Water Services: M&A Momentum Across the Value Chain

Featured professionals: John Arendale, Eric Logue, Luke Semple, Greg Waller, Matt White

Many water-related themes are generating growth and investment potential for companies throughout the value chain. For example, limited funding for water and wastewater assets has established a sustained, nondiscretionary need for maintenance and improvement. At the same time, municipalities and utilities are increasingly outsourcing noncore functions like water and wastewater management. And with evolving regulations, aging infrastructure, accelerating digitalization, and more rigorous compliance requirements, oversight of these complex systems is becoming even more stringent.

In addition, there’s an emerging market for treating private and public bodies of water for long-term health, usability, cleanliness, and recreation. This is creating a significant opportunity for sophisticated providers to grow rapidly and benefit from greater outsourcing of services.

Given these trends, demand will remain strong for services, products, and technology that support the water, wastewater, and water treatment ecosystem. “The outlook is bright for a diverse group of companies serving essential water and wastewater systems,” says Greg Waller, a managing director in our Energy, Power & Infrastructure Group. “Investors are paying particular attention to businesses facilitating the repair, enhancement, and expansion of these assets, as well as companies providing water treatment services to municipal, commercial, and residential customers.”

Harris Williams has played a meaningful role in the sector’s surging M&A activity. Below, we share recent clients that illustrate the sought-after businesses and M&A opportunities across the water landscape.

Jones Lake Management

Jones Lake Management provides science-based lake and pond management services with an attractive recurring revenue model. The company leverages deep expertise to serve a diverse base of residential, commercial, and municipal customers at scale. “Through its asset-light model, high customer retention, and high-quality, biologist-led service delivery, Jones Lake Management has become a leader in an appealing market with growing demand for specialized aquatic solutions,” says Brent Spiller, a managing director in our Consumer Group.

“Jones Lake Management is a differentiated company in a fast-growing residential and commercial services category,” adds Spiller. “It has the right business model, team, and growth strategy to capture significant whitespace and become a national platform in the segment.”

United Flow Technologies

United Flow Technologies brings mission-critical process equipment, pumps, valves, and automation solutions to the water and wastewater sector. Its national scale, combined with regional density and engineering expertise, has established the business as a one-stop shop, streamlining an otherwise fragmented and inefficient procurement process for its customers.

“United Flow Technologies has built a scalable platform with a demonstrated track record of both organic and inorganic growth,” says Matt White, a managing director in our Energy, Power & Infrastructure Group. “With its comprehensive product portfolio, the company has all the pieces in place for continued long-term expansion.”

AlpHa Measurement Solutions

AlpHa Measurement Solutions manufactures liquid analytical sensors and instrumentation that generate intelligent, actionable insights across an array of parameters. Through its in-house engineering and chemistry capabilities, the company designs, develops, and produces custom liquid sensing solutions while continuously advancing its products to better serve customers. AlpHa’s sensors are also critical to water and wastewater systems and have regular replacement cycles, creating barriers to entry, predictable recurring revenue, and strong customer retention.

“Industrial sensor and analytical measurement solutions offer defensive characteristics and clear growth potential, both of which are very appealing to investors,” says John Arendale, a managing director in our Industrials Group. “This is especially true where applications demand digital capabilities with precise analytics to control sensitive processes, and AlpHa is a great example of that opportunity.”

Mott Corporation

Mott Corporation offers highly engineered and custom-designed flow control and filtration solutions for vital applications across the water and wastewater reclamation, semiconductor, and clean energy industries. By collaborating with OEMs to solve complex challenges, Mott’s customized and reliable products become essential components within larger systems, creating high switching costs and a semi consumable replacement cycle.

“Mott separates itself through a culture of innovation, focusing on the most challenging problems in high-growth industries,” adds Eric Logue, a managing director in our Industrials Group. “This, combined with the tight tolerances of its solutions and the semi-consumable nature of its products, creates a valuable business model that’s attractive to investors.”

M&A Continues to Flow

Opportunities within water, wastewater, and water treatment will continue to capture investor attention, with leaders in the sector benefiting from essential, ongoing demand, sticky customer relationships, high barriers to entry, and predictable reoccurring revenue.

Going forward, a variety of water-related services, products, and technology will be well positioned for growth. “There are many ways for investors to capitalize on this favorable environment, and we expect strong interest for differentiated businesses across many segments,” says Luke Semple, a managing director in our Energy, Power & Infrastructure Group.

To further discuss M&A across the water ecosystem, please contact our senior professionals.