Sanitors, Inc. Growth Capital and Founder Liquidity Needs met by Recapitalization

Opportunity: Founders’ Retirement

• After building a successful janitorial services company over 15 years from startup to more than $20 million in revenues. Two of the three Sanitors founders plan to retire while the third wants to continue the Company’s expansion
• The competitive environment created a wide range of performance between companies; many had succumbed to lower margin, commodity pricing. By contrast, Sanitors had developed a reputation based on premium service in its markets, catering to the leading office property owners, reducing account turnover and creating substantial opportunity for additional services
• The industry was regionally fragmented. No company controlled more than 5% of the U.S janitorial market. Several attractive acquisitions were available where Sanitors could leverage its reputation and existing customer base
• Issue to resolve: how to fund both the liquidity needs of the two retiring founders as well as potential acquisitions.

Private Capital Solution:

• Summit Partners led an investment by a group (including Management and Mr. Fechtmeyer’s previous fund, TSG Co-investors) that provided $20 million of Equity Capital, augmented by a $30 million Bank Revolver. These were both to be drawn down as needed, thus minimizing dilution while maximizing “deep pockets”
• Built Human Resource and IT infrastructure to accommodate rapid growth through acquisition
• By combining Sanitor’s outstanding reputation for quality with a strong capital partner, it was positioned as a “preferred” acquiror in the industry
• During 1998 through 2002, Sanitors completed 13 acquisitions in janitorial and landscaping and established itself as one of the largest janitorial services companies in the U.S. with over $160 million in sales
• Sold to Cravey, Green & Whalen in 2003