Building an Industy Leader From Two Underperformers
“We saw that Henniges possessed tremendous potential from day one—but it took an exceptional leadership team to unleash that potential.”– John Hatherly, Managing Partner, Wynnchurch
The Henniges story begins with our September 2007 acquisition of the North American operations of Metzeler Automotive Profile Systems, a manufacturer of engineered vehicle sealing systems, from its distressed European parent. In December of the same year, we acquired the most attractive assets of GDX Automotive and combined the two businesses under a new leadership team to form North America’s largest and the world’s second-largest supplier of vehicle sealing systems. The new company was named Henniges Automotive.
Challenges Out of the Gate
Individually, the two businesses faced numerous challenges. Severe operational problems forced Metzeler’s parent company to divest all global operations, including selling its European operations and brand name to another buyer. GDX, owned by a large hedge fund since 2004, was in serious financial distress as a result of failed product launches, leadership turnover and unfavorable labor agreements.
Addressing Issues, Building on Strengths
With strong automotive experience, Wynnchurch saw opportunity in combining the two businesses. Metzeler had strong operating and management systems but lacked an intelligent growth vision. GDX had a tremendous book of business, but lacked management systems. With a fresh vision and Wynnchurch support, the new management team institutionalized best practices and created a culture of continuous improvement, transforming Henniges into a world-class automotive supplier with a diversified low-cost manufacturing footprint and industry-leading engineering expertise.
Wynnchurch Role: Support to Set the Stage
An exceptional management team was key to the Henniges turnaround story. Wynnchurch helped set the stage. We supported management in renegotiating OEM contracts, capitalized the business prudently and shepherded two complex transactions to closing. With Wynnchurch involved at the board level, the management team took it from there.
Results and Realization
Revenues and profitability rose dramatically during the three years of our investment. After exploring strategic alternatives, Wynnchurch agreed to sell the company in October of 2010 and closed on November 30, 2010. As part of the transaction, Wynnchurch negotiated the right to invest equity in the new holding company on the same terms as the buyer.