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Holley Performance trades hand among private equity firms

Published in blog.hemmings.com

Holley 4150-style carburetor, as used on the Hemmings Muscle Machines project Chevelle. Photo by Terry McGean.

There’s money to be made in aftermarket performance parts. Just take a look at the recently completed SEMA show in Las Vegas. Or, just ask Sentinel Capital Partners, which recently acquired Holley Performance Products in a private deal with another venture capital firm.

Sentinel, a privately held investment firm based in New York (where else?) specializes in what the analysts at Bloomberg call “growing, mature and lower middle market private and public companies,” like Holley, which has been flipped by other investment companies in recent years. Most recently, it was Lincolnshire Management, another New York-based private equity firm. The Wall Street Journal reported that Lincolnshire “tripled its money on the sale of Holley Performance,” which Lincolnshire had acquired in 2013 from Monomoy Capital Partners, yet another New York-based private equity firm. In February of this year, Holley started the process by retaining an investment bank to explore a possible sale.

Founded as the Holley Motor Company in Pennsylvania in 1899 by three brothers (Frank, George, and Earl Holley), the company started out making motorcycle engines, which didn’t sell so well. So, the brothers started making complete motorcycles, with one brother, George, setting speed records and winning races in hopes of selling more bikes. But it didn’t happen. A four-wheeled Holley Motorette achieved only minor success, with some 600 cars made.

It was a visit to Paris and a license to produce the Longuemare carburetor that ultimately led to Holley’s success. The company manufactured its first carbs in 1904, with Oldsmobile immediately adopting it for its Curved Dash model, then the most popular car in America. Henry Ford took note, using it on some of his Model A cars (the 1903-1904 edition, not the later 1928 model of the same name, though that car, too, had a Holley carb). After moving to Detroit in 1907, Holley became a preferred supplier of carburetors to the Model T and ultimately became one of the largest manufacturers of carburetors in the world, supplying not only the automotive and trucking businesses, but also aviation.

The company also made ignition products, which found their way into many internal combustion engines. The company introduced the groundbreaking four-barrel 4150 carburetor in 1957 on the Ford Thunderbird. It became an oft-used factory high-performance item and a practically de rigueur item for fans of American V-8 hot rods.

The last of the Holley brothers passed away in 1963. Since then, the company has passed through several owners, acquiring and developing other well known performance names along the way, such as MSD, Accel, Superchips, Diablosport, Edge, Flowtech, Mr. Gasket, and Hooker, among many others. Holley remains headquartered in Bowling Green, Kentucky, but has facilities in other states.

Sentinel, which seems to focus more on the size and profit potential of a company rather than an industry, has stakes in aerospace, defense, restaurants, franchising, consumer staples, materials, healthcare products, and so on. Earlier this year, it announced more than $2.6 billion in funding from investors in its most recent round of financing, all geared toward lower midmarket companies with EDITDA of up to $65 million.

Sentinel has also been busy the past few years buying up automotive performance aftermarket companies and stocking its portfolio with them. Sentinel began in 2015 with the acquisition of Driven Performance Brands, an entity that original started as B&M Racing, but even before the acquisition had grown to include Flowmaster, Hurst Shifters, Hurst Driveline Conversion, and even Dinan Engineering, the successful, long-time, California-based BMW tuning operation. In 2017, they acquired APR, a Volkswagen, Audi, and Porsche tuning and performance operation, from yet another private equity firm, Mangrove Equity Partners, surprisingly based in Tampa, Florida, and not New York. Sentinel plans to combine Holley Performance, and its subsidiaries, with Driven Performance Brands. At press time, there was no indication from Sentinel, Driven, nor Holley regarding how that combination would pan out.

None of these acquisitions and divestitures should surprise anyone. Holley has not been part of the Holley family for decades and business is simply business. These firms find opportunities they think will bring them money and they go for it. As for the acquired companies, people get into business to make money. If they make enough, they get noticed and the investors start lurking around. While consolidation might seem scary in some regards (redundant products or employees being phased out among them), it also means that there is a strength with so many of these aftermarket brands under one umbrella, and that the investors want to grow these businesses and make money with them.