Transportation is evolving more and more each year as new technologies and infrastructure continue to receive private equity investment. MiddleGround Capital is now looking to the fragmented cycling industry as a burgeoning market in transportation.
MiddleGround Capital, an operationally focused private equity firm that makes control investments in North American middle market B2B industrial and specialty distribution companies, believes its capital infusion in Hawley-Lambert Cycling, dba HLC, will expand its geographic footprint and make technology and infrastructure investments that facilitate HLC’s customer retention and growth. It will enhance HLC’s ability to bring more bicycling customers — both individual and commercial — its current brand offerings and an expanded array of products.
Founded over 75 years ago, with headquarters in Lévis, Quebec and Lexington, S.C., HLC distributes over 170 recognized brands in the cycling world to well-established and startup businesses. Rather than complete bicycle frames, HLC sells parts, accessories, and components for both traditional and electric bicycles (e-bikes).
“Fundamentally, we believe bicycling will play a critical role in the future of mobility,” says a MiddleGround senior executive close to the deal. “Certainly, COVID accelerated that whether it’s the penetration of e-bike, or cycling infrastructure, spending and investment,” he added.
MiddleGround Capital sees the acquisition of HLC as part of a larger acquisition strategy in this space where there isn’t much institutional capital. Recognizing the organic tailwinds around municipal investment in traditional and e-bike infrastructure, they’re pursuing a buy-and-build strategy with HLC as its initial platform. “It’s a highly fragmented industry with a lot of private business owners that will want to transact at some point,” says MiddleGround Capital’s HLC acquisition lead.
HLC provides MiddleGround with a headstart in the industry as the firm distributes brands including SRAM, Shimano, Garmin, ABUS, RockShox, Kuat, Tacx and Muc-Off. Also included in the acquisition is HLC’s portfolio of best-in-class owned brands including Evo, WheelShop, PWR bikes and Eclypse.
“Like we do with every MiddleGround portfolio company, whether it’s a specialty distributor, like HLC, or manufacturing business, we’ll run our traditional playbook to help their management team optimize working capital,” says the MiddleGround lead we spoke to about the deal. “We’ll help make sure the cost structure is appropriate, so they scale and grow most profitably.”
-Dahna Chandler
