OPERATOR Opportunity for Lower Middle Market Acquisition
Aug 05, 2021 4:06 pm
Calling All Operators!
Gray Gifford @ Illinois Capital Partners LLC has an amazing Acquisition target under LOI and is looking for a sharp operator/partner. Please read below if you are interested or know of anyone who is interested.
STRICTLY PRIVATE AND CONFIDENTIAL and intended only for the recipients of this email OR those who they may recommend for the position.
From Gray:
Illinois Avenue Partners LLC
Project Wave Summary
Summer 2021
IAP Background:
Private holding company focused on buying companies in the non-structural architectural building products space - IAP has done 5 acquisitions since 2018 and has recently completed a transformational acquisition, limiting internal staffing resources and time to execute on new deals.
What we are looking for:
- Experienced operators looking for an entrepreneurial entry point
- IAP is flexible in terms of investing up and down the capital structure (Debt & Equity)
- Can facilitate guaranteed exit in 3 years based on performance hurdles
Project Wave, at a glance - a Lighting and Sign Services and Installation Company (TargetCo)
- TargetCo under LOI seeking operating partner
o IAP is currently under an exclusive LOI to purchase the business with 80% of diligence completed
o Looking for a strategic operating partner to support the acquisition
- Flexible investment thesis when working with operating partner or search fund entrepreneur – willing to invest up and down the capital structure to help bridge any funding gaps, this can take the form of co-GP, LP or other creative deal structures
- Tremendous growth opportunities through market expansion and synergistic relationships
- Sales are diversified across a variety of product and service types, including electrical, lighting and signs
Business Profile:
- TargetCo is a Lighting, Electrical and Signage service provider headquartered in Tampa, Florida with
o 5 regional offices and 41+ service areas across the state of Florida
o Underutilized field operation in Atlanta, Georgia that represents a significant expansion opportunity
- Limited customer concentration as its top customer represented 15.8% of normalized 2020 sales and its top 10 customers represented slightly over half of total sales
- Sales by Industry: TargetCo has a number of blue-chip customer relationships, including REITs and facility maintenance organizations; many of these represent top 5-10 customer accounts and contribute to Sales by Industry of Office, Nationals and Shopping Centers
Sales Mix / Revenue Drivers:
- Sales as a Percentage of Revenue: Electrical Project (3.8%), Electrical Services (6.6%), Lighting Project (27.1%), Lighting Service (28.4%), Planned Lighting Maintenance (9.7%), Sign Project (3.8%), Sign Service (6.6%), Not Classified (14%)
- Serving institutional real estate owners and property managers with a diverse customer mix
o Sales by Industry: Shopping Centers (40.0%), Nationals (22.3%), Office (15.4%), Other Misc. (22.3%)
o Sales by Top 10 Customers: Top Customer (15.8%), 2nd Customer (10.9%), 3rd Customer (6.3%), 4th Customer (4.5%), 5th Customer (3.2%), 6th Customer (3.0%), 7th Customer (2.6%), 8th Customer (2.3%), 9th Customer (2.2%), 10th Customer (2.0%)
STRICTLY PRIVATE AND CONFIDENTIAL
Primary Service Categories
- LED Conversions – Lighting for Parking Lots, Exterior Areas, Landscapes, Garages, Wall Packs, Interiors, Security
- Lighting Maintenance – Exterior Lighting Maintenance, Planned Lighting Maintenance Programs, Energy Efficient Lighting Upgrades, Energy Audits, Lamp/Ballast Recycle
- Electrical Services – Wireless Controls/EMS Systems, Electrical Upgrades, Boring Services, Troubleshooting Experts, Circuit Tracing
- Sign Solutions – Survey, Fabrication, Maintenance, Design, Install, LED Retrofitting
Industry / Competitive Landscape: - Large and highly fragmented industry with limited professional competition
- Lighting / Signage Industries are generally subscale and run with high levels of operational inefficiencies
o Highly fragmented marketplace
o Lack of large-scale competition & clear lack of succession planning
o Low purchase price multiples (1.5x – 4.5x EBITDA)
Deal Summary:
Enterprise Valuation - $5,750,000
Price multiples based on FY20 Earnings
- EV/Revenue - .718x
- EV/EBITDA – 4.13x
Sustained Revenue Growth
TargetCo has sustained an average of 8.5% revenue growth on average from FY17-19 and has room to grow as demand for housing and accompanying infrastructure rides headwinds through FY21
• 2017 – $6.61mm
• 2018 - $7.25mm
• 2019 - $7.28mm
• 2020 - $8.01mm
Normalized EBITDA (in 000’s)
TargetCo drives EBITDA growth consistently with revenue achieving 18.15% EBITDA/Revenue on average from FY17-20
• 2017 - $1,081 (16.0%)
• 2018 - $1,419 (19.6%)
• 2019 - $1,424 (19.6%)
• 2020 - $1,392 (17.4%)
If you are interested, please contact Gray @ Gray.gifford@illinoisavepartners.com and/OR 215-527-0842
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Pressing On,
Sam Leslie
Twitter: @samtleslie