Information on the Target

Velocity Dynamics, LLC is a recognized solutions provider specializing in branded, proprietary dry and liquid feed systems. The company focuses on optimizing chemical performance in water and wastewater utilities as well as industrial facilities. This acquisition allows cleanwater1 to enhance its offerings by leveraging Velocity’s advanced technological solutions to address the increasing complexities associated with water management.

The products developed by Velocity Dynamics are designed to improve the efficiency of chemical usage, ensuring that clients achieve superior results in treating water while managing operational costs. As the demand for effective water treatment solutions continues to rise, Velocity Dynamics positions itself as a key player in the market, contributing significantly to improved water quality outcomes.

Industry Overview in the Target’s Specific Country

The water treatment industry in the United States is experiencing a significant transformation, driven by regulatory changes, increasing environmental concerns, and the necessity for sustainable practices. As municipalities and industries face strict regulations regarding water quality, the demand for innovative treatment technologies is surging. Companies are seeking advanced solutions that not only comply with regulations but also optimize costs and improve efficiency.

Furthermore, the Covid-19 pandemic highlighted the importance of water quality and its impact on public health, leading to increased investments in infrastructure and technologies aimed at improving water treatment processes. The industry is evolving with the integration of advanced technologies such as automation and data analytics, making water treatment operations more effective and responsive.

Industry players are also focusing on reducing chemical costs while boosting performance, as chemical expenses have risen sharply in recent years. This trend has prompted a consolidation within the sector as companies look to enhance their service offerings through strategic acquisitions and partnerships.

In response to these challenges, firms are innovating new chemical feed systems and processes to streamline operations and increase the overall reliability of their services. Such advancements position companies like Velocity Dynamics at the forefront of helping clients meet their operational challenges while adhering to environmental standards.

The Rationale Behind the Deal

Cleanwater1's acquisition of Velocity Dynamics is a strategic move aimed at enhancing its portfolio of water treatment solutions. Given the escalating costs of chemical inputs and the growing pressure from environmental regulations, this acquisition allows cleanwater1 to deliver more cost-effective solutions to its customers by integrating Velocity's proprietary technologies.

This union of two industry leaders aims to pool their expertise in chemistry optimization, enabling the provision of superior solutions that address critical challenges faced by water and wastewater utilities. The collaboration is expected to create synergies that will lead to more competitive services and solutions for clients in the sector.

Information About the Investor

Baird Capital is a private equity firm known for investing in growth-stage companies across various sectors, including technology and environmental services. Having invested in cleanwater1 (formerly UGSI Solutions) in 2022, Baird Capital brings substantial industry experience and expertise, enabling its portfolio companies to scale effectively and capture market opportunities.

With a strong track record of facilitating operational enhancements and driving growth in its investments, Baird Capital is strategically positioned to support cleanwater1's vision of leading innovations in the water treatment industry. Their involvement signifies a strong commitment to environmental sustainability and the delivery of efficient solutions.

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The acquisition of Velocity Dynamics by cleanwater1 represents a strategic and timely investment that is likely to yield positive returns. From an operational standpoint, merging the technological capabilities of Velocity with the established market presence of cleanwater1 can significantly enhance operational efficiencies and customer offerings.

Given the increasing regulatory pressures and the rising costs associated with water treatment chemicals, this acquisition provides a timely solution to a pressing industry need. By combining their resources, these companies can effectively address the challenges faced by water and wastewater utilities, promoting broader adoption of advanced solutions and driving down costs for end-users.

Moreover, the collaboration is poised to foster innovation, enabling the development of new technologies that enhance chemical optimization processes. This aligns well with market trends emphasizing the need for sustainable practices in water management.

The strong backing from Baird Capital further strengthens the investment's potential, as it adds financial stability and operational expertise to cleanwater1, making it well-equipped to navigate future industry challenges and capture growth opportunities.

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