Restoration Alliance to pursue national expansion via M&A, investor says by Marlene Star
Summary
Hidden River, Taurus Capital back ServiceMaster Restore franchisee
Restoration Alliance, a Tacoma, Washington-based ServiceMaster Restore franchisee, plans to expand across the US with the help of acquisitions, said Kevin Condon, partner with Hidden River Strategic Capital.
On 6 January, Hidden River Strategic Capital partnered with management on an undisclosed investment to create the new platform, to be called Restoration Alliance. Terms were not disclosed. Hidden River provided equity and debt. Taurus Capital also provided equity, Condon said. It was the company’s first institutional capital, he added.
Condon would not disclose revenue but said the company has about 100 employees and is one of the larger disaster restoration businesses in its market of Seattle and Tacoma.
There has been some consolidation within the Restore franchise system but he said this process is in “early innings.” “There is a lot of runway to grow our business and help the entire franchise system to grow its presence,” he said. There are more than 800 franchisees across 14 countries in the Restore system serving residential and commercial customers. The company is only interested in acquiring businesses within that ecosystem, he added.
According to ServiceMaster, the Restore brand has ranked on the Franchise 500 list for more than 40 years. It said US locations with significant opportunity include Austin and San Antonio, Texas; Birmingham, Alabama; Denver; Detroit; Jacksonville and Orland, Florida; Nashville, Tennessee; New Orleans; Providence, Rhode Island; and Richmond, Virginia.
Other franchise players in restoration include Servpro, the largest, Paul Davis and Rainbow Restoration, he said.
Location is less important than leadership, he said. “It’s a people-driven business,” he said. Most Restore franchisees are located in the mid tier or major cities with population density, Condon said. “There are no particular cities we’re prioritizing. ”Targets are likely to be smaller or equal in size to Restoration Alliance, he said. The business is profitable and would prefer to acquire profitable targets, he added.
Disaster restoration is a large and growing market. “It’s an essential service for homeowners and commercial customers,” Condon said. Whether it’s water remediation or fire restoration, “you can’t really delay or disregard those issues.”
Restoration can also focus on mundane everyday mishaps such as pipes bursting from cold weather, he said. In fact, businesses with revenue skewed toward consistent problems as opposed to large catastrophic weather events like the wildfires ravaging California, tend to fetch higher valuation multiples, he noted.
Ice Miller advised the private equity firm. MP Law advised the seller. Exbo Group was the accounting firm. The transaction came through a direct approach; there were no financial advisors, Condon said.
Business and Media Inquiries, please contact:
Graham Bachman
Managing Director, Head of Business Development
Hidden River Strategic Capital
Email: gbachman@hiddenrivercap.com
Phone: 484-453-3134