8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 6, 2020

ANDOVER NATIONAL CORPORATION

(Exact Name of Registrant as Specified in Charter)

Delaware	000-55882	83-2216345
(State of Other Jurisdiction	(Commission File Number)	(IRS Employer
of Incorporation)		Identification No.)

333 Avenue of the Americas, Suite 2000
Miami, FL	33131-2185
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (786) 871-3333

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Securities registered under Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Not Applicable	Not Applicable	Not Applicable

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 8.01 Other Events

On March 6, 2020, Andover National Corporation (the “Company”) released a letter from the Company’s Executive Chairman and Chief Executive Officer (the “Chairman’s Letter”) to the Company’s stockholders. A copy of the Chairman’s Letter is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information reported under this Item 8.01 of Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

The Chairman’s Letter contains forward-looking statements within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that describe future outcomes or expectations that are usually identified by words such as “will,” “should,” “could,” “plan,” “intend,” “expect,” “continue,” “forecast,” “believe,” and “anticipate” and include, for example, any statement made regarding the Company's future results. Actual results may differ materially as a result of various risks and uncertainties, including the risks and uncertainties expressed in the cautionary statements and risk factors in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. The Company may not be able to predict and may have little or no control over many factors or events that may influence its future results and, except as required by law, shall have no obligation to update any forward-looking statements.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following exhibits are included with this Current Report on Form 8-K

99.1 Chairman’s Letter dated March 6, 2020.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ANDOVER NATIONAL CORPORATION
Date: March 6, 2020	By:	/s/ Jeffrey C. Piermont
	Name:	Jeffrey C. Piermont
	Title:	President and Chief Operating Officer

EX-99.1

Exhibit 99.1

March 6, 2020

Dear Friends,

Last year, I sent you a description of the new company I lead, Andover National Corporation. It is a public company that is held by a small group of investors, and hence does not yet trade on an exchange.

To refresh, Andover’s objective is to acquire majority interests in highly profitable, private businesses owned by established entrepreneurs. These owners not only desire liquidity after many years of working, but also want to continue building and growing their companies by leveraging years of experience and local relationships.

Our focus area to date has been the environmental service sector in the Southeast United States. We concluded that this is a space with great opportunity after spending considerable time analyzing several industries which share numerous characteristics that we find desirable. Specifically, these include attributes such as having large amounts of non-discretionary spend that is recurring in nature, enjoying minimal foreign competition, and having a low risk of technological obsolescence. Importantly, we estimate that this addressable market is worth well over $100 billion annually in the US with the Southeast representing a very substantial portion, as both the market and the region are growing faster than the general economy and are highly fragmented.

For these reasons, Andover is focusing on industrial tree maintenance, pest control, commercial landscaping, water reclamation, and related verticals. We believe the US Southeast (and Florida in particular) is very attractive, as this region is growing faster than the national average across all measures and has experienced more persistent and severe tropical weather. We expect that these characteristics will support the long-term durability of the businesses we acquire for decades.

Notably, Andover believes a critical part of our continued success in finding great operators is that we avoid the typical private equity playbook. We eschew the use of excessive debt or other forms of financial engineering and allow our partners to remain fully independent, only getting involved when appropriate or if they ask. We also ensure that those we partner with share a strong sense of pride and commitment to their employees, clients, and community—traits we believe are critical to our collective success. We firmly believe that this approach will continually engender unique opportunities for us that are not always available to other investors.

Since 2018, Andover has been capitalized with $20 million, raised in two tranches. We have spent more than half of this sum acquiring three businesses and building our operations. After these acquisitions, the income we derive from these companies leaves us confident in our financial position. At this juncture, additional financing would allow us to further capitalize on our rapidly expanding pipeline of attractive acquisition opportunities. It is worth noting that, thus far, we have paid on average, well below 6.0x adjusted EBITDA for the deals we have closed.

We believe another differentiator in our model that appeals to our partners is their ability to retain significant stakes in their companies, particularly as we grow together. Typically, they start with no less than a 40% ownership interest, ensuring they are aligned with Andover at the outset. Then as we grow, we offer to finance their share of any incremental acquisitions or capital investments, secured by their equity interest. This allows our partners to avoid dilution and to continue benefitting substantially from the growth of their business, while maintaining their alignment with Andover.

It is important to highlight that Andover will scale as our platforms grow with the use of our capital and expertise. We expect to execute both “tuck-in” acquisitions and organic opportunities with our partners, in addition to acquiring new growth platforms.

Upon deployment of additional capital that we intend to raise, we expect to list our shares on a national exchange via an “up-list.” This method allows us to avoid a costly and uncertain IPO syndication process, as we are already a public company and simply need to list the availability of our shares on an exchange. Our long-term goal is to rapidly grow our book value per share by reinvesting our profits in perpetuity. However, we also believe there is a unique near-term opportunity with Andover to close the public to private “discount” that exists with our chosen industries, enhancing returns for our shareholders more quickly.

We are not a fund but a public “C” Corporation. There are no fees, no minimum investment size, no carried interest, and no lock-up. Additionally, we have a very experienced and competent Board of Directors to provide corporate governance.

We appreciate your support to date and look forward to hearing from you. As always, if anyone has any questions or comments, please call or email me.

Sincerely,

Peter Cohen

Executive Chairman and Chief Executive Officer