Mag Group: White Bros, Vance & Hines, Renthal To Be Sold

According to the Dow Jones website:

Leonard Green & Partners LP is close to sealing a deal for aftermarket motorcycle parts company Motorsport Aftermarket Group Inc., which has brought together eight companies over the last six years under private equity owner Duff Ackerman & Goodrich LLC, a person familiar with the matter said.

Terms of the deal are not known, although Leonard Green, of Los Angeles, typically targets companies with enterprise values between $500 million and $2 billion. The firm is tapping its fourth buyout fund, the $1.85 billion Green Equity Investors IV LP which closed in 2003, for equity, according to a Federal Trade Commission filing clearing the deal.

Leonard Green, Duff Ackerman and Motorsport Aftermarket Chief Executive Tom McGann did not respond to calls for comment.

San Francisco-based Duff Ackerman formed Motorsport Aftermarket Group, which is based in Irvine, Calif., in 2000 as a holding company to buy companies in the fragmented motorcycle aftermarket parts sector. Its first two acquisitions were made with $39 million in funding, including $2 million in equity, from Prudential Capital Group in early 2001.

The companies that make up Motorsport Aftermarket Group make aftermarket parts for motorcycles. The companies are White Brothers, a specialist in motorcross bike and all-terrain-vehicle parts; K?¬ryakyn, a specialist in custom Harley-Davidson Inc. motorcycle parts; J&P Cycles, a catalog retailer; Performance Machine Inc., which sells wheels and brakes; Progressive Suspension, which sells suspension parts; Vance & Hines, which sells exhaust systems; Mustang Motorcycle Seats, which sells motorcycle seats; and Renthal, which sells handlebars, chains and sprockets.

Motorcycle riding has increased in popularity over the last few years. Sales of motorcycles and scooters increased to about 1.1 million in 2005, up 5% from 2004 and the 13th consecutive year that sales of motorcycles have increased, according to the Motorcycle Industry Council.

Investing in an aftermarket supplier is also a common bet for PE firms, which like the reliable stream of cash generated by selling parts that need to be replaced. Aftermarket parts companies also tend to have a diverse customer base and don’t have to grapple with cyclical sale trends, isolating the investments from risk and making them more attractive than companies servicing original equipment manufacturers.

Duff Ackerman was founded in 1991 and has both PE and venture capital investment arms. In April, the firm recently closed on $325 million for a new venture fund, DAG Ventures II-QP.