The Selling Company: Indianhead Pipeline Services LLC provides pipeline construction support services for mid- to large-diameter oil & gas transmission pipelines throughout the United States. The company provides a mix of services; including buoyancy control, foam systems that protect buried pipelines, and right-of-way restoration services, to the largest pipeline construction contractors and their pipeline system owners.
Why the company was sold: The shareholders built the company to take advantage of the surge in pipeline construction demand that began in 2007 and is expected to continue through the middle of the 21st century as North American unconventional oil & gas production climbs. Having achieved strong profitability, the shareholders elected to seek a financial partner who could benefit from participating in the future growth of the company, while allowing them to reduce their personal risk profiles by monetizing a portion of their investment.
Capital Alliance’s Performance: Capital Alliance worked with the shareholders to overcome the challenges of a seasonal business with a short list of customers. The extensive Capital Alliance network of oil & gas infrastructure buyers yielded an excellent fit – a buyer looking for defensible niche companies with business results that are not dependent on energy commodity prices. The sellers achieved a price for the company that greatly exceeded their expectations, and left them with a significant minority stake in the enterprise.
Terms of the Transaction: The enterprise valuation of the transaction exceeded the seller’s expectations by approximately 80%, and included cash at closing equal to the price that had sought for the business. Additional consideration included an interest-bearing note, a contingent performance payment package, and substantial rollover equity in the company.
The Acquiring Company: Strait Lane Capital Partners is an investment firm based in Dallas, Texas. SLCP has made a number of investments in market niches where the acquired company enjoys a prominent market position.