• American Securities had prior experience in the asset integrity space through ownership of Acuren
• Sponsor anticipates it will continue to invest in Canada in the near-term
• Tariffs are expected to have minimum impact on IGS’ Canadian operations

After exiting industrial technologies company Acuren last July, American Securities was on the looking for an opportunity to re-invest in an asset integrity services business.

The hunt did not take long. Shortly after exiting Acuren, the New York-based private equity firm learned late last summer that another company in the sector was on the market. Integrated Global Services (IGS), a portfolio company of JF Lehman & Company, was working with Houlihan Lokey on a sale process.

American Securities was attracted by what it believed to be IGS’ market-leading products, including a proprietary high-velocity thermal spray solution (HVTS), Michael Sand, a managing director at the firm, told Mergermarket.  The solution is a thermal spray coating process used to apply protective or functional coatings to surfaces to prevent corrosion of equipment used at many facilities.

“What piqued our attention was that they’re an asset integrity solutions business, and when we learned of their penetrating technology, we saw a significant opportunity to grow with their team,” said Sand.

At first glance, the company was smaller than a typical American Securities investment. The sponsor targets firms with EBITDA of USD 50m-USD 200m. IGS had an EBITDA of USD 30m for 2023, according to Sand. Upon closer inspection, however, the American Securities’ team took note of IGS’ technology and the fact that it had consistently grown by around 10% annually.

To dig into IGS’ potential more, American Securities tapped its in-house experts within what it calls its resource group to craft a survey of more than 50 customers. The sponsor also turned to its network of contacts across the industry to get a sense of how its latest target and the services it was providing were received.

The results spoke for themselves. “The survey results were overwhelmingly positive, meeting or exceeding customers’ expectations in every instance, which is pretty rare,” said Sand.

Leaning on Acuren

During management presentations in New York, American Securities leaned on its recent experience with Acuren to demonstrate that it had the combination of knowledge and experience to grow IGS.

American Securities, which has been investing in energy and industrials companies for the best part of three decades, had owned Acuren for just under five years, gaining experience in a business area focused on ensuring that facilities belonging to industrial and energy companies are safe to operate.

In particular, its experience with Acuren in Canada, also a key market for IGS, kept coming up.

During due diligence, American Securities surmised that many of the same facilities it serviced through Acuren were ripe for IGS as well, and that it had the local connections to unlock fresh growth. Under American Securities’ ownership, Acuren had operated an approximately USD 600m revenue business in Canada, compared to IGS’ revenue of less than USD 10m, said Sand.

After prevailing in the sale process, American Securities invested in IGS from its USD 7bn Fund VIII. The deal was done with leverage of between 4-4.5x EBITDA, with IGS’ EBITDA in the high USD 40m range at the time of the transaction, said Sand.

Scope for growth

Building out IGS’ footprint in Canada remains a priority for American Securities, but it comes at a time of heightened uncertainty.

In March, President Donald Trump issued a 25% tariff on a range of Canadian goods on top of a 10% tariff on certain energy products. Uncertainty over tariffs has already put some cross-border deals on ice, and seen deals with exposure to Canada postponed, as reported by Mergermarket.

Tariffs are a minor concern for IGS’ Canadian ambitions, however. Teams in the country have already been making the rounds, meeting customers, and are looking to increase hiring in the country. Most critically, most of the company’s work is aimed at servicing local facilities in a bid to grow revenue on a more recurring basis, which only has minimal cross-border implications, said Sand.

“It’s very important that it’s served by local suppliers for a local environment,” explained Sand. “I don’t think this is one where the tariffs are going to be as impactful because we’re not looking at moving materials across the border.”

Where tariffs could cause a wrinkle is on demand for oil. Since the initial shock from the tariff announcements, concerns about a potential recession have dragged those prices down. The current spot price for oil is USD 62.97 (21 April), down about 11% since Trump announced sweeping global tariffs on 2 April. At the same time, there have been few new facilities constructed in recent years, which could translate into demand for more maintenance services to keep existing ones functional, especially if demand for oil remains robust, said Sand.

The sponsor also has plans to double down on its add-on strategy for IGS. Under its previous ownership, IGS made a few acquisitions, including Liquidmetal Industrial Solutions last October. The aspiration is to continue down this path and broaden the suite of services IGS can provide customers it is servicing.

“We’re very much interested in doing that because we’ve got very good customer intimacy,” said Sand. “We’d like to broaden the suite of services that we can provide, which will give us even more of that advisor role, which is always the place that we’re looking to be.”