The pandemic decimated many retail, restaurant and hotel service businesses, but for some, covid-19 has catapulted growth.
In early April, PE-backed Restoration 1 started receiving calls to disinfect police departments, hospitals, management companies and grocery stores. While traditionally focused on providing emergency services such as sewer cleanup, pipe repairs and fire, water and mold damage, the home services company pivoted – adding cleaning services to the list.
“We created the Keep It Clean program,” said Gary Findley, CEO of Restoration 1 and sister company bluefrog Plumbing + Drain. The program aimed to bring uniformity in the operations of almost 300 Restoration 1 franchises that were using different cleaning methods, products and protocols.
“We had Zoom calls and emails on what you need to do when you are asked to do covid cleaning from wipe-downs to the fogging machine,” Findley said, pointing to the best practices suggested by the Centers for Disease Control and Prevention and the World Health Organization.
Restoration 1, a property restoration company, and its sister brand bluefrog, a plumbing franchise, were acquired by MPK Equity Partners this April. The investment was made alongside Suzanne Perot McGee Family, a family investment office, and Mays Family. The three entities together hold a 98 percent stake and Findley is an investor.
Part of what attracted the Dallas, Texas, PE firm was the essential nature of the business.
“We do fire, water and mold repair and those are things that happen every day,” Findley said. “A pipe break is not an appointment; these things are usually emergencies,” said Findley, whose Waco, Texas, home was flooded earlier this year after a sink tap was left on for days.
All steam ahead
All but a couple of Maryland-based Restoration 1 franchises operated through covid-19. From a business standpoint, the company remains an unintended beneficiary of hurricanes and natural disasters across the nation, said MPK’s co-founder Patrick McGee.
In 2020, “we expect Restoration 1 to add 40 to 50 [franchise] locations,” Findley said. Systemwide sales are estimated to hit $110 million this year, up from $85 million in 2019.
According to Findley, investment for a Restoration 1 franchise ranges from $84,500 to $193,125, including the franchise fee of about $54,900.
Besides growing the number of franchises, the group of investors also intends to “aggressively go out and acquire some other home services businesses,” McGee said.
To support those plans, the investor added, “we are now creating a holding company, which will acquire other brands in the home services space.” The holding company will include the existing Restoration 1 and Blue Frog franchises among the new targets.
The franchise model is also attractive because operators typically embody a feeling of ownership, explained McGee. “Lots of mom-and-pop store employees want to be their own bosses,” McGee said. “Some of them have been laid off or faced reduction in salaries; we want to have brands where we can place these new entrepreneurs.”
The broader holding company aims to place entrepreneurs in the new franchise location of brands acquired.
For example, “Gary [Findley] has a relationship with other entrepreneurs that need help growing from 5 to 10 locations to 300 location brands,” explained McGee.
The target investment size for additional brands will likely fall between $5 million and $25 million in enterprise value, although McGee said there is no real upper limit.
The existing investors are in conversation with other founders and aim to close a couple of deals by the end of this year. The holding company’s name is being withheld for trademark reasons.
Action Item: Check out the deal story spotlighting Restoration 1’s acquisition.
Correction: This report was updated with a more accurate figure for the company’s franchise fee and clarifies that Suzanne Perot McGee Family is a family office.
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Action Item: check out the full database of PE-backed companies that have pivoted operations amid covid-19. The information has been supplied by the PE firms, compiled and edited by PE Hub for clarity.
Download the database here.
|No||Name||Portfolio Company||Doing what?|
|1||Artemis Capital Partners||BioDot||Working 7 days a week to manufacture fluid dispensing systems for labs that assemble antibody or serological tests.|
|2||Tecum Capital Partners and Validor Capital||BICO||Steelworkers at BICO worked extra hours to help a supplier of ventilators ramp up production.|
|3||Lincolnshire management||Powerhouse||Powerhouse now installs barriers that act as separators for retail workers. The company is also disinfecting spaces. Both these tasks are additions to its pre-covid businsses.|
|4||MPK Equity Partners||Restoration 1||Restoration 1 fixes fire, water and mold damage but is now providing disinfecting services - thanks to the PPE that it typically uses for its general services.|
|5||Adjuvant Capital||Codagenix||Partnered with the Serum Institute of India to rapidly co-develop a live-attenuated vaccine against the coronavirus.|
|6||ArchiMed||Diesse Diagnostica Senese||Developing a blood test for covid-19 detection.|
|7||EQT / TA Associates||Aldevron||Aldevron's technology is being used in 30 different covid programs right now.|
|8||Consonance Capital||Bako Diagnostics||Bako repurposed its technology expertise in PCR, developing and launching a covid-19 test in a matter of weeks. The company is also working on developing a serology test to develop antibodies, a proxy for covid immunity.|
|9||Falfurrias Capital Partners||Sauer Brands (Richmond Plant)||The company has been making spices, seasonings and extracts for 133 years but got FDA approval to start making hand sanitizer. It’s strictly for employees and also local first responders in Richmond, to whom Sauer Brands is donating the sanitizer.|
|10||Bain Capital||Canada Goose||The Canada Goose Response Program repurposed all eight Canadian manufacturing facilities and engaged 600 employees to work toward the goal of delivering 1.6 million pieces of medical grade PPE at cost to frontline healthcare workers across the country.|
|11||Pine Island and Bain Capital and Compass Partners||Precinmac||The Trimaster Division of Precinmac in Guelph, Ontario, is manufacturing over 800,000 units of a vital component in ventilators. The components are being distributed to key customers who have repurposed their facilities to ramp up production of these life-saving devices.|
|12||Bain Capital||QuVa||QuVa tripled the production of critical sedation, blood pressure support and anesthesia medications to aid the treatment of patients in ICU at over 1,500 hospitals across the US. The company is also reimbursing all childcare expenses for dedicated staff who are working to produce these high-demand pharmaceuticals.|
|13||Bain Capital||Apex Tool Group||Apex Tool Group’s industrial designers used 3-D printing to make hundreds of face shields for healthcare heroes and distributed them via community partners.|
|14||Bain Capital||Michael's||Michael's donated $1 million worth of fabric – enough to make about 750,000 pieces – to organizations making protective masks for first responders, hospitals and essential workers.|
|15||Bain Capital||Dynavax||Dynavax is developing CpG 1018 as a broad vaccine adjuvant platform. With that as the goal, the company has embarked on a strategy to establish multiple research collaborations aimed at demonstrating the capability of CpG 1018 to enhance the immune response to a variety of vaccine antigens.|
|16||Bain Capital||Varsity Brands||Varsity Brands adapted its graduation-cap-and-gown manufacturing facilities to quickly deliver critical personal protective equipment (PPE) to essential business customers globally.|
|17||Bain Capital||Affinavix||Affinivax is supporting the development of next-generation vaccines by accelerating the use of its patented Multiple Antigen Presenting System (MAPS) technology, which enables high-affinity binding of polysaccharides and proteins to uniquely induce a broad and protective B- and T-cell immune response to vaccines.|
|18||Bain Capital||Rent the Runway||Rent the Runway repurposed its garment repairs team and local NYC factory partners to produce 80,000+ washable and reusable non-medical face masks for the general public.|
|19||Bain Capital||Diversey||Diversey increased product supply by 8x to meet the unprecedented surge in demand for disinfectants and sanitizers.|
|20||Bain Capital||HealthDrive||HealthDrive’s behavioral health providers volunteered to facilitate a telehealth therapy service to any partner, provider or staff member at the company, ensuring that mental health is a priority.|
|21||Bain Capital||Homebase||Homebase is providing healthcare teams with premium time tracking and scheduling software for free for three months. Healthcare teams at covid-19 screening centers and response centers are using Homebase.|
|22||Bain Capital||Cloud Guru||Cloud Guru has launched a program to provide 1,000 individuals who have lost employment due to covid-19 with a free one-year subscription to its cloud skills education program.|
|23||Bain Capital||IQVIA||The company launched the covid Active Research Experience (CARE) Project, an information-gathering portal, which to date has produced more than 50 reports to help inform the scientific community and the greater community at large about disease prevalence, symptom progression and treatment outcomes.|
|24||Bain Capital||CentralSquare||Provided select software products such as online citizen reporting tools free of charge to public safety agencies to assist with emergency response throughout the pandemic.|
|25||Bain Capital (and other investors RA Capital Management, Perceptive Advisors, Rock Springs Capital, Adage Capital Management, T. Rowe Price, Redmile Group and Omega Funds)||Atea Pharmaceuticals||Atea is developing a drug for treatment of adult patients hospitalized with moderate covid-19 with one or more risk factors|
|26||Apollo||CareerBuilder||CareerBuilder has launched a Crisis Support Center to help impacted Americans find jobs.|
|27||Apollo||Tegra||Typically known for developing sports and athletic apparel, Tegra has reprioritized operations and is pivoting its manufacturing to make face masks amid the ongoing spread of covid-19.|
|28||Apollo||University of Phoenix||University of Phoenix is offering free, credit-bearing online courses and “tool kits” for k-12 teachers who are adapting to online learning environments.|
|29||Apollo||McGraw Hill Education||McGraw Hill Education is offering free access to online higher-ed coursework and training professors and students to digital learning platforms and is providing free K-12 digital products and access to ALEKs learning platform.|
|30||Apollo||Intrado||Intrado has partnered with Cisco to provide free virtual learning software and services for K-12 schools in the US.|
|31||Compass Diversified Holdings||Sterno||Sterno shifted its priorities at two of its plants. Rather than producing insulated food bags and ethanol chafing fuel, they are now producing cotton masks and hand sanitizer.|
|32||Blackstone||SERVPRO||Employees at SERVPRO, a cleanup and restoration company, have been involved in a number of relief efforts. These include assembling care packages for US Army personnel deployed to New York City to build a covid-19 hospital, providing meals to US Army Fort Campbell Troops managing the Jacob Javits Medical Center, and franchises across the country. They are answering requests for first responder vehicle cleanings at no charge.|
|33||Blackstone||Bridger Aerospace||Bridger Aerospace provided its aerial transportation resources to airlift emergency supplies and deliver blood drive services to treat patients in Bozeman, Montana, hospitals.|
|34||Blackstone||Sema4||Sema4 is joining the fight against covid-19 by offering rapid testing to support healthcare providers in Connecticut and New York.|
|35||L Catterton||ClassPass||ClassPass has launched a new feature that enables fitness and wellness providers to offer live-streamed classes, sessions and appointments through the ClassPass app and website. The company will donate 100% of the proceeds from these purchases through June 1, 2020 directly to its partners who are unable to host in-person classes and appointments due to covid-19.|
|36||Veritas Capital||Athenahealth||Developed new interactive covid-19 dashboard, to be used by covid-19 Healtchare coalition and Athenahealth customers. Dashboard tracks lab test orders and identifies concentrations of high-risk patients, via data from its providers across 50 states and 100 million patients. Also, launched 24-hour incident response team to stay in sync with the Centers for Disease Control and World Health Organization.|
|37||Veritas Capital||Cotiviti||Launched publicly available outbreak tracker which identifies future geographic areas that may see heightened infection outbreaks, helping the healthcare industry shift its response from reactive to proactive.|
|38||Veritas Capital||OnSolve||OnSolve, a provider of SaaS-based mass notification, put together a crisis communication kit for covid-19, offering best practices for communicating sample coronavirus message templates and ways to manage employee expectations.|
|39||Veritas Capital||Cambium||Cambium now provides free access to K-12 curriculum organizations to support educational challenges created out of covid-19.|
|40||Cerberus Capital||Kellermeyer Bergensons Services||KBS, a provider of commercial contract cleaning, has leased its own trucks to move necessary chemicals and PPE directly from its manufacturer to its warehouse, and redirected its hospitality staff to work on coronavirus cleanup instead.|
|41||Cerberus Capital||ABC Technologies||ABC, an automotive supplier, is developing ventilator components to support production efforts in the United States and Canada. It started shipments of components within just three weeks. It has also been working with several organizations and companies to produce face masks and protective face shields.|
|42||Cerberus Capital||Albertsons Companies||Albertsons, the second-largest supermarket chain in North America partnered with major hospitality businesses to provide part-time jobs to furloughed employees. Partners include Hilton, Marriott International, MGM Resorts. Like other supermarkets it has been working around the clock to keep products on shelves and keep stores clean and open.|
|43||Great Hill Partners||CustomInk||CustomInk, the online custom apparel retailer, quickly pivoted and repurposed their manufacturing so they could provide desperately needed face masks at bulk rates.|
|44||Advantech Capital and Vivo Capital||Sinovac R&D||Sinovac Biotech, a leading provider of biopharmaceutical products in China, is developing an inactivated vaccine against covid-19 named CoronaVac. The Phase II clinical trial commenced in May.|
|45||Sole Source Capital||Supply Chain Services||SCS produced large amounts of RFID labels for coronavirus testing devices. The Medical Contract Manufacturer reached out in early March when the spread of the virus worsened and the need for tests grew exponentially. These labels are important for medical professionals to accurately track patient tests and keep accurate data. Unfortunately the inlays the manufacturer uses for orders are sourced out of China and were not going to be filled until July. SCS also helped the manufacturer by reaching out to their inlay suppliers and pulled together to locate the wet inlays needed. SCS also helped a grocery store to do online ordering and store pickup similar to Instacart by creating a hardware kit. The combination of a handheld scanner and mobile printer let the grocery employees fulfill online orders without going through the high-traffic checkout lanes.|
|46||Eurazeo Brands||The Bandier team||The activewear company is keeping its community connected with daily, virtual at-home exercise sessions,|
|47||Eurazeo Brands||NEST||The manufacturer and marketer of luxury fragrances is working to develop antibacterial products for consumers.|
|48||Edison Partners||Suuchi||A supply-chain management software provider for the clothing manufacturing industry converted to making masks and PPE.
|49||Blackford Capital||Mopec||Scaled production and started creating CDC-compliant body bags. It developed Guardian Racks, which is a collapsible morgue storage rack system. This was created in response to the wooden shelves being built in New York to hold bodies in refrigerated trailers.|
|50||Clinical Ink||NovaQuest||Clinical Ink helped expedite the study of a treatment for "cytokine storm," the immunological reaction associated with severe cases of covid-19.|
|51||Tritium Partners||RVShare||The peer-to-peer RV rentals in the US has seen a massive growth in bookings due to the pandemic as domestic family trips have become the dominant form of travel.|
|52||New Mountain Capital||Zep Inc.||The cleaning company's sales were trending down until covid but now they are scrambling to meet demand. They have some retail business, but the bulk is heavy duty cleaning chemicals for industrial (mfg,automotive), F&B (meat/dairy processing plants) and institutional (hospitals, schools), so will likely see sustained growth in post-COVID world.|
|53||VSS||Coretelligent||The managed IT services firm witnessed an increase in demand from clients – many of whom, new to the virtual environment, required more than the day-to-day IT support services. The company migrated its onsite field team to meet this demand.|
|54||CORE Industrial Partners||Fathom||In the early covid months – when conversations around ventilator shortages had just begun – Fathom, a 3-D printing company signed two large ventilator projects under the Defense Production Act. To increase production and reduce time to market, Fathom also created a new multi-cavity tool to build covid test cartridges, which saw an incredible spike in demand.|