Deal Snapshot: Solomon Corporation

solomon-2.pngFounded in 1971, Solomon Corporation (Solomon) is a leading provider of repair, remanufacturing and recycling solutions for transformers and related electrical equipment. The company offers utility and industrial clients comprehensive services across the full transformer equipment life cycle.

Solomon was recently acquired by Sunbelt Transformer Ltd, a portfolio company of Trilantic North America. Here, Matt White, a managing director in the Harris Williams Energy, Power & Infrastructure Group, shares his insights on what made Solomon Corporation a standout investment opportunity.

1. What makes this an appealing space for buyers and investors?

White: “There is robust demand for refurbishing, repair and recycling of equipment across power-dependent industries. That demand is being driven by aging electrical infrastructure, increased spending on power transmission and distribution, customers’ increasing focus on reliability, and a continued shift towards outsourcing of mission-critical services.

“Infrastructure and utility investors find this space appealing because of that demand, and because of its steady, cycle-resistant growth. The sale of Solomon represents our fifth outsourced utility services transaction in 12 months, and illustrates the strong interest and deal activity we’re continuing to see in the utility services market.”

2. What made Solomon Corporation particularly appealing to its buyer?

White: “Solomon combines a national footprint with a broad range of capabilities, which enables it to provide a higher level of service than many competitors. Solomon specializes in critical equipment that is needed across the country, serving large utilities, small municipal cooperatives and large industrial users of power. Because of its national scale, infrastructure and breadth of equipment, the company can quickly and reliably serve that network when there is a need.

“Solomon also fills a void in the market between the large OEMs focused largely on selling new equipment and the smaller companies focused on one service or one geography. The company’s breadth of specialized services for used equipment and geographic reach is unique.

“Finally, Solomon was a great fit for Sunbelt, with complementary services and markets that helped create a differentiated platform with national scale.”

3. What advice do you have for other buyers and investors interested in the space?

White: “There are a lot of very interesting niche service providers that are supporting the electric, gas, telecom, utility and infrastructure markets, including equipment repair or refurbishing, test and inspection and technology services. In many of these areas, the market remains fragmented and there is an abundance of demand that tends to be very cycle-resilient. 

“Investors can add scale and sophistication to these businesses through systems and processes and create platforms of scale supporting the broader utility infrastructure landscape. They should look for companies with brand recognition, a good reputation, good margins and specialized services, and that are doing well in a local or regional market, but need capital to expand their model nationally.”

Published August 2019