Diversified Solutions, Inc. Acquired by Crestone Services Group
In 2014, Aaron Larkin had recently sold a communications equipment installation business that he had founded 10 years prior to that. As Aaron began to contemplate his future, he began discussing the idea of starting a business with his longtime friend, Shane Olerich, who had nearly 25 years of experience in the underground utility construction business. Aaron and Shane felt they could combine their individual strengths and experience to start a successful business together. They formed Diversified Solutions, Inc. (“DSI”) in Phoenix, Arizona in 2014.
Building off of Shane’s expertise in underground construction and field operations, and Aaron’s strong business acumen, DSI was focused exclusively on installing utility lines and fiber optic cable. While DSI quickly began building client relationships in the Phoenix area, Shane began leveraging contacts in his home state of Montana to source new business. As a result, DSI quickly became operational in both states.
DSI grew steadily by building a positive reputation based on high quality work. As they gained recognition as a reliable subcontractor, DSI began competing for larger contracts as a prime contractor. At the same time, DSI had shifted nearly its entire focus to the installation of fiber optic cable due to increasing demand.
By 2019, DSI was operating at maximum capacity. Due to a nationwide shortage of qualified labor and the proliferation of new communication technology, there was more work available to them than they could take on. While they had continued to build their team slowly, they wanted to find a way to grow capacity to better serve existing clients and take on projects with new clients.
DSI continued to see their backlog and pipeline grow. Aaron and Shane saw an opportunity to more than double their revenue each of the next two years. However, they knew they would need a strategic partner to help them increase their capacity. Because they were still young and motivated, Aaron and Shane also wanted to continue leading DSI and retain partial ownership. After discussing their challenges and objectives with an advisor, Aaron and Shane were referred to Mariner Capital Advisors.
Initial research performed by Mariner Capital Advisors showed that, despite the economic conditions caused by COVID-19, M&A activity in the industry was fairly strong and was being led by a number of companies executing aggressive roll-up strategies. Confident in our ability to produce results, Mariner Capital Advisors launched a full-scale sell-side M&A process on behalf of DSI during the summer of 2020.
Because Aaron and Shane’s choice to sell DSI was motivated by the desire to increase capacity to achieve further growth, Mariner Capital Advisors focused its search for prospective buyers on those that had not only been actively seeking acquisition opportunities, but also possessed the requisite scale to provide the level of support sought by DSI. Given our client’s desire to retain some ownership, we also paid special attention to companies that we thought would provide Aaron and Shane the best opportunity to grow the value of their remaining equity.
Mariner Capital Advisors’ efforts attracted the attention over 30 prospective buyers, including some of the most notable names in the industry. After advanced discussions with over a dozen interested parties, DSI received multiple offers, including two competing offers from parties that met all of the criteria that Aaron and Shane were searching for in a prospective buyer.
In early March 2021, Mariner Capital Advisors successfully completed the sale of DSI to Crestone Services Group (“Crestone”), a Denver-based company specializing in the installation of electric, gas and communications infrastructure. As part of Crestone, DSI will retain its brand identity and continue to be led by Aaron and Shane, who remain partial owners.
By working collaboratively throughout the closing process, Crestone quickly showed its willingness and ability to provide the support and resources needed to help grow DSI. In addition to providing those additional resources, Crestone will also absorb certain back-office and administrative functions, allowing Aaron and Shane to spend more time on their favorite aspects of running the company.
This document is for informational use only and may be outdated and/or no longer applicable. Nothing in this publication is intended to constitute legal, tax, or investment advice. There is no guarantee that any claims made will come to pass. The information contained herein has been obtained from sources believed to be reliable, but Mariner Capital Advisors does not warrant the accuracy of the information. Consult a financial, tax or legal professional for specific information related to your own situation.