AIR-Serv Group

TOP CALIBER CEO

Wind Point partnered with CEO Greg Muldoon to acquire AIR-Serv Group (“AIR-Serv”).  Prior to AIR-Serv, Greg was an Executive Vice President and COO at Browning Ferris (“BFI”), at the time the second largest waste management company in the world, responsible for over $4.5 billion in sales. In addition, Greg was the SVP of Business Development at BFI.  In this role, Greg and his team completed over 200 acquisitions, many of which were small, family run businesses similar to the dealer network of AIR-Serv.  Wind Point was introduced to Greg Muldoon by EAP Chuck Kepler.

UNDER-MANAGED MIDDLE MARKET BUSINESS

AIR-Serv, headquartered in Minneapolis, was the largest operator of freestanding coin-operated tire-inflation and vacuum vending machines in the United States.  AIR-Serv owned and operated over 32,000 air vending machines and maintained exclusive air vending service contracts with over 90 major national gas station and convenience store chains.  AIR-Serv also manufactured and operated coin-operated tire inflation, vacuum and jet wash machines in the United Kingdom.  Wind Point acquired AIR-Serv in 2003 for $153 million, or 7.6x pro forma TTM EBITDA.

Prior to Wind Point’s ownership, AIR-Serv was a roll-up of smaller, local air vending businesses that were not properly integrated.  The management team had no significant national sales or route management expertise.  As a result, AIR-Serv had experienced limited organic growth and significant operating inefficiencies.  In addition, its CEO sought to retire upon completion of a sale process.

PATH TO VALUE CREATION

Wind Point and Greg Muldoon identifed and implemented the following path to value creation that was executed during Wind Point’s ownership:

• Transform the management team.  Prior to Wind Point’s leadership, AIR-Serv was led by a CEO who desired to retire following the transaction and had a home grown management team with no seasoned leaders and no national sales or route management experience.  Under Wind Point’s ownership, AIR-Serv recruited a new CFO, controller and three regional vice presidents (former BFI employees) who brought extensive experience in managing route-based, capital intensive businesses.

• Install new organic machines.  Prior to Wind Point’s ownership, AIR-Serv suffered from 1% - 2% annual organic machine growth and high machine turnover.  During Wind Point’s leadership, AIR-Serv won national account contracts with BP, Shell and Speedway, grew average annual new machine growth to 11%, and reduced machine turnover from 10% to 5%.

• Increase revenue per machine.  Prior to Wind Point’s ownership, AIR-Serv experienced flat revenue per machine growth and had limited controls on theft and vandalism of machines.  During Wind Point’s ownership, AIR-Serv initiated a vend price increase from $0.50 to $0.75, increased revenue per machine from $125 to $137, and installed concrete vaults on 6,800 machines to reduce theft and vandalism.

• Complete add-on acquisitions.  Prior to Wind Point’s ownership, AIR-Serv had 40% market share in a highly fragmented industry with over 50 competitors.  Under Wind Point’s ownership, AIR-Serv completed 25 acquisitions totaling $12.9 million of EBITDA, with an average acquisition multiple of 4.7x EBITDA, and grew market share to 65% (10x larger than its next largest competitor).

COMPANY FINANCIAL RESULTS

Wind Point grew revenue by 77% and EBITDA by 22% during ownership.