Target Company Information

Founded in Oklahoma City, Oklahoma, CASS is a prominent enterprise in the formulation, manufacturing, and marketing of specialty chemicals. The company operates additional production facilities located in Irvine, California, and Charlotte and Madison Heights in Michigan. CASS specializes in complex adhesives, industrial composites, and coatings, utilizing applications that include epoxies, urethane, and polyester chemistries. Its diverse customer base spans multiple sectors such as automotive, aerospace and defense, electronics, as well as commercial and residential floor coatings, and infrastructure repair.

The company was co-founded by Doug Frans, who has held the position of CEO since 1998 and remains a principal shareholder. Under his leadership, CASS has developed a solid reputation within the specialty chemicals industry. Don Stanutz, Managing Director at Akoya and head of its Specialty Chemical Sector, is set to join CASS’s Board of Directors following the acquisition.

Industry Overview

The specialty chemicals industry in the United States has demonstrated robust growth due to innovations and increasing demand across various sectors. The industry is characterized by a diverse range of applications, providing critical components in manufacturing processes, which has become vital as technology advances and new materials emerge.

Within the specialty chemicals sector, the adhesives market is notably strong, driven by the automotive and aerospace industries' demand for high-performance materials. The rise in infrastructure projects also bolsters the demand for formulation technologies that enhance durability and functionality, crucial for long-lasting applications.

The U.S. market for coatings is another significant area of growth. New regulations around environmental sustainability have pushed innovations in eco-friendly products, aligning with changing consumer preferences and safety standards. As such, companies engaged in producing formulated coatings are positioned for success in this evolving landscape.

Moreover, the elevation of the manufacturing sector in emerging markets has opened up new opportunities for specialized chemical firms, including CASS. By leveraging its technological capabilities and expertise, CASS is well-prepared to capitalize on these growth modules effectively.

Rationale Behind the Deal

This acquisition aligns with Akoya's strategic objective of investing in companies that are well-positioned for growth within the Specialty Chemicals sector. CASS operates in an appealing market that is witnessing higher demand for differentiated chemical products. By strengthening CASS's foundation, Akoya aims to drive sustainable growth through both organic strategies and possible add-on acquisitions in the future.

Akoya's investment philosophy emphasizes actionable value creation strategies that can significantly benefit both management and investors. This acquisition is seen as a critical step in consolidating its presence in the specialty chemical landscape.

Investor Information

Akoya Capital LLC is a private investment firm specializing in lower and middle market businesses with promising growth trajectories. The firm focuses on forming partnerships with accomplished operating executives, ensuring a hands-on approach in executing targeted investment strategies across sectors including Specialty Chemicals, Consumer Foods, and Workplace Safety.

Since its inception, Akoya has engaged in over 35 diverse transactions, including acquisitions, mergers, and capital raises. This rich background in investments, paired with operational expertise, sets Akoya apart in identifying and nurturing high-potential business opportunities.

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From an analytical perspective, the acquisition of CASS by Akoya appears to be a strategic and prudent investment. CASS is well-established within a thriving specialty chemicals market with a broad customer base and multifaceted applications that promise stability and growth.

Moreover, the management team's experience, specifically Doug Frans's continued involvement, instills confidence in the operational continuity and strategic direction of the company. CASS’s specialties, such as adhesives and coatings, are aligned with key growth sectors, which should bolster its market position.

Furthermore, Akoya's commitment to value creation through its expert-led management approach indicates that potential efficiencies and improvements can be tracked post-acquisition. The collaboration with ShoreView Industries adds to the credibility of this investment, given ShoreView's extensive experience in the middle market.

In conclusion, the partnership between Akoya and CASS presents a compelling case of a synergistic venture that has the potential for significant upside, making it an attractive investment opportunity in the evolving specialty chemicals sector.

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