Target Company Overview

Suburban Intermediate Holdco, Inc. (“Suburban”), founded in 1978 and headquartered in Waukesha, Wisconsin, is a leading provider of construction services. The Company specializes in drywall, insulation, steel framing, and custom finish installation services throughout Southern Wisconsin. With operations in Waukesha and Lake Mills (Madison), Suburban has built a strong reputation over its 46-year history, serving prominent multi-family and commercial general contractors, as well as single-family homebuilders across the state.

Under the leadership of President Dave Satermo, who has nearly four decades of experience in the construction services industry, Suburban has developed a robust management team including Vice President Matt Satermo and CFO Susan Hrobar. Their combined expertise has played a crucial role in the company's growth and success in the competitive construction landscape.

Industry Overview

The construction industry in Wisconsin has experienced steady growth, bolstered by a strong demand for residential and commercial projects. Recent years have seen a surge in multi-family housing developments, driven by a growing population and an evolving housing landscape. This trend has created significant opportunities for construction service providers like Suburban, who can meet the rising needs of contractors and builders.

Moreover, the state’s focus on infrastructure improvement has further propelled growth within the sector. With government initiatives aimed at enhancing transportation and public infrastructure, construction companies are positioned to capitalize on increased project funding and activity. This environment fosters collaboration among industry players and presents pathways for strategic partnerships and expansions.

Nevertheless, the industry faces challenges such as fluctuating material costs, labor shortages, and increasing regulations. Adaptability and financial acumen are essential for construction firms to navigate these obstacles successfully. Companies that invest in operational efficiencies, technology, and employee training will likely emerge as leaders in this evolving climate.

As the industry continues to evolve, established companies with a strong track record and an innovative approach, like Suburban, are well-positioned to leverage their expertise and experience in order to capture market share and drive future growth.

Rationale Behind the Deal

The sale of Suburban to AVALT, a Boston-based private equity family office, and VantEdge, a Kansas City-based family office investment firm, represents a strategic move aimed at maximizing the Company's potential. High Street Capital's partnership with Suburban, which began in 2019, resulted in significant improvements to the organization's resources, infrastructure, and market positioning. By expanding operational capabilities and investing in key personnel, the management team successfully positioned Suburban as a frontrunner in the construction services sector.

Moreover, this deal serves as a fruitful exit for High Street Capital V, reflecting their commitment to fostering growth and delivering value. The partnership approach emphasized by High Street Capital has proven beneficial, allowing Suburban to thrive and achieve its operational goals.

Investor Information

AVALT is a private equity family office with a focus on investing in businesses that demonstrate strong growth potential. With a disciplined and strategic approach to investment, AVALT seeks to partner with management teams to unlock value and drive sustainable growth. Similarly, VantEdge is an experienced investment firm known for its focus on niche markets and fostering companies with strong operational foundations.

Both firms bring valuable resources, industry expertise, and a wealth of knowledge that will aid Suburban in its next phase of growth. Their backing signals confidence in Suburban’s capabilities and aligns with their ambitions to expand market presence and enhance operational efficiencies.

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The sale of Suburban Intermediate Holdco, Inc. is viewed positively within the investment community, as it highlights how strategic partnerships can lead to significant growth outcomes. High Street Capital's investment approach not only provided operational support but also fostered leadership development within Suburban’s management team, which is crucial for long-term sustainability.

From an investment standpoint, this deal represents a successful exit that demonstrates the effectiveness of a collaborative equity investment strategy. Private equity firms often seek to partner with established businesses that have room for scaling, and Suburban exemplifies this with its strong market positioning and operational improvements achieved under High Street Capital’s guidance.

Furthermore, the involvement of AVALT and VantEdge indicates a commitment to continuing the mission of strengthening Suburban’s market share. Their investment is expected to drive innovative strategies and enhance Suburban’s offerings in the construction services sector, creating potential for sustained success.

In conclusion, this transaction not only benefits the involved parties but also sets a precedent for future exits within the construction industry, emphasizing the importance of strategic partnerships in unlocking substantial value.

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