With experience on both sides—the investor and the “invested”—Troy Thacker comes from the PE world and has more recently been serving stints as CEO of environmental services companies, one a major provider of services to upstream oil and gas companies and the other a firm claiming to be the world’s leading safety services company. Thacker was CEO of R360 Environmental Solutions Inc. (Houston, TX), operator of 26 waste treatment and recycling facilities in Louisiana, New Mexico, North Dakota, Oklahoma, Texas, and Wyoming, when it was sold to solid waste management company Waste Connections, Inc. (The Woodlands, TX) in October 2012.
R360, which was backed by four PE firms, had been “reviewing a variety of options, one of which was to go public,” Thacker tells EBJ. In the natural course of looking for an exit strategy, “the option to do a transaction with Waste Connections made a lot of sense for us, for them, and for the customer base. It was a really terrific deal for all involved.”
In July 2013, Thacker was appointed CEO of Houston-based Total Safety, a provider of industrial safety and compliance services operating from 141 offices in 20 countries. Since late 2011, Total Safety has been a portfolio company of Warburg Pincus, a PE giant that has invested more than $45 billion in over 675 companies around the world.
Indeed, “the sponsorship by Warburg Pincus was a big part of my decision to join Total Safety,” Thacker says. “They are a well-respected and large private equity firm, with intimate knowledge of our industry and our goals, and they have very deep pockets.” Total Safety “was well-capitalized from the start, and it was given a war chest to pursue more growth opportunities. We have substantial dry powder in reserve.”
The acquisition by Warburg Pincus was “a banker-run process” that included evaluations of both financial and strategic buyers, according to Stenning Schueppert, Total Safety’s senior vice president for strategy, marketing, and corporate development. “We did not look at the S-1 option, and we’re still not going to go public,” he adds. “The strategic buyers were involved, but the financial buyers presented a more attractive package.”
With Warburg Pincus’s backing, Total Safety’s growth strategy will be aggressive but with a conservative capital structure, according to Thacker. “We’ll balance our organic growth and investments in greenfield opportunities and capital equipment with merger and acquisition opportunities. We’ll be conservative on debt versus equity, with deals involving a combination of the two.”
Warburg Pincus “allows us to run the business,” says Thacker. Put another way, “we’ll make returns for them by building our business and not through financial engineering.”
In terms of acquisitions, Warburg Pincus “will be involved in the larger opportunities we’ll be looking at, but the smaller opportunities will be identified and pursued by our internal management team,” says Schueppert. “If we need to access additional capital on the capital markets, they have the depth and breadth to assist us.” With regard to actual deals, “we are having a broad array of conversations and hope you will see us getting pretty active in the next 12 months,” he notes.
As for an exit strategy for Warburg Pincus, that’s open-ended, says Thacker. “If we build a great business, the exit strategy will make itself known in the future. Our focus is and will always be growing a great company.”
Source: Environmental Business Journal