1847 Holdings’ Hunt For Small Business Gems: How This PE Firm Finds Its Diamonds In The Rough

NEW YORK, NY / ACCESSWIRE / February 23, 2024 / Not every investment is going to be a slam dunk, but 1847 Holdings LLC (NYSE American:EFSH) seems to have some exits under its belt that prove how enough success can overshadow any losses. The publicly traded diversified acquisition holding company hailing out of New York City acquires small businesses with about $5 million of EBITDA and then deploys resources to strengthen the enterprise and improve operations. All that work can lead to a sale or IPO, often at a much higher valuation than 1847 Holdings paid. In other instances 1847 Holdings will hold on to the asset, contributing to the company's ability to pay regular and special dividends to investors.

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Take the IPO of 1847 Goedeker's, now going by Polish.com Inc. as one example. In April 2019, 1847 Holdings paid $6.5 million for the online purveyor of appliances, furniture and home goods. By June of 2021 when it went public, the company was valued at roughly $60 million. "Our investors were able to sell the shares in what was a fairly robust market," says Ellery W. Roberts, founder and CEO. "It's been rewarding and we're excited about the opportunity to invest capital in the businesses that we have that we believe are going in the right direction, all the while looking at new opportunities to expand our platform going forward."

Seeking Successful Exits

That successful exit is an example of what 1847 may be able to do with its other portfolio companies which include Wolo, the maker of horn and safety products for cars, trucks and emergency vehicles which it acquired for $8.3 million in March 2021, and ICU Eyewear Holdings Inc., a designer of over-the-counter (OTC), non-prescription reading glasses, sunglasses, blue light blocking eyewear, sun readers and outdoor specialty sunglasses which 1847 Holdings bought for $4.5 million in February 2023, among others. The idea is to find those diamonds in the rough, grow their businesses and then either sell them for a higher price or hold on to them, benefiting from their improved business conditions.

Not Your Normal PE Firm

1847 Holdings isn't your run-of-the-mill private equity firm. Unlike traditional private equity firms that create massive funds for investors, 1847 Holdings' shareholders have stock in each individual operating entity the firm owns. "With us you're not investing in the manager you're actually investing in the underlying operating subsidiaries," says Roberts. "Our investors get shares in the additional entities or they benefit from the increase in asset value of our holding company."