Target Company Overview

H.I.G. Capital has signed a definitive agreement to sell its portfolio company, USALCO, to funds managed by TJC (formerly known as The Jordan Company). USALCO, headquartered in Baltimore, MD, is recognized as a leading provider of water treatment solutions for both municipal and commercial customers across North America. The company specializes in custom formulated chemistries that demonstrate best-in-class product efficacy. With 33 manufacturing and distribution facilities, USALCO effectively addresses a wide variety of water treatment needs through innovative digital dosing and filtration cleaning services.

During its ownership since June 2020, H.I.G. has played a pivotal role in transforming USALCO. The firm has invested significantly in expanding the company's production capabilities and geographic reach, in addition to supporting the development of a best-in-class management team and executing strategic acquisition initiatives. Under H.I.G.'s stewardship, USALCO has solidified its position as a market leader in the water treatment sector.

Industry Overview in North America

The water treatment industry plays a crucial role in ensuring safe and reliable water supply across North America. It serves a diverse clientele, ranging from municipal authorities to commercial enterprises, all of which are increasingly focused on sustainability and efficiency in their water management practices. This sector has seen a growing demand for innovative solutions that meet rigorous environmental regulations and health standards.

Moreover, the North American water treatment market is influenced by several factors, including rising water scarcity, regulatory pressures, and the need for modernization in infrastructure. Advanced treatment technologies, such as digital dosing systems and highly efficient filtration processes, are becoming increasingly important as customers seek enhanced service levels and cost-saving measures.

As the demand for clean water continues to escalate, companies like USALCO that have the capability to provide customized solutions will likely gain a competitive edge. The emphasis on sustainable practices and improved operational efficiencies presents significant growth opportunities for players in this industry.

In terms of market trajectory, analysts predict robust growth in the North American water treatment sector, driven by investments in technology and infrastructure, as well as increased industrial activity. This environment creates a favorable context for strategic partnerships and acquisitions, allowing companies to expand their market presence and technical offerings.

Rationale Behind the Deal

The decision for H.I.G. Capital to sell USALCO to TJC is reflective of the latter's confidence in the company's future growth potential. USALCO has transitioned into a differentiated and scalable water treatment solutions provider, and TJC recognizes the promising avenues for continued expansion and innovation. By acquiring USALCO, TJC aims to leverage the company's established market leadership and operational strengths to unlock further value.

Furthermore, H.I.G. will retain a minority stake in USALCO post-transaction, indicating their belief in the ongoing potential of the company and their commitment to support its next phase of growth under TJC's management.

Investor Overview

TJC, formerly known as The Jordan Company, is a renowned alternative investment firm that manages a diverse portfolio of investments across various industries. With a strong operational focus, TJC is committed to identifying and unlocking value in its portfolio companies. The firm aims to partner with management teams to drive growth strategies that enhance operational efficiencies while expanding market presence.

With an established track record, TJC's acquisition of USALCO aligns with its strategy to invest in high-potential companies within essential industries such as water treatment. The firm is well-positioned to provide the necessary resources and support to facilitate USALCO's future success.

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This transaction presents a compelling opportunity for TJC to capitalize on USALCO's strong market position and the growing demand for water treatment solutions. H.I.G.'s prior investments in management and operational enhancements have set a strong foundation for future success.

Moreover, USALCO's focus on innovative, customized water treatment solutions positions it favorably within an expanding market, making the investment strategically sound. Given the increasing regulatory focus on water quality and efficiency, USALCO stands to benefit from favorable industry dynamics.

From an investment perspective, the combination of a strong leadership team and a well-defined growth strategy enhances USALCO's appeal. TJC’s involvement is anticipated to further accelerate the company’s trajectory, indicating a positive outlook for this deal as a sound investment decision.

Overall, the acquisition of USALCO by TJC reflects a strategic move that is expected to yield significant long-term benefits, both for the company and its investors, marking an effective evolution in the competitive landscape of North American water treatment.

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