Minority Recapitalization Case Study
The Business
Founded in 2000 by the Biles family and headquartered in Nashville, Tennessee, J&J Services, Inc. (“J&J” or the “Company”) is a second-generation family-owned business providing roll-off dumpster and portable toilet rental services to an expansive base of residential, commercial, and demolition customers. Driven by the Company’s highly responsive, customer-centric service approach, J&J has longstanding relationships with regional and national contractors operating throughout the rapidly growing Nashville and Middle Tennessee markets.The Transaction
J&J was introduced to Main Street by an Atlanta-based investment bank advising the Company on a sale process. Prior to the transaction, co-founder John Biles, Sr. had retired from the business and his son, John Biles, Jr., had assumed full day-to-day managerial responsibility. With the bulk of their wealth tied up in the Company and a second generation of leadership driving strong growth, the Biles family sought a transaction that could (i) facilitate a liquidity event for John Biles, Sr., (ii) allow for continued leadership and controlling equity ownership for John Biles, Jr., and (iii) provide the Company with a long- term capital partner and strategic advisor to pursue future growth initiatives. Previously unaware that a minority recapitalization option existed in the marketplace to meet their transaction objectives, the Biles family ultimately chose to partner with Main Street over competing majority recapitalization and full sale proposals from other financial and strategic parties.
Main Street’s initial investment consisted of a senior secured term loan and minority equity investment which provided 100% of the capital necessary to facilitate the recapitalization of the Company. Main Street’s unique debt and equity structure allowed the Biles family to retain financial and operational control of the Company, while providing them with desired liquidity and a long-term capital partner to support continued growth.
The Results
Before Main Street Partnership
- With the bulk of their personal wealth tied up in the Company, the Biles family sought a liquidity event without surrendering operational control of the business
- J&J’s management team sought a partner with a long-term investment horizon and the ability to fund future acquisitions and other growth initiatives
- No member of management outside of the Biles family had equity ownership in the Company
After Main Street Partnership
- The Biles family achieved desired liquidity to complete estate planning while retaining financial and operational control of the Company
- Main Street’s permanent capital base and flexible exit strategy with no defined investment horizon provides a long-term capital partner to support future growth efforts
- In conjunction with the transaction, an equity incentive plan was established to allow for senior members of management to participate in equity upside
Transaction Summary
Company
- Family owned and operated
- Established market leader with strong growth trajectory
- Meaningful opportunities for geographic and service offering expansion
Transaction Type
- Minority Recapitalization
- Estate and succession planning
- One-stop financing
Original Investment
- $31,200,000 (debt and equity)
Investment Structure
- Senior secured debt
- Minority equity investment