Maxim Crane sponsor taps Goldman to explore sale, sources say

Provided exclusively by Mergermarket

Platinum Equity has retained Goldman Sachs to explore a sale of its portfolio company, Maxim Crane Works, according to three people familiar with the matter.

The Bridgeville, Pennsylvania-based lift equipment rental company generates approximately USD 170m of EBITDA and could fetch north of USD 1bn, according to a fourth person familiar with the matter.

Platinum and Goldman Sachs declined comment.

According to the first person, banks pursued mandates for an advisory role this spring. Goldman advised Maxim in 2008 when it sold to Platinum Equity for approximately USD 425m.

In May, Maxim made two acquisitions for undisclosed sums: Indianapolis, Indiana-based Poindexter Crane Services and Orlando, Florida-based provider of heavy hauling, specialized rigging and crane services, Crane Rental Corporation.

Two of the people said the buyer pool for the business will likely be dominated by financial sponsors. If sold, the second person said he expected the company would trade at a multiple “significantly south” of where TNT Crane & Rigging traded.

First Reserve announced it acquired Houston, Texas-based TNT Crane & Rigging from Odyssey Investment Partners for an undisclosed sum in October 2013. This news service reported that the company was sold at approximately 8x EBITDA, in line with the reported figure of USD 800m.

The first person said he expected the company might be comped to NESCO, which Platinum sold at the tail end of 2013 to Energy Capital Partners for an undisclosed sum. According to a Moody’s report, the deal was valued at approximately USD 875m.

One of the people said the NESCO deal was struck at a multiple in the 8x ballpark, several turns above where Platinum purchased Nesco from Hammond, Kennedy, Whitney & Company in 2011.

Other comps could include BlueLine Rental, formerly known as Volvo Rents, and Miami, Florida-based Neff Corp (NYSE:NEFF). Platinum Equity completed the purchase of BlueLine last year for USD 1.1bn.

Maxim would likely sell at a discount to industry bellwether, United Rentals (NYSE:URI), one of the people said. The Stamford, Connecticut-based company trades at 8.8x EV/EBITDA.

The same person said he expected Maxim might angle for an 8x multiple, although buyers could be closer to 6x. “The truth is probably somewhere in the middle.”

General challenges across the rental space that could weigh on prospective suitors include struggles on pricing and rate growth, said another of the people. “And there are some real questions at to what stage of the cycle we’re in. We may be further along than people expected,” said the same person.

Moreover, Maxim serves various industries on projects that include oil refineries, coal burning and nuclear power plants, wood processing plants, and heavy highway and bridge placements. Exposure to the highly pressured oil and gas industry continues to cause strong headwinds across the equipment rental space.

by Claudia Montoto in Ft Lauderdale

As seen in the mergermarket newsletter on 16/07/2015

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