to CE retailers, for about $90 million. In 2010, DBL and AVAD merged to create the Ingram Micro CE Division. AVAD kept its identity. DBL did not.
New AVAD Owners Staying Quiet as Klipsch Guys Take Helm
No information is available at this time about DBL in the Kingswood acquisition. In fact, Kingswood has little to say at all about the acquisition, other than, “Kingswood and its operating team provides AVAD with the executive leadership, operational resources and capital necessary to realize the Company’s long-term strategic goals.”
The PR agency says, “As they are just getting their feet on the ground and communicating with the AVAD team, we don’t yet have additional information to share about the acquisition. We plan to send you updates in the next week or two.”
In a press release issued today, Kingswood named new top executives for AVAD but did not provide any additional information about the execs. We are told that additional information is not be shared at this time.
We do know that Tom Jacoby has been named CEO and Fred Farrar is the new president of AVAD.
Jacoby was CEO of Harman Consumer Group between 1980 and 2000. Later he served as vice chairman and corporate development officer of Klipsch and later as a director of Klipsch group.
Farrar spent two decades as an executive in enterprises related to Klipsch, the audio company now owned by Audiovox. Concurrently, he spent 13 years in the 1990s as CFO of Overhead Door Company, a distributor of garage-door and related products. Farrar oversaw the acquisition of Klipsch in 2011 as EVP of Audiovox. He currently is involved with Chafre, LLC, a “private investment company that includes a publicly traded shell company,” according to his Linkedin profile.
Los Angeles-based Kingswood Capital says it is “operationally focused middle market private equity firm that invests in businesses in transition driven by operational, strategic, financial or market-driven change. In addition to access to capital, Kingswood brings a broad network of operational resources, relevant industry relationships and tailored solutions to strengthen businesses, realize strategic goals and enhance long term value creation.”
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PRESS RELEASE
Kingswood Capital Management Completes Acquisition of AVAD
LOS ANGELES – July 5, 2016 – Kingswood Capital Management (“Kingswood”), an operationally focused middle market private equity investment firm, is pleased to announce that its controlled affiliate has acquired AVAD, LLC, including its wholly owned subsidiary, AVAD Canada Ltd. (together, “AVAD” or the “Company”).
AVAD is a leading distributor of high-end audio and video solutions focused on the commercial and residential custom installation markets in North America. With more than 10,000 customers across the United States and Canada, AVAD is one of the most recognized brands in the fast-growing system integration market and offers a comprehensive line of premium solutions for video, audio, networking, HVAC, lighting control, security, home automation, digital signage, system design and other products needed by professional installers. The partnership with Kingswood and its operating team provides AVAD with the executive leadership, operational resources and capital necessary to realize the Company’s long-term strategic goals.
AVAD offers premium AV solutions to small- and medium-sized businesses, commercial venues and mid-to-high end residential markets in the United States and Canada. Kingswood has recruited consumer electronics and distribution industry veterans, Tom Jacoby as Chief Executive Officer and Fred Farrar as President, among other key executives to be announced, to assist the team going forward. Following this transaction, AVAD is well positioned to continue providing its comprehensive, premium products and services to its broad base of existing customers while growing its distribution in numerous underserved markets.
Alex Wolf, Managing Partner at Kingswood, commented, “As the market leader in distribution of premium audio and video solutions, AVAD is poised to grow its product offering and distribution reach under new leadership. Kingswood is fortunate to partner with an industry leader like AVAD and proven industry executives like Mr. Jacoby and Mr. Farrar in this transaction.”
Tom Jacoby, AVAD’s new Chief Executive Officer added “Fred Farrar and I have had the pleasure of working with AVAD as one of our customers over our many years in the consumer electronics industry. We hold AVAD in the highest regard and look forward to joining its strong, passionate team and extending AVAD’s market leading position. We have plans to invest in AVAD’s infrastructure and will particularly focus on using web enabled technology to deliver added value to all of our trading partners. We are delighted to be able to contribute our experience and commitment to this great organization.”
“I am excited to work with the AVAD team as we build on the most respected line card in the business and further strengthen AVAD’s renowned customer service, technical support and system design capabilities. I’m also very pleased that AVAD’s leadership team have chosen to partner with us, as we focus on enhancing the customer, vendor and employee experience” said Fred Farrar, AVAD’s new President.
Advisors
Goodwin Procter LLP served as legal advisor to Kingswood. Wells Fargo provided financing for the transaction. No financial advisors were involved.
About Kingswood Capital Management
Kingswood is an operationally focused middle market private equity firm that invests in businesses in transition driven by operational, strategic, financial or market-driven change. In addition to access to capital, Kingswood brings a broad network of operational resources, relevant industry relationships and tailored solutions to strengthen businesses, realize strategic goals and enhance long term value creation.
