Investcorp and Trilantic chart a roadmap for RoadSafe

PE Hub spoke with Investcorp's Amit Gaind and Trilantic's Charles Fleischmann about RoadSafe's five acquisitions since they invested in it a year ago.

In the year since Investcorp and Trilantic North America bought RoadSafe Traffic Systems, the Chicago-based provider of traffic control and pavement-marking services has been on an acquisitive growth path, closing five deals. Last month RoadSafe announced the acquisition of Liddell Bros and Liddell Leasing, Halifax, Massachusetts-based suppliers of traffic control services and equipment. The move followed prior acquisitions of businesses in California, Utah and North Carolina. PE Hub caught up with Amit Gaind, a partner at Investcorp, and Charles Fleischmann, a partner at Trilantic, to learn more about RoadSafe’s growth path at a moment when the US is set to revamp road infrastructure.

Roadwork ahead

According to the 2021 Report Card for America’s Infrastructure, 40 percent of the road network system is now in poor or mediocre condition. The sector presents a great opportunity for investment, especially as the US prepares to invest in infrastructure, including roads and bridges, through the bipartisan Infrastructure Investment and Jobs Act that was signed late last year by President Joe Biden.

“We are big believers in this industry,” explained Gaind, who leads the industrial and consumer services efforts at Investcorp. The firm’s interest in infrastructure pre-dates the latest federal legislation. He said there is enormous potential for growth in the market.

“The core driver for our thesis is long-term,” Gaind said. “These markets have always grown at three to five percent, and the state of roads and bridges is such that the investment will have to continue for a long period of time.”

Fleischmann described the sector as resilient and likely to withstand macroeconomic pressures, such as rising interest rates and inflation. “None of those are factors that keep us up at night,” he said adding that RoadSafe’s management team is constantly innovating in terms of how to deliver a better product that is cost effective.

Growth path

With equal voting rights in RoadSafe, the two firms have a lot in common, including their investment strategies and areas of focus. They both have appetites to partner with high-quality companies and high-quality management teams, explained Gaind. Fleischmann and Gaind worked together for several years at Investcorp, before Fleischmann joined Trilantic seven years ago.

Fleischmann said most of RoadSafe’s deals are non-marketed transactions, and the firm does not go through a broker or an auction process. Rather, the deals came out of relationships that the management team cultivated and developed over many years within the industry.

“We really think that the team has made themselves, both reputationally in how they behave and how they treat acquisitions, as the acquirer of choice within our markets,” Fleischmann said referring to RoadSafe.

Early in the partnership, the PE firms sat down with management to hone RoadSafe’s growth path and set a standard on the quality of companies to pursue. Fleischmann and Gaind said they will continue to support RoadSafe’s management and perfect its M&A playbook for a continued aggressive growth.

RoadSafe has a national presence and operates in 48 states. In expanding the company, Fleischmann said: “We are really focused on finding businesses that complement the footprint that we already have in place, and these businesses tend to be ones that work with safety and have strong company cultures in them, companies that take care of their employees and deliver excellent service to their customers.”