Platinum Equity Provides Investment Solution for Founder-Owned Tarter

Tarter Farm and Ranch Equipment is a well-known brand that provides mission-critical products for farmers and ranchers in the U.S.

The company is also the latest example of Platinum Equity providing a divestiture solution for a founder-owned company.

Following similar acquisition paths as current portfolio companies like L&R, Arrow International and Hop Lun, Tarter also required a degree of understanding that there is a personal dynamic in such a transaction.

Earlier this year, Platinum Equity announced the acquisition, which was spearheaded by the Small Cap investment team. Some members of the family remain minority shareholders. Financial terms were not disclosed.

“We admire what the Tarter family has built and have great respect for what the company means to its employees, customers and the communities they serve,” Platinum Equity Co-President Jacob Kotzubei said in the release announcing the transaction. “Family farms and ranches are a vital part of the U.S. agricultural economy. We believe Tarter is one of the only companies that has the capacity and capability to serve the largest and most demanding customers in the space.”

Platinum Equity Managing Director Dan Krasner said: “Platinum Equity has a lot of experience helping founder-owned businesses evolve and work toward maximizing their potential. Our global experience and expertise in areas like sourcing and supply chain, manufacturing, digital transformation and business scalability can help Tarter take the next step.”

Founded by the Tarter family in 1945 as the Tarter Gate Company, the business has expanded significantly in recent years to include a broad range of ranch and farm equipment. Product lines include animal gates and fencing solutions, tractor implements, planters and fire rings, and animal feeding and handling equipment for ranchers, large institutional farms and smaller farming enthusiasts. According to a recent economic impact report, nearly 20 percent of the nation’s economic activity and 15 percent of U.S. employment are linked to agriculture.

Tarter, which is headquartered in Dunnville, Ky., currently has a workforce of roughly 1,000 employees across 12 facilities in Kentucky and Utah. The investment will require significant operational investment, which is a common theme among founders who seek outside investment. The company was previously owned by the fourth generation of the Tarter family.

Former co-owner Anna Tarter Smith said: “I am deeply proud of what Tarter Farm and Ranch Equipment has become and equally optimistic about the company’s future with Platinum Equity’s support. We have great products, loyal customers and a strong brand. I’m grateful for the hard work and commitment of all Tarter employees and excited about what lies ahead.”

Earlier this year, Krasner provided a few more details about the investment.

(Answers have been edited for length and clarity).

Q: How was the deal sourced?

Krasner: This one actually didn’t come from one of our normal investment banking relationships. The family hired a small investment bank out of Nashville, and it was sourced through our business development team. Kudos to them for tracking this one down from a not-well-known investment bank. Once we got into it, it was a transaction just like any other, and fortunately we were able to prevail.

Q: Given the sluggish M&A climate during the first half of the year, were there any challenges to get the deal across the finish line?

Krasner: There were definitely challenges, but I wouldn’t say there were any related to the M&A market. The Small Cap Fund isn’t really accessing the capital markets and that’s what’s really caused the overall M&A markets to slow down, but that hasn’t affected us at all. We closed two platforms this year (The HC Companies was the other Small Cap acquisition). We’re preparing two companies for sale. We’ve closed a number of add-ons. The malaise that you read about in the M&A markets has less of an impact on our fund.

Q: What were the challenges?

Krasner: The challenges came from dealing with a family that was new to all this from a transaction standpoint. We were also dealing with a family business. Their name is literally on the wall, and they care about that name deeply. We’re a bunch of individuals coming in from a private equity firm in Beverly Hills. It was important that we earned their trust, that they really understood that we intend to be good stewards for the company.

Q: That sounds similar to stories with other family-owned businesses Platinum has transacted with, the challenges that you have earning trust with family-run businesses. Do you have any specific anecdote from the sales process where you had to overcome skepticism?

Krasner: We didn’t realize this coming in, but this was a family and there were six family members who were all shareholders. They all had very different interests. You have to find a way to work with everyone. And in this case, that was not easy. You just have to do that through earning trust and helping them see that you’re a good company and demonstrating that we can really be helpful for their company.

Q: From ops perspective, what will be the major focus?

Krasner: There’s a number of initiatives that we are putting in place. We’re installing automated welding lines. We’ve brought on a new CFO, we’ve elevated the COO into the CEO role and we’re working on a commercial game plan and all of which is off to a good start. We’ve had success generating cash from the business in the first three months. We are positioning the business to grow going forward. And I think the ops team is hard at work, driving efficiency throughout the entire cost structure. And I think this business is going to be well positioned over the next couple of years.