Management Buyout:

Corporate Orphan/Industry Consolidation

Prospect Water Co. LLC
Lombard, Illinois

Type of Business: Provider of water treatment products and services

In 2011, Prospect Partners was introduced to veteran Culligan International Company operating executives Don Fuller and John Capone by independent equity sponsor Stone Pointe, LLC. The management duo had been running Culligan's company-owned dealers and were interested in continuing to grow and consolidate the dealer network after Culligan announced its intention to divest its corporate-owned dealers. Culligan, the parent and seller and worldwide leader in water treatment solutions, was interested in selling the assets to de-lever its balance sheet.

Prospect Partners saw great potential for the success of the units as an independent water solutions company in the Culligan dealer network; Fuller and Capone knew the industry, possessed great passion for the business, and had a clear plan for how they wanted to run and grow their company.

Together with the executives and Stone Pointe, Prospect Partners formed Prospect Water Co. LLC (WaterCo) to acquire 11 Culligan-branded dealers in Connecticut, New York, Ohio, Rhode Island and Washington. WaterCo would serve residential and commercial accounts with a comprehensive suite of water-related products and services, including water equipment, bottled water, water treatment, and equipment installation, maintenance, and repair.

Our Strategy:
Prospect Partners sought to support management's vision to build WaterCo into Culligan's leading U.S. dealer. The expansion strategy would capitalize on strong industry tailwinds, continued operating improvement in existing territories, new product introductions, M&A-driven geographic expansion, and the implementation of best-in-class processes in newly-acquired dealers. Prospect Partners would provide targeted help identifying and closing add-on acquisitions, expanding the management team, providing attractive financing for the add-ons, and offering overall counsel to the business as it expanded. We would also remain in regular contact with Culligan corporate, the franchisor, to ensure the alignment of WaterCo's business objectives.

Results: Management turned around the original acquired stores by implementing standardized best practices that focused on operational improvements. Despite the fact the stores were operating in a mature market, management transformed them from annual declining revenue units to profit-makers within a few years.

WaterCo's aggressive acquisitions strategy resulted in the successful purchase and integration of more than 20 add-on acquisitions of other Culligan franchises, independent water service dealers, and providers of commercial and industrial water purification services. These nationwide buys significantly expanded the company's geographic footprint, market reach, and bottled water delivery capabilities.

By 2018, WaterCo operated with territory exclusivity in 36 locations in 13 states, was among the largest franchise owners in the Culligan North American dealer network, providing consistent, recurring top-line growth for corporate, and was among the fastest-growing dealers in the system.

At the time of Prospect Partners' exit, WaterCo had a steadily expanding installed base of nearly 100,000 U.S. households and businesses, and had grown revenue and EBITDA each by more than 150 percent since 2011.

In 2018, Prospect Partners sold its interest in WaterCo for a significant gain to Culligan International Company.

Our Philosophy: To provide financial backing, strategic guidance, and M&A expertise in support of a seasoned, savvy management team in the execution of their strategic plan.

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"We have deeply valued the strategic guidance and support Prospect Partners provided during our seven-year partnership and through more than 20 acquisitions, which each presented different issues, conditions, and challenges. The counsel of Prospect Partners helped steer WaterCo to a very successful outcome.”

— Don Fuller, President and CEO,


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WaterCo company profile
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