The electric vehicle market shows great promise in the years ahead, but it’s been a bumpy road to start for many new entrants in the market. Such has been the case with Webasto Charging Solutions, which was losing millions under its German owner. But PE firm Transom Capital Group have a plan to turn things around, after carving out the division earlier this month. Transom co-founder Russ Roenick says his firm will rely on its operational chops to turn around a money-losing unit in a booming sector. Here’s more on their investment thesis that drove the deal.

In 2022, the German auto supplier Webasto Group hired Jeffries to find a partner for its U.S.-based electric vehicle charging division even as EV sales were picking up. The company claimed at the time that it didn’t want to sell the unit outright, but rather needed help with a promising U.S. division far from headquarters.

The parent company itself had lost money the previous two years and said it also wanted to focus on its core business of producing roofs, heaters, battery equipment and other equipment for major automakers. The EV unit produces mobile charging equipment and charging cables for private and corporate customers.

Further, Webasto had little experience selling directly to consumers, which the EV business required.

“They had a tiger by the tail,” Roenick says. “But they were 8,000 miles away from the business.”

The European press reported that Transom paid about $250 million to carve out the EV charging business, which also produces equipment for airport baggage carts and other industrial EV vehicles. Those same reports say the EV unit lost almost $90 million last year.

Webasto retained a minority stake in the business, which has factories in Los Angeles, Germany and Mexico.

“The business is growing like wildfire,” Roenick says. “We have experts on supply chain, digital transformation and operational expertise” that will get put to good use to turn this business around.

Los Angeles-based Transom has already identified efficiencies it can make at the newly built Mexico plant, he adds.

Investment Strategy

In the meantime, Roenick his firm will continue to hunt for more deals. Transom writes checks as large as $300 million for middle-market companies with revenue up to $500 million and Ebitda up to $100 million. It targets founder-owner businesses and corporate carve-outs that appear to be underperforming.

“We are looking for opportunities that are good businesses and that have good bones that we can swarm with our operational know-how.”

Transom announced three other acquisitions and two exits in the last year.

In December, Transom closed its acquisition of Galleher, a Los Angeles distributor and manufacturer of flooring. In June, it closed its acquisition of Aden & Anais, the maker and distributor of infant products under the Halo brand. Finally, it acquired Bose Corp.’s Bose Profession unit, which installs audio and video systems for conferences.

In January, it sold mapping technology company Locana to engineering firm TRC Companies Inc. and in December sold headphones maker Loud Audio to RØDE Microphones.

Transom is currently raising its fourth fund after it raised $300 million for its third fund in 2018 and closing a $133 million fund in 2016. Transom investors include endowment foundations, insurance companies, family offices and pension funds, including the Los Angeles Fire and Police Pensions $15 million commitment to its latest fund. 

When Transom invests, it almost always overhauls operations, including executive and managerial changes. Revamping operations has always been the strategy since Roenick and his partners launched Transom in 2008.

Transom’s first acquisition shortly after launch was Blue Microphone, a high-end sound equipment maker. The company “was a great business at the time, had a great brand but basically had everything you could imagine being broken about it,” Roenick says.

Transom fixed Blue Microphone’s supply chain and built a new management team, including installing John Maier as CEO. Transom sold it to Logitech for $177 million in 2013. Last year, Transom hired Maier to similarly grow and then exit the Bose-acquired asset.

Roenick says Transom will deploy its same strategy for the Webasto EV charging business.

Reach Roenick at 424-293-2818.