Information on the Target

Watermill Express, LLC, founded in 1984 and headquartered in Brighton, Colorado, is a leading provider of affordable and safe drinking water and ice through convenient drive-up, self-service stations. The Company operates nearly 1,300 stations across eight states, predominantly located in the West Coast and Sunbelt regions. Over its 40-year history, Watermill has provided safe drinking water and ice to over 10 million people, significantly reducing plastic waste by preventing over 15 billion single-use water bottles from entering landfills.

Under the stewardship of Brentwood Associates, Watermill has successfully tripled its adjusted EBITDA by strategically opening new stations, upgrading existing ones to a new water-and-ice prototype, and acquiring its remaining franchisees. The Company's growth trajectory remains robust, with substantial opportunities for organic expansion, enhancements to current offerings, and potential strategic acquisitions to solidify its presence in the drinking water and ice market.

Industry Overview in the Target's Specific Country

The market for drinking water and ice services in the United States has seen significant growth driven by increasing consumer awareness of health, sustainability, and the environmental impact of single-use plastics. As public interest in clean, affordable drinking water rises, companies that offer convenient solutions, like Watermill Express, have gained traction.

This industry is characterized by a shift toward sustainability, with more consumers preferring refillable options over bottled water. The U.S. market also benefits from a favorable regulatory environment that encourages green initiatives, which further bolsters Watermill's mission of providing affordable and accessible clean water.

In recent years, the rise of e-commerce and increased demand for convenience have transformed the landscape of water and ice delivery, paving the way for innovative service models. Self-service kiosks, like those operated by Watermill Express, play a crucial role in meeting this demand, providing an efficient solution for consumers seeking high-quality products.

Moreover, the competitive landscape is growing, as more companies enter the sustainable hydration market. However, Watermill's long-standing history and established infrastructure provide a solid foundation to leverage against new entrants, ensuring that it remains a preferred choice for consumers.

The Rationale Behind the Deal

The recent transaction signifies Brentwood Associates' continued commitment to Watermill Express and its management team, facilitating further investment to advance the Company's growth strategy. The establishment of the oversubscribed single-asset continuation fund allows for an infusion of capital essential for expanding Watermill’s operations.

Brentwood's belief in Watermill's growth potential is evident, as the firm not only supports the Company through its Fund VII but also reinvests proceeds from the transaction, reinforcing confidence in the partnership.

Information About the Investor

Brentwood Associates is a Los Angeles-based private equity firm specializing in investing in middle-market, growth-oriented essential services companies. With over 30 years of experience, the firm has invested in more than 50 portfolio companies, culminating in over $7 billion in transaction value. Brentwood is recognized for its expertise in brand development and enhancing the value of its investments.

Alongside Brentwood, Hollyport Capital is the lead investor in this continuation fund, known for its expertise in secondary investments and capturing value in legacy private equity assets. With over $9 billion in managed assets and a team of over 65 professionals, Hollyport focuses on uncovering hidden value and providing tailored liquidity solutions.

View of Dealert

The recent deal involving Watermill Express is viewed favorably due to the Company's strong market position and growth potential. As the demand for affordable and sustainable drinking water solutions continues to rise, Watermill is well-positioned to capitalize on this trend, making it an appealing investment opportunity.

Moreover, Brentwood Associates’ track record of successful investments in essential services suggests that they have the expertise and vision necessary to guide Watermill through its next phase of expansion. This partnership not only signifies financial backing but also strategic mentorship, enhancing the Company's operational capabilities.

Watermill's commitment to social impact and sustainable practices aligns with growing consumer preferences, potentially yielding long-term benefits for shareholders. By addressing the clean water challenge effectively, the Company is likely to increase its footprint and brand loyalty in underserved markets.

In conclusion, the investment in Watermill Express reflects a strategic alignment between growth potential and social responsibility, positioning it as a promising addition to Brentwood's portfolio. For these reasons, this investment is likely to yield positive outcomes for all stakeholders involved.

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