Houston-based Ashbrook Simon-Hartley (Ashbrook) produces wastewater process and equipment solutions primarily for municipalities in the United States and the United Kingdom. Ashbrook dominates the belt-filter-press niche within the wastewater dewatering space.
THE SITUATION
In 2004, Ashbrook was a $50-million Houston-based subsidiary of RWE, a $50-billion German-based utility. RWE concluded that Ashbrook did not fit RWE’s strategy and therefore sought to divest Ashbrook. Ashbrook’s managers wanted to be a part of an independent stand-alone company in which they would be material owners. They therefore asked two of the Dos Rios Partners (i.e. Wayne Patterson and Bo Baskin)—who, at the time, worked for predecessor funds (“the Funds”)–to partner with them in the acquisition of Ashbrook.
INVESTMENT
Together, the Funds and the Ashbrook management team bought 100% of Ashbrook. Each member of the management team personally invested in the company and, separately, participated in a new Ashbrook stock option plan.
POST-INVESTMENT
Bo, Wayne and the management team collaborated on multiple projects to enhance Ashbrook’s value. First, they dramatically improved the company’s working capital efficiency. Second, they pursued and won Middle Eastern wastewater opportunities that its former parent had previously discouraged. Third, they added and integrated a highly accretive bolt-on acquisition.
Later, the 2008-9 economic downturn devastated parts of the wastewater space. In response, Ashbrook used its strong balance sheet to purchase out-of-bankruptcy the United Kingdom’s leading provider of centrifuge wastewater dewatering solutions. As a result, Ashbrook was able to offer customers both of the two most important dewatering technologies (i.e. belt-filter presses and centrifuges), thereby materially enhancing Ashbrook’s competitive position.
RESULTS
By improving its capital effi ciency, Ashbrook was able to recapitalize and return almost 100% of shareholder capital only nine months after the RWE sale. Over the ensuing three years, Ashbrook returned ~3x the original investment. In 2012, the world’s leading centrifuge dewatering company Alfa Laval purchased Ashbrook. Ultimately, the investors—including the management team—earned a total of 8x their original investment.