Leveraged Recapitalization:

Industry Consolidation

Summit Companies
St. Paul, Minnesota

Type of Business: Provider of fire and life safety services


Situation:
In 2006, Jeff Evrard, an independent equity investor and veteran operating executive, approached Prospect Partners with the opportunity to invest in Summit Fire Protection Co., a leading Upper Midwestern provider of fire sprinkler and HVAC/plumbing systems for commercial properties and multi-unit residences. Summit's owners sought partial liquidity, additional management expertise, and an experienced and well-funded private equity investor to support the company's expansion into new geographies and new lines of business. After the recapitalization, the management team included Summit founder Quint Rubald III, President, and the new operating partners, Mr. Evrard, CEO, and Lon Binder, another veteran outside senior executive, as CFO. Management continued to own meaningful stakes in the business.


Our Strategy:
We sought to transform a company primarily focused on sprinkler design, installation and servicing for commercial properties in Minnesota and Iowa into a regional leader able to provide round-the-clock management of the entire fire and life safety systems of nearly any building. With Summit's strong leadership, engineering and technical expertise, and customer relationships, we believed the company could become a successful and scalable platform in a highly fragmented niche industry. Through a consolidation strategy, Summit sought growth through a combination of acquisitions and new branch offices in strategically located contiguous geographic markets. The acquisitions would deliver complementary new lines of business, including those with recurring revenue and value-added aftermarket services, and/or would expand Summit's geographic footprint or service offering.


Results: Summit became the Upper Midwest's dominant fire and life safety services provider, with a comprehensive suite of services. The company, which rebranded as Summit Companies in 2014, successfully acquired and integrated two dozen businesses across five states — Iowa, Minnesota, Wisconsin, Nebraska and North Dakota — to create 11 Summit locations with licenses to perform work in 40 states throughout the United States. By 2017, Summit provided annual service to more than 15,000 local, regional and national customers in commercial, industrial, government, healthcare and multi-family residential facilities. Notably, Summit adeptly managed through the recession of 2007-2009, capturing market share from less capitalized and less professional competitors. Summit also exited the HVAC business to be more focused on fire and life safety services. With end-to-end capabilities that positioned Summit as the single source for program management, Summit had successfully built a scalable platform poised for national expansion. The company more than doubled both revenue and EBITDA during Prospect Partners' investment period.


Exit:
In 2017, Prospect Partners sold its interest in Summit Companies for a significant gain to a larger financial buyer supportive of management's playbook for growth. Management revinvested in Summit to participate in the next phase of the company's expansion.


Our Philosophy: To provide financial backing and strategic guidance to support a strong and experienced management team in executing and achieving their strategic plan.

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"Prospect Partners' business acumen is second to none. From the outset, the firm championed management's vision. They supported Summit during the Great Recession of 2007-2009, and that support helped lay the foundation for where we are today. With Prospect Partners' guidance and backing, we launched an acquisitions program and made over 20 add-ons, both strategic buys and tuck-ins, in our time together. The capability to expand our footprint, via M&A and new branch offices, became a big differentiator for our business that will continue to play a large role in our success.”

— Jeff Evrard, CEO,
Summit Companies

 

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