Target Overview

Hidden River Strategic Capital is pleased to announce its platform investment in Restoration Alliance, a prominent franchisee within the ServiceMaster Restore franchise system. Based in Seattle-Tacoma, WA, Restoration Alliance, trading as ServiceMaster of Tacoma, specializes in disaster restoration services for both residential and commercial clients. Their offerings include water mitigation, fire and smoke damage restoration, as well as related contents cleaning and storage. For over three decades, the Sorenson family has owned and operated the company, establishing a solid reputation in the restoration industry.

Under the leadership of CEO Jeff Sorenson, Restoration Alliance aims to expand its influence from a regional leader into a national competitor within the disaster restoration sector. The firm will continue to leverage its existing management team, ensuring a seamless transition as it embarks on new growth initiatives. This partnership collaboration reflects Hidden River's commitment to a founder-friendly investment strategy.

Industry Overview

The disaster restoration industry in the United States has witnessed significant growth in recent years, driven by an increasing frequency of natural disasters and the resultant demand for restoration services. With climate change contributing to more severe weather conditions, the need for quick and effective disaster response solutions has become paramount. This trend is particularly evident in regions prone to floods, hurricanes, and wildfires, where communities rely heavily on timely restoration services to recover from catastrophic events.

In the Pacific Northwest, where Restoration Alliance operates, the availability of skilled restoration professionals has become critical. The industry faces unique challenges, including staffing shortages as experienced technicians retire, which creates opportunities for companies like Restoration Alliance to fill the gap. Furthermore, the emergence of technology in restoration practices, such as advanced drying techniques and damage assessment tools, has enhanced efficiency and outcomes, reinforcing the importance of innovation in staying competitive.

Moreover, with over 800 franchise locations across 14 countries, ServiceMaster Restore stands as one of the largest and most reputable brands in the disaster restoration space. This global presence not only establishes credibility but also facilitates the sharing of best practices among franchisees, contributing towards a standardized, quality service offering.

The outlook for the disaster restoration industry remains positive, with market analysts predicting sustained growth over the coming years. As property owners increasingly recognize the value of professional restoration services in preserving their assets, businesses in this sector, including Restoration Alliance, are well-positioned to benefit from this heightened awareness.

Rationale Behind the Deal

The investment by Hidden River in Restoration Alliance is primarily driven by the company's strong reputation for quality service and operational excellence. Recognizing the potential for growth, Hidden River aims to provide the necessary growth capital for Restoration Alliance to pursue strategic acquisitions and expand its operational footprint. This partnership approach not only respects the company's heritage but also allows for shared ambitions of growth.

Additionally, the collaboration with Taurus Capital Partners further strengthens the deal, as they bring expertise and resources that can facilitate the expansion efforts of Restoration Alliance. The mutual respect and shared vision among the stakeholders highlight the expected synergies resulting from this transaction.

Investor Information

Hidden River Strategic Capital specializes in investing between $5 million and $25 million into U.S.-based businesses that generate positive cash flow, typically reporting at least $10 million in revenues. Their investment philosophy focuses on providing flexible, customized capital that aligns closely with management teams to support growth and operational success. Hidden River prioritizes unique, durable business models within diverse industries, making their investment in Restoration Alliance a strategic fit.

Alongside co-investors, Hidden River is committed to fostering long-term partnerships that enable management teams to pursue strategic initiatives without sacrificing their ownership vision. This approach reinforces Hidden River’s dedication to enabling entrepreneurial growth and operational excellence in their portfolio companies.

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In my opinion, the partnership between Hidden River and Restoration Alliance is a strategically sound investment. The company's established history, strong leadership, and solid reputation within the disaster restoration industry position it well for future success. By providing necessary growth capital, Hidden River not only enables Restoration Alliance to scale its operations but also respects the founding family's legacy, which is essential for maintaining morale and commitment among the existing team.

Moreover, Hidden River's approach to investment is refreshing and shows an understanding of the nuances involved in operating family-owned businesses. Their commitment to fostering a collaborative atmosphere can lead to a smoother transition during the expansion phase, minimizing disruption to daily operations and maintaining service quality.

The disaster restoration industry is poised for continued growth due to increasing demand for restoration services. Given the historical performance and ongoing trends in the Pacific Northwest, Restoration Alliance is expected to capture a sizable share of this market, further justifying the deal. Additionally, with Taurus Capital Partners as a co-investor, there is an added layer of expertise that can enhance strategic planning and execution.

Ultimately, this investment aligns well with market conditions, and if managed effectively, it could yield substantial returns for Hidden River and its partners, marking this deal as a potentially fruitful endeavor in the robust disaster restoration market.

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