BY ROBERT P. MADER
Of CONTRACTOR’s staff
HOUSTON — On Friday the 13th of December 2002, Limbach Facilities Services won its independence from Enron as management and private investors bought the company.
FdG Associates, a middle-market private equity firm based in New York, acquired the business and assets of Limbach Facility Services Inc. and its subsidiaries in partnership with Limbach’s current management team. Limbach was ranked as the country’s seventh largest mechanical contractor in the country in CONTRACTOR’s Book of Giants with annual sales of more than $670 million (May 2002, pg. 18).
With the transaction, Limbach and its executive management team regain independence after 16 years of operation as a subsidiary of two different corporations, Vivendi and, most recently, Enron.
The journey to independence started a week before Enron filed for bankruptcy, CEO Steve Wurzel told CONTRACTOR. Limbach management knew the end was near. Limbach’s only tie to Enron was cash flow and bonding. After Dec. 3, 2001, it had neither.
Wurzel and his management team persuaded St. Paul Cos. to protect it from Enron’s creditors with a “picket fence” agreement. In return for pledging its receivables to St. Paul, Limbach received $500 million in bonding from the surety. Wurzel was emphatic about how much the company owes to St. Paul for saving it from being dragged into Enron’s bankruptcy proceedings.
While the bonding was crucial, Limbach had no debtor-in-possession financing so it had to work with its own positive cash flow, Wurzel said.
Limbach then went about the sales process, with Enron’s Business Development Group spearheading the effort. Even though Wurzel and his management team told Enron that they planned to buy the company, they had a management protocol agreement with Enron that said they would buy it as part of a competitive bidding process with other interested parties.
Wurzel took on responsibility for bonding and day-to-day management of the company; Joseph F. Doody, president of the Eastern region, took on chief financial officer duties; and Charles L. Boyd, president of the Central region took on the task of finding an equity partner and banks to put together a proposal.
Limbach chose FdG Associates out of several equity partners, Wurzel said, because it has interests in other construction companies and knows the industry.
FdG put together Limbach Facility Services LLC, co-owned by FdG Associates and 50 members of Limbach management. LaSalle Bank National Association, Harris Nesbitt and Canterbury Capital Partners provided debt financing for the transaction, and St. Paul and Kemper will provide surety bonding.
The consortium went into a competitive auction for the company with six other interested parties and won.
After what Wurzel called “a lot of lawyer hours,” the deal was finalized, Enron received a check and told them goodbye and good luck, he said. The purchase price was approximately $80 million.
“Limbach finally saw the light at the end of the tunnel and passed through to the light,” an obviously relieved Wurzel said. “Twenty-six hundred people get to keep their jobs and Limbach gets to stay in Pittsburgh for another 100 years.”
Mark S. Hauser, managing director of FdG Associates, added: “We are pleased to be partnering with the management of Limbach as the company regains its independence. Together, we intend to further the growth of the company, which today already ranks as one of the 10 largest mechanical contractors in the nation. As with our other portfolio companies, we intend to provide resources, insight and strategic direction to assist the company in realizing its potential.”
Limbach will continue to be guided by its existing executive management team, which has operated the company over the past 20 years. The team is led by Wurzel as chief executive officer, Boyd as Central region president, Doody as Eastern region president, and Martin A. Keyser as executive vice president and general counsel.
“The management team is enthusiastic to be moving forward with FdG as owners of a 100-year-old company, which can now enter its second century stronger than ever,” Wurzel said. “We are confident that our team, coupled with FdG’s proven leadership in growing businesses, will increase profitability and exceed customer expectations by delivering quality construction and related services.”
The Limbach family cashed out in the 1980s when it sold the company to the Anjou International division of French water utility Compagnie Generale Des Eaux, which later changed its name to Vivendi. Affiliates of Enron Corp. acquired Limbach from Vivendi in 1998. The company became a wholly owned subsidiary of Enron Energy Services Operations Inc. through its subsidiary, Enron Facility Services Inc.
FdG Associates describes itself as a private investment firm providing equity capital to North American-based middle market growth companies with sound businesses and unrealized potential. By building a partnership with management and offering problem solving and long-term planning focused around key corporate initiatives, FdG helps companies to achieve their full growth potential and increase their equity value, the firm said.
FdG typically commits $15 million to $30 million in equity to sponsor management buyouts, recapitalizations, and growth-oriented capital investments in private and public companies.
Founded in 1901, Pittsburgh-based Limbach Facility Services LLC provides comprehensive construction services, including mechanical and electrical construction, pipefitting, sheet metal fabrication, plumbing, HVAC service and maintenance, and engineering and mechanical construction management services. The company also provides facility maintenance and other services.
The company offers customers a full complement of value-added design and engineering services across many sectors. With headquarters in Pittsburgh, Limbach maintains established branch offices in 10 locations across the country, some of which operate under distinct, regional trade names including Williard in Philadelphia and Trenton, N.J.; Western Air & Refrigeration in Los Angeles; PBM Mechanical and Marlin Electric in Washington; Performance Mechanical in Atlanta; and Harper Mechanical in Orlando, Fla. Other locations include Boston; Columbus, Ohio; and Detroit.