Collaborative excellence and operational mastery within the industry.
Overview
Overview
Lower Middle Market Control
Private Equity Investments.
- Cold Bore’s investment and operations professionals have over 100 years of Private Equity, M&A, and Operations experience and have been involved in over 150 transactions representing an aggregate value in excess of $5 billion.
- CBC partners experienced management teams and small business owners with elite military veterans with the goal of establishing enduring companies in attractive Business to Business Services sectors ("B2B").
- Operations Team members work closely with platform C-Suite leadership to effectively drive integration of accretive add-on acquisitions and spur organic growth across the enterprise.
- CBC has completed 35 acquisitions to date, investing a total of $143 million through two private equity funds and various co-investment vehicles.
Differentiated, Execution-Focused
Strategy.
- High-Tempo Execution: Top-down, industry thesis approach combined with core operations/execution principles allowing CBC to efficiently establish platforms with strong management teams and methodically scale via add-on acquisitions.
- Differentiated Approach to Operations: Operations Team leverages Special Operations Forces (SOF) principles and frameworks to drive efficient post-merger integration processes and portfolio company value creation initiatives.
Investment
thesis
- Disciplined focus on high-growth, recession-resistant industries with quantifiable demand drivers and a clear path to value creation.
- Establish integrated platforms with best-in-class management teams, financial reporting, data analytics capabilities, and attractive growth rates, margins, and industry-specific KPIs.
investment
criteria
- Lower middle market, U.S.-based businesses
- $500,000-$5 million of EBITDA
- Large, fragmented, recession and Amazon resistant
- Scale-based multiple arbitrage dynamics
- Stable, recurring, and sustainable margins with high free cash flow conversion rates
current / target
sectors
- Testing, Inspection, & Certification
- Disaster Restoration
- Janitorial Services
- IT Managed Services
- Staffing Services
- Pest Control
investments
Select realized investments
Landscaping services
Performance
- Entry Date: November 2020
- Exit Date: August 2023
- Investment Status Sector:
Trend & Commentary
- Industry-leading revenue mix, retention, and financial metrics.
- 12% and 13% pro forma organic revenue and EBITDA CAGR over investment period, respectively.
- Scaled from $1.5MM to $13MM in pro forma EBITDA via organic and acquisitive growth in less than 3 years.
Speciality pharmacies
Performance
- Entry Date: November 2020
- Exit Date: August 2023
- Investment Status Sector:
Trend & Commentary
- Industry-leading revenue mix, retention, and financial metrics.
- 12% and 13% pro forma organic revenue and EBITDA CAGR over investment period, respectively.
- Scaled from $1.5MM to $13MM in pro forma EBITDA via organic and acquisitive growth in less than 3 years.
sectors
Target sectors
Industry
Size &
Composition
Financial
Profile
M&A
Activity
Commentary
IT Managed
Services
- Revenue: $665B
- Top 5 operators ~ 5% of total industry revenue
- 457k operators
- EBITDA Margin: 15-30%
- FCF Conversion: 95%+
- ~ 800 deals completed in 2022; ~ 340 in H1 2023
- 100+ PE based platforms
- 6.0x-15.0x+ based on scale
- High fragmentation and significant sponsor interest
- An attractive business model featuring sticky, recurring revenue and high switching costs
Janitorial
Services
- Revenue: $90B
- Top 4 less than 5% total industry revenue
- 1M+ operators
- EBITDA Margin: 8-11%
- FCF Conversion: ~88%+
- Market dynamics favor large consolidators
- Ample white space for a highly acquisitive platform
- 4.0x to 12.0x, based on scale
- Significant levels of fragmentation and actionable targets
- Attractive business model with sticky, recurring revenue
Testing,
Inspection &
Compliance
- Revenue: $41B
- 41k businesses
- Top 5 operators <10% of industry revenue
- EBITDA Margin: 20%
- FCF Conversion: 85%+
- Increasing M&A activity
- 6.0x-15.0x
- High fragmentation
- Attractive end market exposure
Disaster
Restoration
- Revenue: $41B
- Three major operators less than 20% of total industry revenue
- 14k industry operators
- EBITDA Margin: 20%; up to 40%
- FCF Conversion: ~95%
- Industry primed for consolidation
- High M&A activity from sponsors
- 4.0x-12.0x+ based on scale
- High fragmentation
- Large industry; highly non-discretionary service
Staffing
Services
- Revenue: $250B
- Top 5 operators <10% of total industry revenue
- 16k operators
- EBITDA Margin: 10-15%
- FCF Conversion: 95%+
- Robust M&A activities from both strategic players and sponsor-backed businesses
- 4.0-10.0x+
- High fragmentation
- Cyclicality moderated by sector specialization (i.e., IT and Healthcare)
Pest
Control
- Revenue: $26B
- 32k businesses
- Moderately concentrated; the top 4 operators account for approximately 30% of the 2022 industry revenue
- EBITDA Margin:15-20% (service mix dependent)
- FCF Conversion: ~90%
- Significant strategic consolidation
- 5.0x-18.0x+ primarily based on scale and financial profile
- Noncyclical, recession resistant, high quality cash flow, attractive EBITDA margin
- Large multiple arbitrage opportunity
IT Managed Services
Size & Composition
- Entry Date: November 2020
- Exit Date: August 2023
- Investment Status Sector:
Financial Profile
- EBITDA Margin: 15-30%
- FCF Conversion: 95%+
M&A Activity
- ~ 800 deals completed in 2022; ~ 340 in H1 2023
- 100+ PE based platforms
- 6.0x-15.0x+ based on scale
Commentary
- High fragmentation and significant sponsor interest
- An attractive business model featuring sticky, recurring revenue and high switching costs
Janitorial Services
Size & Composition
- Revenue: $90B
- Top 4 less than 5% total industry revenue
- 1M+ operators
Financial Profile
- EBITDA Margin: 8-11%
- FCF Conversion: ~88%+
M&A Activity
- Market dynamics favor large consolidators
- Ample white space for a highly acquisitive platform
- 4.0x to 12.0x, based on scale
Commentary
- Significant levels of fragmentation and actionable targets
- Attractive business model with sticky, recurring revenue
Testing, Inspection & Compliance
Size & Composition
- Revenue: $41B
- 41k businesses
- Top 5 operators <10% of industry revenue
Financial Profile
- EBITDA Margin: 20%
- FCF Conversion: 85%+
M&A Activity
- Increasing M&A activity
- 6.0x-15.0x
Commentary
- High fragmentation
- Attractive end market exposure
Disaster Restoration
Size & Composition
- Revenue: $41B
- Three major operators less than 20% of total industry revenue
- 14k industry operators
Financial Profile
- EBITDA Margin: 20%; up to 40%
- FCF Conversion: ~95%
M&A Activity
- Industry primed for consolidation
- High M&A activity from sponsors
- 4.0x-12.0x+ based on scale
Commentary
- High fragmentation
- Large industry; highly non-discretionary service
Staffing Services
Size & Composition
- Revenue: $250B
- Top 5 operators <10% of total industry revenue
- 16k operators
Financial Profile
- EBITDA Margin: 10-15%
- FCF Conversion: 95%+
M&A Activity
- Robust M&A activities from both strategic players and sponsor-backed businesses
- 4.0-10.0x+
Commentary
- High fragmentation
- Cyclicality moderated by sector specialization (i.e., IT and Healthcare)
Staffing Services
Size & Composition
- Revenue: $26B
- 32k businesses
- Moderately concentrated; the top 4 operators account for approximately 30% of the 2022 industry revenue
Financial Profile
- EBITDA Margin:15-20% (service mix dependent)
- FCF Conversion: ~90%
M&A Activity
- Significant strategic consolidation
- 5.0x-18.0x+ primarily based on scale and financial profile
Commentary
- Noncyclical, recession resistant, high quality cash flow, attractive EBITDA margin
- Large multiple arbitrage opportunity
How We Invest
Pick the Right Ground
We opt for sectors where our team’s collective expertise in execution and industry knowledge can help reduce risk while potentially enhancing returns. Essential criteria include the attractiveness of potential acquisitions based on their size, valuation, and quantity, our team’s ability to outperform the competition, and the projected exit multiples for scalable platforms.
Buy & Integrate
buy
We allocate a judicious initial capital to each platform, ensuring flexibility to optimize the risk-to-reward ratio for both the specific platform and our overall portfolio. We maintain a disciplined approach to pricing and evaluate our acquisitions to be positive investments, even without the assumption of multiple expansion.
integrate
Utilizing the collective intelligence of our board, management, and operational teams, we allocate our resources wisely, spotlighting each business’s strengths while alleviating associated risks.
Protect & Grow
protect
Safeguarding the small-business cash flows we acquire is vital. This emphasis on protection naturally increases valuation multiples when these small businesses transition to larger, middle-market platforms. A specialized team-of-teams structure enables us to excel at identifying and mitigating risks, such as key-person dependency, customer concentration, and scalability challenges.
Grow
Utilizing the collective intelligence of our board, management, and operational teams, we allocate our resources wisely, spotlighting each business’s strengths while alleviating associated risks.
Position for Exit
The criteria for an ideal exit will naturally evolve over time, requiring a phased, adaptive approach. We continuously evaluate and reallocate capital to align with market demands and our platforms’ evolving status.
work with us
Business Owners We Works With
Family Offices
Single Family Offices (SFO’s) and Multi-Family Offices (MFO)
Description
Services offered by family offices can range from traditional wealth management, tax planning, and estate planning to more personal services such as concierge, travel coordination, and succession planning. The primary goal is to preserve and grow the family’s wealth across generations while attending to the broader financial and personal needs of its members.
Indicators
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Registered Investment Advisor
Traditional Registered Investment Advisor (TRIA) and Comprehensive Registered Investment Advisor (CRIA)
Description
Services offered by family offices can range from traditional wealth management, tax planning, and estate planning to more personal services such as concierge, travel coordination, and succession planning. The primary goal is to preserve and grow the family’s wealth across generations while attending to the broader financial and personal needs of its members.
Indicators
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Wealthy Individuals
High Net Worth Individual (HNWI) and Ultra High Net Worth Individual (UHNWI) and Multi-Family Offices (MFO)
Description
These individuals often have the financial capacity, risk tolerance, and long-term investment horizon suitable for private equity investments, which are illiquid and can have extended lock-up periods. Due to the complexity and high entry barriers of private equity, HNWIs, and UHNWIs may access such opportunities directly or, more commonly, through specialized wealth management firms, family offices, or private banks that offer private equity fund placements or co-investment opportunities.
Indicators
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Funds of Funds
(FOF)
Description
These are investment vehicles that pool investor capital to invest in a diversified portfolio of multiple private equity funds. They provide investors with broad exposure to the private equity market, diversification, and access to top-tier funds. Institutional capital is typically managed by investment firms, pension funds, endowments, and other large-scale financial entities, and is a key player in the private equity landscape. These entities have the resources to engage in substantial investments and play a crucial role in shaping the private equity market.
Indicators
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Focus
Description
Indicators
Family Offices
Single Family Offices (SFO’s) and Multi-Family Offices (MFO)
Services offered by family offices can range from traditional wealth management, tax planning, and estate planning to more personal services such as concierge, travel coordination, and succession planning. The primary goal is to preserve and grow the family’s wealth across generations while attending to the broader financial and personal needs of its members.
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Registered Investment Advisor
Traditional Registered Investment Advisor (TRIA) and Comprehensive Registered Investment Advisor (CRIA)
Both TRIAs and CRIAs operate with a fiduciary duty, ensuring they act in their client’s best interest. However, the depth and range of their services differ, catering to different wealth brackets and client needs. Potential clients should choose an RIA type based on their asset size, financial goals, and the complexity of their financial situation.
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Wealthy Individuals
High Net Worth Individual (HNWI) and Ultra High Net Worth Individual (UHNWI)
These individuals often have the financial capacity, risk tolerance, and long-term investment horizon suitable for private equity investments, which are illiquid and can have extended lock-up periods. Due to the complexity and high entry barriers of private equity, HNWIs, and UHNWIs may access such opportunities directly or, more commonly, through specialized wealth management firms, family offices, or private banks that offer private equity fund placements or co-investment opportunities.
Lorem ipsum dolor sit amet, consectetur adipiscing elit
Funds of Funds
(FOF)
These are investment vehicles that pool investor capital to invest in a diversified portfolio of multiple private equity funds. They provide investors with broad exposure to the private equity market, diversification, and access to top-tier funds. Institutional capital is typically managed by investment firms, pension funds, endowments, and other large-scale financial entities, and is a key player in the private equity landscape. These entities have the resources to engage in substantial investments and play a crucial role in shaping the private equity market.
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