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Wingate Partners and USA Environment LP (USA) have joined forces in a recapitalization of USA.
USA is a full-service environmental contractor that provides a full range of high-end environmental services. The company is a licensed contractor in 30 states that specializes in turnkey solutions for any environmental construction, remediation, industrial services, radioactive material handling, disposal, transportation or spill problem.
“We chose Wingate because of its reputation as being one of the top private equity firms in the country,” said Bret Pardue, CEO of USA. “I am very impressed with their due diligence and management experience. We are excited to have them as our partner.”
Since 2001, USA has grown by an average of 30 percent annually to have more than 300 full-time employees and revenues of $80 million. The company offers more than 10 years of experience, during which time it has completed thousands of remedial actions at individual hazardous, toxic and radioactive waste sites throughout the United States.
Wingate Partners is a Dallas-based private equity investment group that targets industrial services firms, and other service, distribution and manufacturing businesses, typically with significant market share position, domiciled in the United States.
“Given Wingate’s focus on industrial services businesses, USA Environment is a perfect fit for our investment portfolio and we are really enthusiastic about our new partnership with the USA team under Bret Pardue’s leadership,” said Mike Decker, principal of Wingate Partners.
USA will continue to operate with its existing management team. The partnering with Wingate will provide USA with access to more capital and an opportunity to grow further and faster. The USA staff will also remain in place, and the company is looking to make additional hires and additional acquisitions. Jim Mattly of Wingate will serve as chairman of the board of USA and Pardue will remain as CEO of USA.
IVS Investment Banking was the exclusive advisor to USA Environment during the negotiation and due diligence process associated with the transaction.
“We are very appreciative of the quality of service that IVS Investment Banking brought to the table,” said Pardue. “Not only did they bring us a qualified partner that was a good fit but a special benefit was the background and skill set of their team. They were adept in structuring mutually beneficial solutions when there seemed to be an impasse in discussions.”
“IVS Investment Banking and its sister company BIC Alliance have the most unique business model,” said Decker. “By operating a communications company, they have access to many, many owners in the industrial niche. From advertising and marketing to recruiting and investment banking, they touch the market in so many places. We are thrilled that IVS Investment Banking was able to align us with USA Environment.”
For more information on USA Environment, call (713) 425-6911 or visit www.usaenviro.com.
For more information on Wingate Partners, call (214) 720-1313 or visit www.wingatepartners.com.
Over the past three years, the principals of IVS Investment Banking have completed $171 million of transactions that include management led buyout, sell-side engagement and leveraged recapitalization.
If you would like an analysis of your company to see if you are a candidate for a leveraged recapitalization, please contact Thomas Brinsko at (281) 538-9996, e-mail tbrinsko@bicalliance.com or contact Earl Heard at (800) 460-4242 or e-mail earlheard@bicalliance.com. To learn more about recent IVS Investment Banking activity, visit www.ivsinvestmentbanking.com.
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TIMEC acquires high-temperature repair, inspection service provider HRI
TIMEC Operating Co. Inc. (TIMEC) has acquired HRI Inc., an expert provider of critical maintenance services in ultra high-temperature and confined space environments to the heavy industry, for $5 million plus an earn-out.
HRI owns the patent on special super heat resistant suits that facilitate safe industrial repair and inspection work in workplaces that reach up to 1,300 degrees F. The multilayered suits are made from Kevlar and carbon fiber with an aluminum coating, and have built-in communications systems, fully filtered external air supplies and internal air-cooling systems.
“This acquisition is a significant strategic step, as it will broaden our direct service offerings and take our business into more than 10 new states in the United States,” said TIMEC President and CEO Pat McMahon.
“Use of the suit enables quicker response times, and will create opportunities to expand into new industries and appeal to our existing clients because of the efficiency savings it offers,” McMahon added.
HRI is a strongly performing business with high customer retention rates and an average organic growth rate of 10 percent during the past five years. The company was acquired at a historical EBITDA multiple of 5.5. The acquisition will be funded out of existing debt facilities.
More than 85 percent of HRI’s customers are in the power-generation, steel producing or oil refining segments across the United States. Many have used the company’s services since it was set up in 1993. HRI’s key customers include companies such as Shell, ExxonMobil, ConocoPhillips and Valero.
HRI will continue to operate as a wholly owned subsidiary with its existing management team.
HRI President Roger Rankin, who will report through operations to McMahon, said 75 percent of HRI’s work involves emergency response work on plants and equipment, where clients would otherwise have to cool down equipment over a period of time to gain access for repairs.
“Because HRI’s systems, processes and super heat resistant suits allow work to be completed at higher temperatures, we can reduce plant downtime and offer significant savings to our customers,” said Rankin.
TIMEC is a leading global provider of maintenance, turnaround and construction services in a diverse range of industries including oil and natural gas, petrochemical, water and wastewater, and food, among others. TIMEC, jointly with its parent company Transfield Services, has more than 20,000 employees, working across the United States, Canada, Australia, New Zealand, the United Arab Emirates, Qatar, South East Asia and India.
IVS Investment Banking was the exclusive advisor to HRI.
“BIC Alliance has handled our marketing effectively for more than six years, so I was familiar with IVS Investment Banking as BIC’s sister company,” said Curt Rankin, HRI secretary and treasurer. “I knew that they were plugged into what’s going on in the business, so we contacted them confidentially to find us a buyer-investor. After evaluating our company’s financial position, IVS suggested strongly that a strategic investor might be the best transaction partner and connected HRI with TIMEC.
Besides actually locating the buyer, it was definitely beneficial to have a group representing us through the process,” said Curt. “They did a nice job in navigating when we were not sure what direction to take. They definitively helped keep the progress moving toward a successful close. I would recommend IVS Investment Banking to anyone in the industrial arena considering selling a company, or just looking for an investor.”
For more information on TIMEC, call (281) 307-2239 or visit www.timec.com.
For more information on HRI, call (888) 390-8255 or visit www.hightempinc.com.
If you are interested in selling, investing in or buying companies in the industrial and energy services sectors, please contact Thomas Brinsko at IVS Investment Banking at (281) 538-9996, e-mail at tbrinsko@bicalliance.com or visit www.indviro.com.
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PSI, Tradebe form joint venture
Deal will expand market reach, allow for technology sharing
NEW ORLEANS — Petrochemical Services Inc. (PSI) and the Tradebe Group have announced a joint venture agreement in which the companies’ combined resources will allow for expanded coverage in new markets and technology sharing.
PSI provides waste processing, tank cleaning and gas freeing services with an emphasis on nonentry applications to a diversified group of industries including refining, chemical, and pulp and paper. Founded in 1981, the company has operations in New Orleans, Houston, Honolulu, and Richmond and El Segundo, Calif. It has worked in many areas including Mississippi, North Texas, Alaska, Canada and the Virgin Islands.
Tradebe Group, headquartered in Barcelona, Spain, is made up of 20 companies and is a leader in several segments of the environmental sector in Spain. With more than 25 years of experience in industry, it has expanded its activities, including to the United Kingdom, France and Turkey, as well as the United States.
The company primarily owns and operates TSD hazardous and nonhazardous waste facilities and provides on-site refinery services. The company owns Recovery & Recycling Solutions, which already operates de-ash and sludge treatment in several refineries. Its decision to enter into the joint venture with PSI is based on the desire to further this presence in the U.S. refining market.
The companies will both continue to contribute their resources to the joint venture, and in the future, PSI will be integrated into the Tradebe Group of companies.
Ind-Viro Search, from its Baton Rouge, La., office, served as intermediary on the joint venture agreement.
For more information on PSI, call (504) 947-7825 or visit www.pet
rosvs.com. For more information on Tradebe Group, visit www.tradebe.com.
If you are interested in selling, investing in or buying companies in the industrial and energy services sectors, please call Thomas Brinsko at IVS’ Houston office at (281) 538-9996 or Earl Heard in Baton Rouge at (800) 460-4242, or visit www.indviro.com.
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BIC Alliance, IVS: One-stop shop helps your company grow
BIC Alliance’s mission is to connect key decision makers in business and industry with one another and suppliers for the betterment of all. When a company is looking to grow, it can do so in three ways: an aggressive marketing plan, hiring and retaining good people to create and maintain growth, and mergers and acquisitions. BIC Alliance helps companies accomplish this in several ways.
BIC Alliance publishes the Business & Industry Connection (BIC) magazine 10 times a year. BIC reaches 100,000 mid- and upper-level managers and executives in the refining/petrochemical, drilling and exploration, pipeline, marine, terminal, pulp and paper, power generation and heavy construction industries. Departments in the publication cover industry concerns such as safety, maintenance, purchasing and the environment. BIC is also featured online in its entirety and is accessed worldwide.
BIC’s unique format features not only the latest news and trends but also marketing campaigns that include ads, ongoing editorial and access to databases. BIC Alliance also holds an annual networking event attended by a Who’s Who in industry, affording industrial suppliers an opportunity to visit with their peers and exchange ideas, leads and business cards.
Founded in 2005, BIC Publishing is the custom book publishing division of BIC Alliance. It offers turnkey production or upgrading of sales, marketing, management and operations training materials needed to help your business run better. BIC Publishing services include copywriting, editing, ghostwriting, layout, design, marketing and publicity. The company also partners with the best printers and distributors in the business to see the project through in a way that is friendly to your budget, from concept to reader.
In 2005 BIC Publishing released “It’s What We Do Together That Counts,” BIC Alliance CEO and founder Earl Heard’s personal testimony of the role of hard work, faith and perseverance in achieving greater peace, happiness and success on the job and off. In 2007, it released “Energy Entrepreneurs,” a collection of stories about entrepreneurs and executives in business and industry.
Heard is available to BIC marketing partners for Alligator Management & Marketing seminars — in-depth management, marketing and sales training. Topics include “Stop, Look & Listen: The Secret to Improving Your Communication & Networking Skills,” “Adversity or Adventure: Our Choice,” “Building Market Share: The Alligator Technique,” “Faith in the Workplace,” and “Success in Entrepreneurship,” to name a few. Heard can also bring his wisdom from more than 30 years’ experience in marketing and sales to everything from a keynote presentation to a trade show or conference.
Ind-Viro Search
Ind-Viro Search (IVS), the sister company of BIC Alliance, enables the BIC Alliance companies to be a one-stop shop not only for marketing but also for merger and acquisition matchmaking, investment banking and recapitalization, and executive recruiting.
As BIC Alliance helps build top-of-the-mind awareness and market share, companies may need to accommodate their growth by adding the best people available to help manage and operate the business. Not only does IVS help recruit the best of the best management, operations, and sales and marketing professionals for its BIC Alliance partners, but IVS also assists companies with their acquisition and merger needs through its intermediary services.
IVS has seen a number of large deals to completion since its inception, celebrating 10 years of merger and acquisition intermediary services in 2007. IVS counts Total Safety’s acquisition of AllService and OMNI Energy Service Corp.’s acquisition of Trussco Inc. and Trussco Properties LLC among its successes. IVS also served as intermediary in CEI’s acquisition of the environmental division of Gulf South Systems.
“At BIC Alliance, we’re already helping companies to grow. It’s a natural step for us to act as intermediaries, connecting buyers and sellers of companies,” Heard said. “We know which companies are looking to sell, and we’re often contacted by people interested in industrial and energy-related acquisitions.”
Through relationships and interest from companies such as BIC Alliance members Wingate Partners and Growth Capital Partners, and others like Florida Capital Partners, IVS can connect equity groups and investment firms with not only platform companies but also add-on companies.
John Zapalac joined Ind-Viro Search’s Investment Banking Group in January 2007 as managing director. He is responsible for originating, processing and ultimately closing investment-banking assignments. Investment banking opportunities or assignments will include working with BIC clients and prospects to buy or sell their companies, perform leverage recapitalizations on their companies, as well as work with the companies CEOs or CFOs to raise additional debt or equity capital in order to facilitate growth.
Zapalac has been involved in the investment banking industry since 1994, primarily working on middle-market leverage buyout transactions. Prior to joining Ind-Viro Search Investment Banking Group, Zapalac was a vice president at McFarland, Grossman & Co., an investment bank located in Houston. Zapalac’s past work experience includes working as a portfolio manager for BHF Capital, overseeing a $750 million debt fund that invested in senior bank debt of leverage buyouts and add-on acquisitions; Ryan, Beck & Co., analyzing commercial bank mergers; as well as an intern for Trivest Inc., a $250-plus million leverage buyout fund, analyzing private equity leverage buyout opportunities.
Zapalac received a bachelor’s degree in finance from Texas A&M University and a degree in corporate finance from Fairleigh Dickinson University and graduated from Citibank’s School of Banking.
Zapalac operates out of Ind-Viro Search’s Houston office.
If you are interested in selling, investing in or buying companies in the industrial and energy services sectors, please call John Zapalac at IVS’ Houston office at (281) 538-9996 or (713) 826-7773.
For more information on BIC Alliance, please contact Thomas Brinsko in Houston at (281) 538-9996 or Earl Heard in Baton Rouge, La., at (800) 460-4242. Visit the Web at www.bical
liance.com and www.indviro.com.
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Two bites at the apple: Leveraged recaps
Deciding to sell all or part of your company is no easy decision. Many small business owners who have built a successful company are often torn between taking chips off the table and pushing harder to take their company to the next level of success.
Growing the company further would have a greater payoff when the owner finally does decide to exit, but there is no guarantee. Currently rosy business conditions can change quickly. The owner may need more capital to grow the business, yet he may not wish to personally guarantee more debt. And if the company experiences tough times, it will be worth less tomorrow after investing more equity and time in the venture. The question boils down to this — do you sell the company now while times are good, or do you hang on and bet that things will continue to get better, perhaps borrowing funds to grow even faster while the opportunity is there?
There is a potential answer to the question that lies in the middle. It is an option that allows the owner of a successful company to mitigate his overall business risk and take some money for his family now, but still allows him to see out the growth of the firm he started. Further, he can be absolved of any personal guarantee on any existing debt and future debt secured to grow the business.
It is like getting two bites at the apple — enjoy some of the fruit now, but continue to grow the fruit larger and sweeter, and eat again later. The scenario is called a leveraged recapitalization or leveraged buyout, sometimes referred to as an LBO.
The scenario generally works like this:
First, the owner will sell a majority interest in the company to an investment group, typically a financial buyer who may have deep general business expertise, but no specific expertise in the subject business. The advantage of a financial buyer as a partner is that the original owner is usually left “in charge” of the operation. The investment group doesn’t really know the business; they just like the way you have run it in the past, or they wouldn’t have made the investment.
Also, the owner will get some sort of “premium” for the part of the business sold. Typically, he may get 70-75 percent of the company’s value in exchange for 51 percent of the stock. This “funny” math can work because the investment group brings in banks or lenders that are part of this total recapitalization package. The minority interest in a smaller privately held company is not worth as much on a pro-rata basis until that interest is sold.
Now the owner has a deep-pocketed partner with lots of business acumen. This partner is in the business of making money and will make sure the owner has the resources, investment and business plan necessary to grow the firm accordingly. The typical goal is to triple (or more) the value of the company and sell to another group.
This second sale is the proverbial second bite at the apple. The 49-percent original owner will participate in the sale of a company at least three times as large as the original business. Ultimately he gets much more money for his equity than an outright sale might have garnered; he gets to mitigate his risk by taking money off the table much earlier in the process, and during the interim, he gets to make a very comfortable living running the company he began.
Leveraged Recapitalization: Top 5 Benefits to the Owner/Seller:
1. Pull 75 percent of value from firm and still own 49 percent of the company.
2. Owner will have investment group as partner going forward. They bring general business expertise and deep pockets for future growth.
3. Despite minority position, owner typically still “in charge” of operation as investment group usually likes the way it is run or they wouldn’t invest.
4. Owner does not personally guarantee any new debt and his guarantee is removed from any existing debt.
5. Because owner still has 49 percent, he can get a “second bite at the apple” when he grows business further with investment group and they sell down the road. Owner’s exit strategy may be negotiated as part of first deal.
If you would like a more detailed description and a personalized forecast of how a leveraged recapitalization would look for your business, please contact Thomas Brinsko or John Zapalac at (281) 486-1500.