ECN Capital Corp. (TSX: ECN), one of North America’s leading commercial finance companies, has agreed to acquire Service Finance Holdings, LLC for CDN $410 million or US $304 million in cash.
In addition, ECN Capital has agreed to a deferred purchase price earn-out plan with the founders that will be based on the achievement of prescribed return on average equity (ROAE) over the next 5 years.
As part of the transaction, ECN Capital will acquire the employees, systems, intellectual property, operations, offices, agreements, and other assets of Service Finance.
The transaction is expected to close in Q3 2017.
Founded in 2004, Boca Raton, Florida based Service Finance originates and services prime and super-prime installment contracts to finance home improvement projects in the U.S. Originations are sourced through exclusive national vendor programs with top manufacturers and dealers.
“In over 25 years I have not encountered a business model like Service Finance with leading vendor finance relationships, superior credit, proven growth, scalability, and a robust partnership with U.S. banks,” said Steven Hudson, ECN Capital’s CEO. “Mark, Steve, Ian and Eric and their team need to be commended for the dominant business that they have built. We’d also like to recognize the role of Flexpoint Ford as an owner and advisor. We look forward to a long-term partnership with Mark and his team.”
BMO Capital Markets, CIBC Capital Markets and Macquarie Capital acted as financial advisors to ECN Capital in connection with the transaction. Baker & Hostetler LLP acted as legal counsel to ECN Capital.
photo credit: Service Finance