Alta Equipment Group to Acquire Ecoverse Industries for $59MM, Creating Business Segment

October 19, 2022, 07:18 AM

Filed Under: Mergers & Acquisitions

Related: Alta Equipment Group, Mergers & Acquisitions, Ryan Greenawalt

Alta Equipment Group Inc. announced it has entered into a definitive agreement to acquire Ecoverse Industries, LTD, a full line distributor of industry-leading environmental processing equipment headquartered in Avon, OH, with 15 sub dealers throughout North America.

“The acquisition of Ecoverse is exciting for our business as it represents our first investment into large-scale equipment distribution, giving us the master dealer rights to distribute best-in-class environmental equipment to dealers and customers throughout North America,” said Ryan Greenawalt, Chief Executive Officer of Alta. “Ecoverse has a long standing track record in the environmental processing equipment sector as a distributor of high-end equipment which is used in biofuel, composting, and various waste and recycling applications. The Ecoverse acquisition immediately positions Alta as an industry leader in a sector where demand for eco-friendly waste solutions and recycling continues to grow. We welcome Ecoverse to the Alta family.”

Strategic and Financial Highlights

Exclusive distribution rights to North America for European equipment OEMs, including Doppstadt, Backus, Backers, and Tiger Depackaging products.
Increasing size of equipment field population in North America will provide for future parts and service growth opportunity.
Ecoverse generated approximately $64.3 million in revenue, $10 million in net income, Adjusted EBITDA of $10.1 million, and $9.7 million of adjusted pre-tax net income for the trailing 12-month period through July 2022.
Given Ecoverse’s asset-light distribution business model and minimal maintenance capex requirements, the Company expects the acquisition to be highly accretive to the Company’s EBITDA to cash flow conversion and earnings per share ratios.
Deal is structured as an asset acquisition allowing for step-up in tax basis of assets acquired.

Additional Transaction Details

The purchase price includes $42.5 million in cash, $2.5 million of Alta common stock and a $6.0 million seller note, at close. In addition, the purchase price includes contingent consideration in the form of an earn-out whereby sellers can earn an additional $4.0 million of Alta common stock and $12.0 million of cash over a five-year period subject to future EBITA growth.
To the extent EBITA remains flat at July 2022 trailing twelve-month levels throughout the earn-out period, the total purchase price will be $59.0 million ($52.5 million in cash and $6.5 million in stock). Other iterations of the ultimate purchase price range from $51.0 million to $67.0 million based on future EBITA performance.
Ecoverse’s brand name, employees, and management team will remain in place post-close.
The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2022.
Including Ecoverse, since the Company’s initial public offering in 2020, Alta has completed 13 acquisitions which have contributed $440.3 million in revenue, and $52.5 million in Adjusted EBITDA.

“This is a huge win for Ecoverse and our customers,” said Ecoverse President Hugh Fagan. “The importance of environmental processing equipment to the organics and waste industry is now well-established, and Alta has recognized the value we have created over the years. Alongside their forward-thinking leadership we developed a sound strategy within our market, and are very excited to fulfill this role as part of the Alta family.”

Established in 2001, Ecoverse has grown to include eight equipment brands sold and serviced throughout the United States and Canada within an exclusive distribution network, and further supported with regional product specialists in each territory. As part of the Alta Equipment Group, Ecoverse customers can expect an increased focus on parts, service, training and machine uptime coupled with an expanding solutions-based offering of cutting-edge environmental equipment. With the expanded presence of Alta’s geographic footprint and resources, this further solidifies Ecoverse’s brand reputation as the industry’s leading organic and environmental material processing expert.