1847 Provides Update on the Sale of 1847 Cabinets Inc.

Rhea-AI Summary

1847 Holdings , a company focusing on identifying undervalued investment opportunities, provided an update on the sale of its subsidiary, 1847 Cabinets Inc. The prospective buyer proposed an enterprise value of $27.6 million, including earn-out payments, representing a 5.91x multiple of 2023 EBITDA. The transaction is progressing through due diligence, with the closing expected within 90 days. The CEO, Mr. Ellery W. Roberts, highlighted plans to utilize proceeds for debt repayment, working capital, acquisitions, and potentially share repurchases, aiming to maximize shareholder value.

Positive

• The sale of 1847 Cabinets Inc. for $27.6 million, including earn-out payments, enhances the financial position of 1847 Holdings

• The acquisition price of 1847 Cabinets at a substantial premium compared to the current market valuation indicates the potential value of the company's portfolio.

Negative

• None.

Financial Analyst

The proposed sale of 1847 Cabinets Inc. at an enterprise value of $27.6 million, including $11.5 million in earn-out payments over three years, represents a significant financial decision for 1847 Holdings. The valuation multiple of 5.91x based on 2023 EBITDA of approximately $4.7 million indicates a positive valuation for the subsidiary, particularly when considering that this multiple is within the common range for similar transactions in the industry. If the transaction closes within the expected 90-day window, the infusion of capital could strengthen 1847 Holdings' balance sheet by enabling it to repay senior secured debt and improve liquidity.

For shareholders, the potential use of proceeds to fund working capital and future acquisitions, coupled with a share repurchase program, suggests an aggressive strategy to enhance shareholder value. The management's focus on reallocating resources strategically is a key point for investors to monitor, as it can lead to improved financial metrics and potentially higher returns on investment in the long run.

Mergers & Acquisitions Expert

From a mergers and acquisitions perspective, the sale of 1847 Cabinets Inc. could be an indicator of 1847 Holdings' strategic refocusing. Divestitures are commonly used to streamline operations and concentrate on core businesses or more profitable ventures. It is also noteworthy that the sale is expected to be at a substantial premium compared to the current market valuation of the company. This could signal to investors that the market may be underestimating the company's portfolio value.

However, investors should be mindful of the risks associated with earn-out agreements, as they are contingent on the future performance of the divested entity and can impact the actual value realized from the transaction. The due diligence process and the negotiation of a definitive purchase agreement will be critical in ensuring that the terms of the sale are favorable and that the strategic buyer is committed to the growth and success of 1847 Cabinets post-acquisition.

NEW YORK, NY / ACCESSWIRE / April 29, 2024 / 1847 Holdings LLC ("1847" or the "Company") (NYSE American:EFSH), a holding company specializing in identifying over-looked, deep value investment opportunities in middle market businesses, today provided an update on the sale of 1847 Cabinets Inc.

As previously announced on April 23, 2024, the Company executed a non-binding Letter of Intent ("LOI") with a prospective strategic buyer to sell all of the assets of 1847 Cabinets Inc. ("1847 Cabinets"). Under the terms of the LOI, the buyer has proposed an enterprise value of $27.6 million for the acquisition of all of the assets of 1847 Cabinets, including $11.5 million in earn-out payments over a three-year period, representing a 5.91x multiple of 2023 EBITDA of approximately $4.7 million. The transaction continues to progress through routine due diligence and the Company currently expects the transaction to close within the next 90 days.

Mr. Ellery W. Roberts, CEO of 1847 Holdings, commented, "We are pleased with the progress we have made advancing this transaction. Currently, the proposed acquisition is undergoing confirmatory due diligence and negotiation of a definitive purchase agreement, both of which are progressing according to plan. As a result, we currently anticipate the closing to take place within 90 days. Given the purchase price, our intention is to utilize the cash proceeds to repay senior secured debt and other liabilities, allocate funds for working capital and future acquisitions, as well as potentially initiate a share repurchase program. This sale represents an important strategic move for 1847, one that validates our ability to purchase, operate and enhance the value of assets and then reach a sale, of which will significantly enhance our financial position, enabling us to reallocate resources strategically and capitalize on emerging opportunities within our portfolio and beyond, with a long-term focus on maximizing value for shareholders."

"While this sale marks a significant milestone, it's just one aspect of our broader strategy aimed at optimizing asset allocation and enhancing overall shareholder returns. The proposed transaction highlights what we believe is the considerable undervaluation of the Company relative to the intrinsic value of our portfolio companies. The acquisition price underscores the inherent value and potential of 1847 Cabinets, as it is priced at a substantial premium compared to the current market valuation for the entire company," concluded Mr. Roberts.

About 1847 Holdings LLC

1847 Holdings LLC (NYSE American: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. 1847 Holdings' 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, 1847 Holdings can consistently acquire businesses it views as "solid" for reasonable multiples of cash flow and then deploy resources to strengthen the infrastructure and systems of those businesses in order to improve operations. These improvements may lead to a sale or IPO of an operating subsidiary at higher valuations than the purchase price and/or alternatively, an operating subsidiary may be held in perpetuity and contribute to 1847 Holdings' ability to pay regular and special dividends to shareholders. For more information, visit www.1847holdings.com.

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Forward-Looking Statements

This press release may contain information about 1847 Holdings' view of its future expectations, plans and prospects that constitute forward-looking statements. All forward-looking statements are based on our management's beliefs, assumptions and expectations of our future economic performance, taking into account the information currently available to it. These statements are not statements of historical fact. Forward-looking statements are subject to a number of factors, risks and uncertainties, some of which are not currently known to us, that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial position. Our actual results may differ materially from the results discussed in forward-looking statements. Factors that might cause such a difference include but are not limited to the risks set forth in "Risk Factors" included in our SEC filings.

Contact:

Crescendo Communications, LLC
Tel: +1 (212) 671-1020
Email: EFSH@crescendo-ir.com

SOURCE: 1847 Holdings LLC

View the original press release on accesswire.com

FAQ

What is the enterprise value proposed for the acquisition of 1847 Cabinets Inc.?

The buyer has proposed an enterprise value of $27.6 million for the acquisition of all assets of 1847 Cabinets Inc., including earn-out payments.

When is the transaction expected to close?

The transaction is expected to close within the next 90 days.

What are the plans for the cash proceeds from the sale?

The cash proceeds from the sale will be utilized for debt repayment, working capital, potential acquisitions, and share repurchases to maximize shareholder value.