Environmental Services Exits

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January 25, 2022

by a searcher from Harvard University - Harvard Business School in Greenwich, CT, USA

Since the start of the year, I've seen a spat of deals in the Environmental Remediation & Abatement space (think Water Treatment, Asbetos/Lead Removal, etc.) - while i've been busy trying to wrap my head around this sector, I'm curious what others may have learned about how to exit in this industry. Seems like attractive margin profile from an owner/operator perspective - even at small scale - means that the industry remains fragmented. Additionally, it seems like the high prevalence of labor unions here has kept out larger PE.

Any experts out there?

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Reply by a searcher
from The University of North Carolina at Chapel Hill in Toronto, ON, Canada
I have also perceived that PE is less interested in this space than you would expect. Small ticket sizes due to high fragmentation and the fact that scaling up professional services businesses often means adding and training qualified headcount (time consuming and expensive), translates into a longer time generating efficiencies than the preferred threshold for many PE buyers.

In addition, standard/formulaic "search fund" criteria would have a bias against this mostly project based operation. Good potential value to be generated in this market with the right mix of operator(s) and investors, but I would say that prior experience in the area is a very valuable asset. Happy to chat.
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Reply by a searcher
from Northwestern University in New York, NY, USA
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