Happy Friday and welcome to this week’s edition of The Lower Middle Market. We’re the only news source tracking lower middle market M&A. Our goal is to keep you up to date on what’s happening in the market by highlighting the latest news, transactions, and activity.
This Week’s Feature
The big news out of Congress last month was the passing of President Biden’s $1.2T infrastructure bill: The Infrastructure Investment & Jobs Act (IIJA). Given it took months of deliberation in the current political climate, the passing of IIJA with bipartisan support made it something of a modern miracle.
Biden’s $2.3T proposal lays out a plan to rebuild the nation’s roads and bridges, shift to renewable energy and expand broadband access. And boy, do we need it. The American Society of Civil Engineers recently published a report card on America’s infrastructure and graded it a C-. That’s a concerning score for a nation that considers itself to be a global superpower.
The bill delivers an opportunity for both the public and private sector to participate in America investing in itself again. However, there is a lot to still figure out from an execution standpoint. There’s hope that by both streamlining the federal permitting process and expanding opportunities for public and private co-investment through public-private partnerships (P3s), the country can radically reshape how we approach infrastructure investments. But as is often the case with these types of things, bureaucracy manages to rear its ugly head.
In looking ahead, where are there opportunities for private equity? As this article from The Brooking Institution points out, by almost any measure, IIJA is enormous. “The roughly $1.2 trillion bill contains an estimated $550 billion in new spending above baseline levels. This spending touches every sector of infrastructure, from transportation and water to energy, broadband, and the resilience and rehabilitation of our nation’s natural resources. While topline numbers from Senate summaries show us the general trends in funding distribution—over half of new spending is transportation-focused—the magnitude of these investments warrants a deeper dive.”
For lower middle-market private equity groups, there’s hope that local and state governments will turn to them for smaller projects on shorter timelines that won’t get the attention of some of the larger players.
Without question, the bill marks Biden’s biggest legislative victory to date and appears to be favorable news for U.S. private equity investors. It has the potential to be a big boost for investors in the transportation and broadband sectors which will see a steep increase in topline above-baseline spending. However, due to the sheer size of the undertaking and the required cooperation from both the private and public sector we’ll have to wait before we declare the passing of this bill a victory for the nation’s infrastructure.
This Week’s LMM Activity
EquiPro Holdings-backed Security Credit Services acquires non-performing receivables co., Jormandy Link
The Riverside Company invests in Executive Home Care Franchising Link
Architect Equity acquires Timec Oil & Gas from Ferrovial Link
Centerbridge Partners and The Vistria Group-backed, Help at Home acquires Ohio-based Prime Home Care Link
Tower Arch Capital exits its investment in branded footwear co., KNS International Link
CenterGate Capital completes the sale of Owen Equipment Company to Wynnchurch Capital Link
CURO acquires consumer finance co., Heights Finance, from Milestone Partners Link
Blue Sea Capital-backed Spectrum Vision Partners acquires Stahl Eyecare Experts Link
Godspeed Capital acquires public and private sector engineering consulting services provider, Ascent Engineering Group Link
Silver Oak Services Partners-backed Pallet Logistics acquires Pal-Serv Link
H.I.G. Capital Exits recycling and packaging co., Sustana, to Blackstone Link
Seacoast Capital invests in parcel delivery co., Lone Star Overnight Link
Main Street Capital invests in automotive parts supplier DMA Sales Link
Main Street Capital and Iron Creek Partners invest in three background screening companies Link
Rotunda Capital-backed FreshEdge acquires produce distributor Monteverde’s Link
HealthEdge Investment Partners completes the sale of I/DD service provider The Columbus Organization to CareSource Link
Gladstone Capital invests in wetsuit brand Xcel Link
Beringer Capital closes Fund IV with $307M to focus on digital transformation Link
Implementing data-driven strategies for SMB’s Link
Bridgepoint’s Q4 trucking and logistics M&A update Link
Meanwhile, the SaaS M&A market is expected to break transaction volume records by year-end Link
Why the next Warby Parker or Allbirds might not be backed by VC Link
Retailers are acquiring logistics companies to help control the supply chain Link