Compass Diversified Exits Clean Earth

Compass Diversified Exits Clean Earth

Compass Diversified Holdings has agreed to sell CEHI Acquisition Corporation, the parent company of Clean Earth, Inc., to Harsco Corporation (NYSE: HSC) for approximately $625 million in cash. Compass Diversified acquired Clean Earth in August 2014 from Littlejohn & Co.

Clean Earth is a provider of environmental services for a variety of contaminated materials including soils, dredged materials, and hazardous waste and drill cuttings. The company analyzes, treats, documents and recycles waste streams generated in a range of end-markets including power, construction, oil & gas, infrastructure, industrial and dredging.

Clean Earth’s treatment processes include thermal desorption, dredged material stabilization, bioremediation, physical treatment and screening, and chemical fixation. Before the company accepts contaminated materials from its customers, it identifies a third party “beneficial reuse” site such as commercial redevelopment or landfill capping, where the materials are sent after they are treated. Clean Earth, led by CEO Chris Dods, is headquartered in Hatboro, PA and operates 14 facilities in the Eastern US (

In 2018, Clean Earth had revenues of $267 million and Adjusted EBITDA of $42 million. In 2019, Clean Earth is projected to have $300 million of revenue and $65 million of Adjusted EBITDA. Based on these results, the exit multiple for this transaction is 14.9x 2018 Adjusted EBITDA and 9.6x 2019 projected Adjusted EBITDA.

“Compass has been an ideal partner, providing hands-on support, outstanding guidance and growth capital to enable Clean Earth to best take advantage of attractive opportunities,” said Mr. Dods. “I would like to thank Compass for their patient approach and commitment to invest in our business, driving growth and further strengthening Clean Earth’s brand, industry leadership and financial performance. The momentum that they helped create will provide us with a strong platform for the future.”

During Compass Diversified’s term of ownership, Clean Earth completed seven add-on acquisitions: Charlotte, NC-based Disposal and Recycling Technologies, a provider of wastewater treatment services with facilities in Detroit and Charlotte (September 2018);  ESMI Companies, located in Fort Edward, NY, and Loudon, NH, a provider of soil recycling and hazardous waste services (June 2018); Doraville, GA-based MKC Enterprises, a provider of hazardous and non-hazardous waste management services (March 2018); Allentown, PA-based AERC Recycling Solutions, an electronic and universal waste recycling company (March 2017); Glencoe, AL-based EWS Alabama, a provider of hazardous and non-hazardous waste management services (July 2016); Plainville, CT-based Phoenix Soil, a provider of thermal treatment services used to process non-hazardous petroleum-contaminated soils (May 2016); and Sewickley, PA-based American Environmental Services, a provider of hazardous and non-hazardous waste management services (April 2015).

“We began our partnership with Clean Earth over four years ago and worked closely with its strong management team to achieve significant growth,” said Elias Sabo, CEO of Compass Diversified. “Specifically, our success capitalizing on organic growth opportunities and completing a number of compelling add-on acquisitions enabled Clean Earth to meaningfully expand its geographic footprint, processing capabilities and extensive service offerings, allowing the company to achieve strong revenue and cash flow growth.”

Compass Diversified (NYSE: CODI) is a private equity firm specializing in acquisitions, buyouts, and middle market investments.  The firm invests between $75 million and $700 million in companies that have EBITDA of at least $10 million. Sectors of interest include niche industrial or branded consumer companies that are headquartered in North America. Compass went public in 2006 and is based in Westport, CT (

Prior to its public offering in 2006, the Compass team, which was formed in 1998, invested solely on behalf of The Kattegat Trust.  A principal beneficiary of The Kattegat Trust is the TK Foundation, a philanthropic foundation of the late J. Torben Karlshoej, the founder of Teekay Corporation (NYSE: TK), an energy transportation (marine), storage and production company.  The Kattegat Trust is Compass’s largest shareholder.

Harsco Corporation (NYSE: HSC), the buyer of Clean Earth, is a diversified business serving the steel and metals production, construction, railways and energy industries. The company is based near Harrisburg in Camp Hill, PA (

Moelis & Company ( and Houlihan Lokey ( were the financial advisors to Compass on this transaction which is expected to close within the next few months.

© 2019 Private Equity Professional | May 10, 2019

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