1847 Holdings LLC (OTCQB: EFSH) a publicly traded diversified acquisition holding company, was founded by Ellery W. Roberts, a former partner of Parallel Investment Partners, Saunders Karp & Megrue and Principal of Lazard Freres Strategic Realty Investors. EFSH's investment thesis is that capital market inefficiencies have left the founders and/or stakeholders of many small business enterprises or lower-middle market businesses with limited exit options despite the intrinsic value of their business. Given this dynamic, EFSH can consistently acquire "solid" businesses for reasonable multiples of cash flow and then deploys resources to strengthen the infrastructure and systems to improve operations. These improvements may lead to a sale or IPO of an operating subsidiary at considerably higher valuations than the purchase price and/or alternatively, an operating subsidiary may be held in perpetuity and contribute to EFSH's ability to pay regular and special dividends to shareholders.
1847 Holdings: Acquisitions and Spinoffs of Growing US-Based Businesses
EFSH employs a unique public, private company holding platform that combines the attractive attributes of private, lower-middle market businesses with the liquidity and transparency of a publicly traded company. Its only public-company comp, Compass Diversified Holding (NYSE: CODI), has a current market cap in excess of $1 billion and is up 295% since its 2006 IPO, compared to 185% for the S&P 500 and 124% for the Russell 2000 over the same period. EFSH seeks opportunities for growth and margin improvement of its subsidiary holdings through additional resources and implementation of return-driven metrics and accountability. The Company demonstrated its ability to execute this model with its acquisition and spinoff of 1847 Goedeker (NYSE: GOED). Acquired for a $7.1 million investment in April 2019, EFSH spun out GOED on the NYSE in July 2020, increasing the value of its holdings to $23.4 million (55% of the total enterprise value of $58.5 million at the time of the IPO). EFSH then followed through on its commitment to share its success with shareholders by completing a special dividend of its GOED shares in October 2020. Leveraging an expansive network of deal flow contacts in a niche of the private company arena often overlooked by investment banks and larger private equity funds, EFSH is ideally positioned to scale and manage its portfolio, repeating the success of GOED, and ultimately generating significant value for its shareholders.
Strong management team with expansive deal flow network
- Led by founder and CEO Ellery W. Roberts, former Managing Director of SKM Growth Investors LP, a Dallas-based private equity fund focused on recapitalizations, buyouts, and growth capital in lower middle-market companies, where he managed $400M across two funds; previously Roberts was a principal at Lazard Freres & Co., where he was a senior team member involved in the investment of $2.4B+ of capital; and worked at Colony Capital, where he analyzed and executed transactions for a $625M private equity fund
- Managing Director Edward Tobin was previously Director of Global Emerging Markets (GEM), where for 15 years he managed Special Situations and Venture investing for GEM’s Partners Capital Fund
Solid foundation with three operating subsidiaries and successful spinoff of fourth business (1847 Goedeker) onto NYSE in July 2020
- Stable, mature businesses with margin improvement and revenue growth opportunities
- Acquired 1847 Goedeker in April 2019 for a $7.1 million investment; spun out 15 months later on NYSE (GOED) with holdings valued at $23.4 million (55% of the total enterprise value at time of IPO)
- Trailing 12-month sales of 70M; third acquisition
Acquisition strategy focused on value creation; robust pipeline
- Institutes return-driven metrics/accountability and add resources (personnel, processes, and/or technology) to drive growth
- Extensive deal network
- Strategically evaluate exit opportunities of subsidiaries to monetize successes
- Well positioned to repeat success of 1847 Goedeker (NYSE: GOED)
- Recently raised $5 million from hedge funds, family offices, and other institutional investors; plans to raise up to an additional $25 million