Information on the Target

Crown Products, Inc., based in Bloomington, Minnesota, is a prominent distributor specializing in flooring and flooring installation products. With a rich history spanning over 35 years, Crown has established itself as an industry leader in the Upper Midwest and Mountain West regions. The company's extensive distribution network includes 20 locations, catering to a wide range of clients, including residential and commercial flooring contractors, builders, and retailers. Crown boasts a diversified portfolio, offering over 23,000 items from more than 100 manufacturers, which underscores its commitment to serving a dynamic customer base.

Since its formation in 2019 from the mergers of Walcro, LLC and Cartwright Distributing, LLC, Crown has made significant progress in expanding its market presence. The company has strategically acquired Tri-State Wholesale Flooring and Jer-And, amplifying its operational capabilities and geographic reach. Under WILsquare Capital's guidance, Crown has embarked on a transformative growth trajectory, investing in its workforce, processes, and e-commerce capabilities.

Industry Overview in the Target’s Specific Country

The flooring installation market in the United States has displayed robust growth, driven by increasing construction activities and a rising demand for high-quality flooring solutions. As a key player, Crown has benefited from the overall positive trends in this sector, characterized by evolving consumer preferences and innovations in flooring technology. The market comprises various segments, including residential, commercial, and industrial flooring, each contributing to the sustained demand for installation products.

Moreover, the COVID-19 pandemic has reshaped many industries, with construction and home improvement projects receiving renewed attention. As people focus more on upgrading their living spaces, the flooring sector has seen increased activity, prompting distributors like Crown to enhance their product offerings to meet consumer expectations. The shift towards sustainable and eco-friendly flooring materials has also influenced market dynamics, further positioning Crown to capitalize on emerging opportunities.

In addition, the rise of online shopping has led to a fundamental transformation across industries, including flooring. The launch of e-commerce platforms by companies like Crown demonstrates an understanding of changing purchasing behaviors, allowing them to reach a broader audience. As the industry continues to evolve, players that adapt quickly to changing market demands will likely maintain a competitive edge.

Overall, the flooring installation industry in the U.S. is expected to grow significantly in the coming years, fueled by advancements in technology and sustained investments in residential and commercial infrastructure. Crown's strategic enhancements and broad distribution capabilities place it favorably within this expanding market.

The Rationale Behind the Deal

The decision to sell Crown Products stemmed from a successful four-and-a-half-year investment period backed by WILsquare Capital. During this time, the firm instigated a series of strategic initiatives resulting in notable acquisitions and expansions that have bolstered Crown's position within the market. The collaboration has yielded a resilient business model, enhanced operational efficiencies, and a strengthened vendor portfolio.

The sale signifies an opportunity for Crown to enter into a new partnership with Shoreview Industries, a move that is anticipated to further accelerate the company's growth trajectory and solidify its status as an industry leader. The partnership aims to leverage existing strengths while exploring innovative ways to boost production and service offerings within the highly competitive flooring distribution landscape.

Information about the Investor

WILsquare Capital is a private equity firm located in St. Louis, specializing in the acquisition and growth of lower-middle market companies throughout the Midwest and Southern United States. With a focus on sectors such as business services, niche manufacturing, and technology, WILsquare has established a reputation for fostering businesses into sustainable growth stories.

Currently operating from their capital fund, WILsquare Capital Partners Fund II, L.P., the firm has a proven track record of identifying potential in emerging markets and facilitating growth through strategic investments. Their expertise in operational enhancement and market adaptation has played a crucial role in shaping Crown into a leading player in the flooring distribution sector.

View of Dealert

The sale of Crown Products, Inc. is perceived as a strategically sound decision, reflecting WILsquare Capital's foresight in recognizing the market's potential and executing a growth-oriented strategy. The deal not only highlights Crown's transformation and success under WILsquare's stewardship but also sets the foundation for future growth under new ownership.

The partnership with Shoreview Industries is expected to provide the necessary resources and expertise to sustain Crown’s competitive advantage. Given the increasing demand for flooring solutions and e-commerce capabilities, Crown is well-positioned to continue its upward trajectory post-acquisition. Such synergies in culture and operational efficiencies are crucial for the continuity and enhancement of service delivery in the market.

Additionally, WILsquare's decision to sell at a time when the industry shows strong growth trends indicates a well-timed move, optimizing investment returns while leaving room for ongoing development. The favorable market conditions and Crown's readiness to adapt to consumer trends make this acquisition a promising venture for both the company and its new investors.

In conclusion, the transaction marks a significant milestone for Crown Products, demonstrating the effectiveness of WILsquare’s investment strategy and positioning the company for future success in the evolving flooring industry landscape.

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