Stability Plus: Investors Seeking Growth and Steadiness in Infrastructure

Companies that combine rock-solid stability with well-established avenues for above-average growth generally attract strong buyer attention. That combination is even more appealing to buyers now that new federal infrastructure spending may finally materialize.

“We’ve seen the combination of stability and growth attract buyers to several industrial companies—most recently Potters and Ennis Flint,” says Patrick McNulty, a managing director in the Harris Williams Industrial Group.

gettyimages-931348468.jpgMore broadly, says McNulty, infrastructure’s natural diversity provides a wide range of opportunities, including in utility services, transportation systems, erosion control, wastewater management, and many others. 

“Buyers continue to come to us looking for assets linked to transportation infrastructure,” says Jeff Burkett, a managing director in the Transportation & Logistics Group. “Our recent sales of Carolina Marine Terminal and Appalachian Railcar Services are great examples of the strength of that interest. It’s even more pronounced when there’s a growth story to tell, which potential legislation would certainly help to strengthen.”

“We saw intense attention from buyers when Area Wide Protective was up for sale,” reiterates Drew Spitzer, a managing director in the Energy, Power & Infrastructure Group. “Its link to infrastructure and its solid long-term growth are timeless attributes, and the prospect of strengthened industry fundamentals is exciting as the company embarks upon the next phase in its evolution.”

Beyond the Highway

Besides embodying this type of asset, Potters and Ennis Flint have several factors in common. Both are established leaders in their respective spaces. They both occupy strong positions in inherently stable, infrastructure-linked end markets, yet they also provide avenues for above-market growth for their buyers.


Potters is a leading glass microsphere supplier in North America, Europe, and Latin America. Its products provide retro-reflectivity in road safety markings, and its sales had been steady across economic cycles, including a year-over-year 7% increase during the first half of 2020. Potters also enjoyed a strong position in the $4.5 billion transportation safety industry, benefiting from ongoing, nondiscretionary spending on road maintenance and new road construction.1

In addition, as a leading producer of engineered glass materials (EGM), Potters stood to benefit from growing demand for this low-cost, environmentally friendly functional additive. For instance, EGM is increasingly used to strengthen materials and reduce their weight, opening up growth opportunities in the automotive and construction sectors, as well as many others.

Like many other assets we are following in the space, Potters benefits from the powerful combination of stable cash flow and higher-growth prospects. “While accelerated growth from a spending bill may be tempered by well-defined maintenance demand, we would expect applications for enhanced safety measures like wider pavement markings to increase meaningfully,” says John Lautemann, a director in the Industrials Group. 


As a world leader in pavement markings and traffic safety solutions, Ennis Flint’s revenue was closely tied to nondiscretionary spending on road maintenance and construction. Also, like Potters, it brought its buyer more than stability.

“In addition to this steady source of revenue, Ennis-Flint brought PPG substantial growth potential,” explains Ty Denoncourt, a director in the Industrials Group. “It had a demonstrated track record as the consolidator-of-choice within the traffic safety industry and established a foothold in mobility solutions, which could figure prominently in a potential infrastructure bill.”

In particular, Ennis-Flint focused its M&A strategy on the intelligent transportation systems (ITS) opportunity, which leverages technology to improve safety, monitor conditions, and reduce traffic congestion. Growth of the ITS market will be driven by the replacement of aging infrastructure and the burgeoning need to connect, monitor, and manage intersections. With an average replacement cycle of approximately 15 years, around 70% of the installed base of roughly 350,000 traffic cabinets in the U.S. is outdated, implying significant near-term demand for new traffic control components.2


The good news: Buyers don’t have to trade stability for growth when pursuing opportunities in the infrastructure sector. The less-good news: These assets can be difficult to find, and competition among buyers will be fierce. Early action and farsightedness can provide an advantage, but both require deep industry knowledge and relationships to parse the growth opportunities from the simple commodity suppliers.

“You have to go deeper than the company’s current offerings, and see the potential new applications for those products, or the growth that can be achieved via M&A,” concludes McNulty. “It’s not easy, but finding these diamonds in the rough drives dividends worth the effort.”

To learn more, please contact our senior bankers.


Published March 2021
1. Institute of Transportation Engineers, Industry Consultant, EDI & Management Estimates.
2. ibid
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