Cardinal Homes, a made-to-order, modular building component manufacturer, invested heavily in production equipment upgrades and renovations to streamline productivity – right before the 2008 housing bubble burst.
Cardinal Homes, like all companies in the home construction industry at that time, “felt the decline dramatically,” and “while many of these companies ended up going under,” Fred Cross, Principal, SC&H Capital explained, “Cardinal hung on.”
Though it survived the 2008 Recession, the company “struggled to carry the expenses of the loan” that allowed the company to upgrade. In the end, Cross said: “The overhead was too much for them to bear.”
Cardinal Homes, a subsidiary of Alouette Holdings, is a crucial employer in its southern Virginia town of Wylliesburg. Company leaders recognized they’d need to find a buyer that shared their priority and commitment to saving jobs. Cardinal Homes leaders also recognized they needed skilled advisers to lead the search and transaction, therefore turned to SC&H Capital’s distressed M&A experts, formerly Equity Partners.
SC&H’s team served as the exclusive, court-approved investment banker to secure a buyer for Cardinal Homes. The SC&H Capital team conducted an exhaustive search and closed the best deal possible for the company within two months.
Cardinal Homes “generated significant market interest,” Cross said. Forty companies executed confidentiality agreements and looked into the deal within the narrow window of opportunity.
Kituwah, a company owned by the Eastern Band of Cherokee Indians, not only submitted the highest offer but shared Cardinal Homes’ commitment to the region and community’s long-term financial well-being. With the transaction complete, the production line is still running.
SC&H Capital’s new special situations team, working efficiently and quickly to find solutions, “we really came up with the best-case scenario, and quickly,” said Cross. “We closed the deal for our client within 55 days of being hired.”
He considers the deal a win for the team, for the employees of Cardinal Homes and the region in which it operates. “Cardinal will maintain jobs and its business can, and will, continue to grow.”
Other professionals who worked on the transaction include:
- Michael E. Hastings, Whiteford Taylor Preston, counsel to Cardinal Homes, Inc.
- Brandy Rapp, Whiteford Taylor Preston, counsel to Cardinal Homes, Inc.
- Michael Condyles, Kutak Rock, LLP, counsel to Newtek Small Business Financing
- Michael Mueller, Williams Mullen, counsel to the Creditor’s Committee
- Guy Davis, Protiviti, Inc., Financial Analyst to Cardinal Homes, Inc. throughout the bankruptcy.
- John Small, Brooks Pierce, LLP, counsel to the buyer, Kituwah, LLC.
About SC&H Capital
SC&H Capital, an affiliate of SC&H Group, is an investment banking and advisory firm providing merger and acquisition (M&A), employee stock ownership plan (ESOP), special situations, and business valuation solutions to middle market and growth companies nationwide. SC&H Capital delivers investment banking and advisory services across numerous industries including technology, healthcare, manufacturing, business and professional services, and government contracting to help owners achieve their exit planning goals and liquidity objectives. To learn more visit www.schcapital.com.