Information on the Target

Controlled Recovery, commonly referred to as CRI, is recognized as the largest facility for non-hazardous oil and gas waste management in the United States. Under the management of John Barnidge, who serves as CEO, CRI has continually expanded its capabilities and operations to meet the growing demand in this critical sector. The facility plays a pivotal role in ensuring the safe and efficient disposal and management of waste, aligning with industry standards and environmental regulations.

Blue Sage Capital has successfully exited its investment in CRI, having been the majority controlling shareholder during its tenure. This strategic decision to sell the company to R360 Treatment signals not just a profitable return for Blue Sage but also a promising future for CRI as it embarks on further growth initiatives.

Industry Overview in the Target’s Specific Country

The oil and gas waste management industry in the United States has seen significant growth, driven by increasing regulatory pressures and a focus on environmentally responsible practices. As companies within the sector recognize the importance of sustainable operations, facilities like CRI are positioned as essential players in responsibly handling waste generated from both exploration and production activities.

In Texas, a major hub for oil and gas production, the demand for non-hazardous waste disposal has expanded as production levels surge. The convergence of increased drilling activity and stricter environmental regulations has propelled growth prospects for companies that specialize in waste management, pushing the sector towards innovation and efficiency.

Moreover, the rise in public awareness regarding environmental issues has led to a greater emphasis on waste management practices. As a result, investment in this industry is becoming increasingly attractive for private equity firms looking to capitalize on sustainable growth trends and regulatory shifts.

Overall, the non-hazardous waste management industry is projected to continue its upward trajectory, driven by a combination of regulatory compliance needs and the move toward more environmentally friendly practices across the oil and gas sector.

The Rationale Behind the Deal

The decision by Blue Sage Capital to sell CRI to R360 Treatment reflects a strategic move aimed at maximizing return on investment while facilitating CRI’s next stage of growth. The acquisition allows R360 Treatment to leverage CRI's existing capabilities and market position, furthering its expansion plans.

For Blue Sage, the exit from this investment represents a successful outcome, with considerable returns on the capital invested. This win-win scenario demonstrates sound judgment in identifying and nurturing a company in a burgeoning sector, ultimately allowing both parties to benefit from the transaction.

Information About the Investor

Blue Sage Capital, headquartered in Austin, Texas, is a private equity firm co-founded by Peter Huff and Jim McBride. The firm specializes in investing in smaller middle-market companies that are based primarily in Texas and the Southwest. Their investment strategy focuses on growth, recapitalization, and buyout financings.

Blue Sage typically targets established and profitable companies generating between $5-100 million in revenue and $2-8 million in cash flow at the time of investment. With initial investments ranging from $5-15 million, Blue Sage is also prepared to allocate additional capital for follow-up investments in their portfolio companies to support continued growth and strategic acquisitions.

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The exit of Blue Sage from its investment in CRI to R360 Treatment is seen as a commendable strategic decision. The oil and gas waste management sector is poised for significant growth, making investments in this area potentially lucrative. Given CRI’s market leadership and operational prowess, the firm has opened the door for R360 Treatment to expand rapidly, which is a promising aspect of this deal.

Furthermore, the partnership between Blue Sage and CRI management has proven fruitful, highlighting effective operational involvement from the investor. This level of engagement not only facilitated the company's growth during their period of ownership but also ensured a seamless transition to new management.

The outcome of the sale to R360 Treatment also indicates that investors in the oil and gas waste management space can expect robust returns, bolstered by market conditions that favor consolidation and expansion. Therefore, this transaction could serve as a case study for successful investments in similar sectors.

Based on the current landscape and expected trends, this deal is likely to be viewed positively, both as a strong exit for Blue Sage and as a robust foundation for CRI's future under new ownership.

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