Excellere Partners has completed the sale of its portfolio company U.S. Water Services to Allete (NYSE: ALE) for $194 million. U.S. Water, which was acquired by Excellere in January 2011, had revenue of approximately $120 million in 2014.
Allete initially purchased 87 percent of U.S. Water for $168 million, based on an enterprise value of $194 million. Current employees and management of U.S. Water will continue to own the remaining 13 percent will be purchase by Allete in the future for a contingent amount based on U.S. Water’s future earnings.
When Excellere acquired U.S. Water the firm believed that the increasing cost of water due to scarcity, quality challenges and environmental policies had, and would continue to drive, small and mid-sized companies and other water users to out-source the treatment of their water supply for industrial processes and/or discharge.
Following Excellere’s four year investment period, U.S. Water grew from an upper-Midwest regionally-focused provider of industrial water treatment services to an industry leader with production facilities and representation nationwide. Today, the company serves over 3,600 customers, including a significant number of Fortune 500 companies. The company’s chemicals division offers a line of approximately 350 chemical products and support services, and the equipment division offers a line of equipment, parts, and consumable supplies. U.S. Water is headquartered northwest of Minneapolis in St. Michael, MN (www.uswaterservices.com).
The sale of U.S. Water is a continuation of momentum Excellere is experiencing in the marketplace. According to Managing Partner David Kessenich, “The momentum started in July with an investment in DentMall, a Miami-based dental practice management company, and continued with three highly-successful exits, two additional platform investments, and one strategic add-on. The pace of activity continues into 2015 with a strong pipeline of new investment opportunities.”
In the midst of what many private equity insiders consider to be a challenging market, driven by strong competition for quality companies and valuations at historical highs, Excellere has been able to achieve its most active period in the firm’s history. “It may seem like an over-simplification, but it’s a combination of a lot of hard work, a sound long-term investment strategy, a proprietary value creation model that is highly attractive to entrepreneurs and some good fortune,” said Mr. Kessenich. “In looking back over the last half of 2014, it really is a culmination of all the efforts we’ve put into our industry-focused investment thesis and the value creation programs that we implement with our management teams.”
In addition to the DentMall investment in July that started this run for Excellere, in December the firm made investments in TrialCard (Raleigh, NC), a provider of patient access and medication adherence support services to the pharmaceutical industry, and completed the acquisition of a geospatial information software and services provider for Systems Integrity Management Solutions (Houston, TX), a provider of asset integrity services to midstream and downstream energy companies. Excellere’s most recent investment occurred last month with the recapitalization of a neuro-rehabilitation company that provides post-acute rehabilitation to persons who have sustained a brain injury.
Exits have equally been active for Excellere. In August, the firm sold Personable Insurance (San Diego, CA), a provider of specialty auto insurance programs; and in November, PhyMed Healthcare Group (Nashville, TN), an anesthesia and pain management provider, was sold to Ontario Teachers’ Pension Plan.
Excellere Partners invests in middle-market companies with revenues ranging from $20 million to $150 million. Sectors of interest include energy products and services; healthcare; industrial technology and services; business services; and agri-business. The firm has $737 million of capital under management and is based in Denver (www.excellerepartners.com).
© 2015 PEPD • Private Equity’s Leading News Magazine • 2-19-15