How Clairvest Is Making Positive Changes In Canadian Communities
Clairvest Group, Inc., a Toronto-based private equity firm, takes the 2018 CVCA Private Capital Regional Impact Award for its investment partnership with Kitchener-based CRS Contractors Rental Supply. The 2018 CVCA Awards are sponsored by Alberta Enterprise.
As part of the team that founded CRS Contractors Rental Supply back in 2000, Steve Fay said their goal was to get back to the basics in the rental equipment business, including putting customers first.
CRS was launched by Fay and seven of his former colleagues at BNR Equipment, which was purchased by United Rentals in 1998.
“We figured if we could bring it back to the customer being number one, we could make a go of it,” said Fay, who went on to become chairman of CRS before it was purchased by Sunbelt Rentals last year.
CRS started with four locations in each of Barrie, Kitchener, Ottawa and Owen Sound, Ont. and in just over a decade grew to 21 locations and about 250 employees across the province. Along the way, CRS had built a reputation for providing great customer service, which caught the attention of private equity firm Clairvest Group.
In 2012, Clairvest Managing Director Mitch Green was at a rental equipment show in Toronto in search of the best companies in the market. The name most people responded with was CRS, one of the largest independent operators in the province.
“Once we got to know them, we quickly identified that they were a best-in-class operator because of their operating and return on capital metrics. Their reputation for customer service and how they treat their employees was also impressive,” Green said.
Green said CRS was also a good fit with Clairvest’s business model, which is focused on owner/operators seeking financing and advice to help them reach the next stage of growth.
In January 2013, Clairvest invested CAD $39.5M in CRS for a 52% ownership stake, with a goal of helping to further grow the business, in part by improving its organizational structure.
“Our role was really to help build the team,” said Green, whose firm helped CRS hire key leadership roles in IT, human resources, marketing and safety. Clairvest also assisted with expansion plans, though “the CRS team made it happen day-to-day.”
Fay said they liked Clairvest’s approach and the fact that the firm understood the rental equipment business.
“We had been approached by several strategic and private equity companies, but we never really found the right fit until Clairvest,” Fay said. “Also, they knew the business. They learned about it before they even approached us. A lot of companies buy and then learn the business.”
Fay and his team also liked that Clairvest wasn’t coming in to try to take over operations, but instead focus on improving their company structure to help drive more efficient growth. “Mitch was very clear. He said,” You guys know what you’re doing. We’re not going behind the front counter and dealing with that side of the business,” Fay said. “On the management side we needed some structure, and we knew that.”
“It was a really great team that took the time to know their communities … and had an impact on them.”
As the company continued to successfully grow operations, takeover offers started to come in. In the spring of 2017, Clairvest brought in Catalyst Strategic Advisors as an exclusive strategic and financial advisor to CRS and its board to evaluate its options.
After a short review period, CRS decided to do a deal with Sunbelt Rentals, the North American business of Ashtead Group plc. On Aug. 1, 2017, Sunbelt closed the deal to buy CRS for C$287 million plus a potential earn-out. CRS was Sunbelt’s first acquisition in Eastern Canada and become Sunbelt’s operational platform in Ontario. Clairvest’s proceeds on the sale of CRS were C$128 million, against its original investment of C$39.5 million.
Fay said they chose the Sunbelt offer in part because of how they planned to run the operation as part of their larger organization.
“We wanted to make sure our new owner wasn’t going to come in and start slashing,” said Fay. “What’s more, their upper management seemed to have the same values and focus on people and customers as CRS did, so it aligned well.”
The deal was the 2018 winner of the CVCA Regional Impact Award, which recognizes member firms whose investment has positioned their portfolio company to make a meaningful mark within the community and the broader business ecosystem. Winners of this award are committed to making impactful investments to help fuel job creation, diversity of talent, and community engagement.
CRS expanded to 30 branches when the deal closed, and upsized five of its existing locations, which together helped grow the overall employee count to 450 from about 250 at the time of Clairvest’s investment.
Also, while the rental equipment industry is heavily male-focused, about 40 per cent of the corporate leadership roles at CRS were held by women at the time of the deal with Sunbelt. CRS was, and still is, actively engaged in the communities where it operates.
“The deal is a great example of the Clairvest business model,” said Green. “We were partnering with folks that were shareholders and operating the business day-to-day. Much of our competition was not. That’s why CRS consistently won in the market. It was a really great team that took the time to know their communities … and had an impact on them.”