Enercare Completes Acquisition of Service Experts
Founded in 1996, Service Experts provides residential and commercial HVAC service and repairs
Canadian home and commercial services company, Enercare Inc., recently completed its previously announced acquisition of Service Experts. The transaction was completed by way of a merger of an indirect wholly owned subsidiary of Enercare Solutions with Service Experts for a purchase price of $340.75 million.
“This is a defining acquisition for Enercare,” said John Macdonald, president and CEO of Enercare, in a news release. “North American expansion has been part of our strategic roadmap and is a natural extension to our business. Through Service Experts, we emerge as a North American market leader, creating new opportunities for growth and broadening our scope from Canada to North America while driving considerable incremental value for shareholders. In 2016, we expect the acquisition of Service Experts to be 25 percent accretive to Normalized pro forma Distributable Cash per common share.”
Service Experts was previously owned by American Capital, located in Bethesda, Maryland, which acquired the company in March 2013. American Capital received $244 million in proceeds, including fees and assuming full collection of escrow and other holdback amounts, and realized a capital gain of $225 million from the transaction. Over the life of the investment, American Capital realized 18 times its investment in the company and generated a compounded annual rate of return of 184 percent, including interest, dividends, fees, and realized gains.
“The tremendous success of our investment in Service Experts is a result of the tireless effort and commitment of the company’s executive leadership team and the approximately 2,800 employees across the U.S. and Canada, in conjunction with the financial, operational, and strategic capabilities of American Capital Special Situations,” said Anuj Khanna, principal, American Capital Special Situations, in a news release. “Together, we have made significant and permanent improvements to the business while returning the company to prominence within the HVAC industry. We believe Enercare is well positioned to enhance the company’s future prospects, and we wish them all the best in this endeavor.”
Founded in 1996, Service Experts is a provider of residential and commercial HVAC service and repairs along with IAQ, plumbing, and home energy solutions in 29 states in the U.S. as well as three Canadian provinces. Headquartered in Plano, Texas, Service Experts has 90 branch locations across the U.S. and Canada, approximately 2,800 employees, and $435 million in annual sales.
The Service Experts name will continue and there will be no changes in the company’s leadership structure for the foreseeable future, according to Scott Boxer, president and CEO, Service Experts.
“One of the things that was very attractive to Enercare is we have a very well-rounded, experienced team in place in the U.S. and Canada,” Boxer said. “The intention is to just continue business as usual and, over time, look for areas of synergy. One of the things we’re looking at very positively with Enercare is they are a strategic owner — they’re in the business we are in — and they see this as a tremendous opportunity to expand. That’s very different than being owned by a private equity that has an end game in their plan. So, we’re very happy we now have a strategic owner that’s going to invest in the business, which is good for our employees.”
In addition to providing Enercare access into the U.S. HVAC services market, the acquisition will provide growth for Service Experts, as well, by using Enercare’s rental model.
“In Canada, it’s very common for consumers to rent their water heaters, air conditioners, and heating systems; whereas, in the U.S., that’s not necessarily a top-of-mind approach,” Boxer explained. “Over the next year or so, we will be introducing the rental model as an option for people in the U.S. From understanding the Canadian market, we know renting can be an attractive proposition for a lot of people, and we see that as a tremendous area of growth for us.”
Additionally, both companies will benefit by sharing best practices, Boxer noted. “Enercare is a very well-run company. Culturally, it’s very close to how we run the company. Having the ability to share best practices is always a great opportunity to help a company improve.”
Publication date: 5/30/2016