Lincolnshire exits American Coach with 35% IRR

The New York-based firm has sold American Coach Lines to Coach America for $60 million.

Lincolnshire Management has sold ground transportation provider American Coach Lines to Coach America, netting a 35 percent IRR. The purchase price was $60 million plus a $4 million seller’s note. Lincolnshire acquired the company in 2003 from Coach USA, a division of Stagecoach Group, for $40 million in cash at close and an $8 million promissory note.

Headquartered in Lake Worth, Florida, American Coach Lines operates charter and transit buses throughout the Southeast. The company has a fleet of more than 500 vehicles under nine brands including America Charters, Southern Coach, Dillon’s Bus Service, Midnight Sun Tours, Florida Cruise Connection and America Coach Lines.

Since it acquired the company Lincolnshire has met with a number of successes.

“This was a business that had underperformed the last couple years before we bought it,” said Lincolnshire managing director George Henry. “There was not enough emphasis on sales and marketing, and not enough coordination between various operating entities. But we didn’t see anything that was going to take any real miracles to fix.”

Prior to being acquired American Coach was completely under the financial and organizational framework of Stagecoach Group, Henry said. Once they bought the company Lincolnshire implemented a new operating system and brought in a CFO, George Delpino. Henry said that through this reorganization Lincolnshire was able to significantly increase the company’s profit. In 2005 Coach America had revenues of approximately $75 million.

Henry said the rapid growth of the Miami operation Lincolnshire set up, reentering the city after Coach USA abandoned its Miami operations, was one of the firm’s greatest accomplishments while owning the company. The operation, one of the thirteen locations the company now owns, saw EBITDA increase almost 800 percent in its second full year of existence.

“We focused in on cost management, because that had been one of the problems in the Miami market in the past,” said Henry. “It’s a fairly tough market down there, but we focused on that business and it really paid off.”

The majority of Coach America’s business, 65 percent, is in charter busing, where groups rent buses for trips or travel. Transit and commuter buses account for another 25 percent of the business, such as American Coach-owned Dillon Bus Service, which provides commuter busing into Baltimore from suburbs. The remaining five percent is made up of sight-seeing tour buses.

The company was one of 14 portfolio companies in Lincolnshire Equity Fund II, a $315 million fund raised in 1999. Previous exits from this fund have included Riddell Sports, which produces the official helmet of the NFL; 3SI Security Systems, a producer of dye packs and other bank security products; and Transcraft Corporation, the leading flatbed trailer manufacturer in the US.

Lincolnshire is currently investing their third fund, which has $433 million of committed capital.