Overview
Established in 1966, Maine Drilling & Blasting Group (“MD&B”) is the leading provider of specialized drilling and blasting solutions for construction and quarry applications throughout the Northeastern United States.
Bigelow Assignment
Bigelow supported a ten year relationship with the second generation owner-managers of this family-owned business. Bigelow brought regular focus on the drivers of enterprise value in MD&B’s industry, with a view towards positioning the Company for a future capital gain opportunity. With two shareholders (brothers now in their 50’s), plus a 30% Employee Stock Ownership Plan (“ESOP”), the likelihood was high that any acquirer or investor would require their continued involvement for a reasonable transition period. Bigelow devised an engagement architecture that would ascertain if the timing for obtaining a strategic investor was now favorable.
Challenges
Could Bigelow find a strategic investor that would perceive a high value for MD&B’s unique offering of integrated drilling and blasting services? Would a strategic investor be able to see the intrinsic value that MD&B brought, even when the related construction industry was out-of-favor? Would the new investor support maintaining the existing ESOP post-transaction?
“It was a challenging deal and quite a journey that we honestly wouldn’t have been able to make without the assistance and guidance of Bigelow. Still today it challenges people to understand what transpired. It was a great opportunity to leverage an investor that added a financial component into our business with a 51% ESOP, and in addition, then turn around and offer 35% growth of the business because we are going to make a substantial acquisition on the backside of the deal.” William D. Purington, President & CEO Maine Drilling & Blasting Group
“This was not an easy deal, but talk about making my life easier by working with Bigelow. The real reason that this deal closed besides the skill that Bill & his team bring to the Company, was because of the Bigelow team; they never cease to amaze me.” Alan D. MacEwan, Esq., Company Counsel Verrill Dana LLP
Outcome
Bigelow created a rapid competitive process among several world class investors within MD&B’s supply chain, resulting in a very attractive offer from a key supplier to the industry, Dyno Nobel N.A., a subsidiary of Incitec Pivot Limited (ASX:IPL). Dyno Nobel represented a unique fit due to their focus on supplying explosives and related products to the worldwide mining, construction, and quarrying industries. Dyno Nobel also contributed certain blasting operations located in MD&B’s served geography in the Northeast, which solidified MD&B’s leading market position.
The transaction was structured creatively, allowing the existing shareholders to achieve a significant liquidity event, with a structured plan for the existing ESOP to increase its ownership in the future.
By joining the strong Dyno Nobel global consortium of joint venture partners, while keeping existing MD&B management in place, and not unduly burdening the Company’s balance sheet, the shareholders ensured MD&B’s longevity well beyond the original family’s ownership.