Art Van Elslander
WARREN, Mich. — Art Van Furniture has reached a deal to sell the Top 100 company to private equity firm Thomas H. Lee Partners, after 58 years under one owner and recent years of aggressive expansion.
Terms of the deal, including the purchase price, were not disclosed. The transaction is slated to close in February.
Art Van’s current leadership, including CEO Kim Yost “will work closely with THL to continue to enhance organizational growth and the brand’s plans for the future,” the retailer said in a release.
Gary Van Elslander will remain as president of Art Van Furniture and David Van Elslander as president of Art Van PureSleep.
In a follow-up interview with Furniture Today, Yost said the acquisition gives Art Van the opportunity to share best practices with THL’s portfolio of great businesses as well as a connection to the firm’s “unlimited access to capital for growth.”
“One of the things they like about us is we’re on a growth path and they felt they could really assist us … with additional capital and maybe even accelerate” those plans, Gary Van Elslander added.
In a statement, the Warren, Mich.-based retailer, with 117 stores in five Midwest states, said it “is embracing the next chapter in the company’s impressive growth story and continued evolution.”
“The heartbeat of any organization is its people,” said Art Van Elslander, the 86-year-old chairman, founder and sole shareholder since opening his first store in 1959 on Gratiot Avenue in Detroit.
“I am proud of Art Van Furniture’s history and what we have accomplished. The time for an ownership transition is right and the opportunity presented itself. There is still much I want to do, and I feel confident knowing the company and its people will be in the very best of hands for continued growth and success.”
Art Van is No. 19 on Furniture Today’s most recent Top 100 with estimated 2015 sales of $690 million at then 98 stores in Michigan, Illinois, Ohio and Indiana. Today it employs more than 3,500 people and operations include 17 franchise stores and specialty store banners Art Van PureSleep, Scott Shuptrine Interiors, Art Van Flooring and Hillside Furniture.
Art Van previously set a goal to top $1 billion in sales by the end of 2018. While Yost declined to share 2016 sales figures, he said 2015 numbers are “understated” and that the retailer is actually on track to hit $1 billion sooner than previously stated. Among other things, Art Van plans to open five additional Chicagoland stores this year and “a record amount” of freestanding PureSleep locations, adding to the 51 sleep shops it operates today, Yost said. It also will be investing millions of dollars into its online business, he added.
Founded in 1974, Thomas H. Lee “has an outstanding history of investing in growth-oriented businesses like Art Van Furniture, and they have a strong track record with consumer and retail brands — including companies such as 1-800 Contacts, Bargain Hunt Superstores, Dunkin’ Brands, Fogo de Chao, and Party City,” the release said.
According to its website, the Boston-based THL has raised more than $22 billion of equity capital, acquired more than 140 portfolio companies and completed more 350 add-on acquisitions, with a combined enterprise value of more than $150 billion at the time of the acquisitions.
The private equity firm has been involved in the furniture industry before: as a previous owner of bedding producer Simmons, which it agreed to acquire in late 2003 in a $1.1 billion deal, and Stanley, for which the firm led a leveraged buyout in early 1989, holding 95% of its shares until Stanley returned to the wider public market in 1993.
“After thoughtful consideration and strategic evaluation, we determined that Thomas H. Lee Partners is absolutely the right ownership partner for Art Van,” Yost said in the release. “We are collectively committed to building on Mr. Van’s tremendous legacy as we enter this new chapter of the Art Van Furniture story.”
THL Managing Director Jeff Swenson, said the firm is “gratified and honored to be able to partner with Art Van Furniture as the company moves into its next phase of growth.”
“Over nearly six decades, the company has continuously realized Mr. Van’s vision and set the standard for excellence in furniture retail in the Midwest,” he said. “We look forward to working with the entire team at Art Van as we continue to aggressively grow this outstanding brand.”
RBC Capital Markets acted as financial advisor to Art Van Furniture in connection with the transaction. Goldman, Sachs & CO acted as financial advisor to THL.
“Art Van has one of the most successful formulas in furniture retailing,” said Jerry Epperson, managing director of Richmond, Va.-based Mann Armistead & Epperson, which advised RBC in the transaction. “He’s never stopped growing and thinking and innovating, and he has created a terrific management team with Kim Yost and Gary Van Elslander at the top.
“Thomas H. Lee was very enthusiastic in their interest in Art Van, and they’re one of the most successful private equity firms in the nation, so it’s a natural combination.”
In meetings with employees today, Yost said he was asked if the retailer anticipates changes under the new ownership, “and we said there will be several,” he told Furniture Today. “But those changes are consistent with the changes we’ve gone through for 58 years. Art Van for decades has been a leader in transition, evolution and always staying relevant. Change is about success, and we’re all about that.”