What Does the Triwater Holdings Acquisition of LMK & Perma-Liner Mean for the Lateral Market?
By Sharon M. Bueno Apr 12, 2013
Since the announcement came at the end of January, the trenchless community has been buzzing about the deal that put two key lateral players under the same parent company. Once rivals, now they are colleagues: LMK Technologies and Perma-Liner Industries.
Triwater Holdings, a Chicago-based water treatment and infrastructure company backed by Bolder Capital LLC, announced Jan. 28 that it had completed significant investments in LMK Technologies and Perma-Liner Industries — two market-leading companies for trenchless rehabilitation of water and sewer infrastructure — placing them under Triwater’s umbrella.
I spoke with the principals involved in the deal — Triwater chairman and CEO Mike Reardon, LMK president Larry Kiest Jr. and Perma-Liner president Jerry D’Hulster — at the recent Pumper and Cleaner Expo in Indianapolis to get their perspective on the impact the acquisitions will have on the competitive and growing lateral market and what it means to their companies.
LMK Technologies, based in Ottawa, Ill., is recognized by many municipalities and engineering firms as an innovative leader for trenchless technologies for the renewal of sewer lateral infrastructure. Founded in 1993 by Kiest, LMK holds more than 90 issued national and international patents and has authored two specific ASTM standards (ASTM F2561-11 and ASTM 2599-11) for its advancements in trenchless pipe and sewer repair.
Perma-Liner Industries, based in Clearwater, Fla., has North America’s largest distribution network of plumbing and drain cleaner contractors for cured-in-place pipe (CIPP) lateral rehabilitation and mainline sewer repairs. Established in 1998 by D’Hulster, Perma-Liner has significant intellectual property assets and more than 1,000 certified installers of its technology with a strong international distribution network.
With the deal, both Kiest and D’Hulster remain presidents of their respective companies and the companies will run autonomously. Still to be worked out are the strategic plans for each of the companies’ products and technologies.
As seen at the recent Pumper Show, the lateral market is becoming a force in the trenchless industry, with several companies unveiling new lateral equipment and at least one more joining the fray with its inaugural lateral lining equipment efforts. This niche sector of the trenchless market is definitely on the rise — and for good reason as the laterals continue to age, causing problems with inflow and infiltration (I/I).
“We see the market potential in the lateral market and to address I/I,” Reardon says. “We saw the opportunity to work with a brilliant person in Larry [Kiest] whose technology and knowledge of the industry is unequalled and in Jerry [D’Hulster] who has developed a great distribution network of local plumbers and local providers. These are the two leading companies in the lateral business.”
Reardon further noted how the two companies complemented each other through LMK’s municipal market audience and Perma-Liner’s plumbers and local providers network.
Reardon is no stranger to the water and wastewater industry. Prior to joining Bolder, Reardon served as president and COO for Culligan and Everpure. Before Culligan, he was a founding executive of U.S. Filter, a former Fortune 300 company that led the consolidation of the global water and wastewater industry, across industrial, municipal and consumer sectors and facilitated the company’s acquisition by Vivendi (now Veolia) for more than $8 billion.
These two companies provide the industry’s most extensive range of trenchless equipment, products and technologies used for the repair and rehabilitation of infrastructure utilizing CIPP technology, Reardon says.
For Kiest, the deal with Triwater just made good business sense at a time when the lateral market is on its way up and his company was on the precipice of growing as well. He needed help to make his growth plans successful. “We were in the right place, at the right time. I had taken LMK as far as I could but I knew we would continue to grow,” he says. “I needed management help to bring discipline to the business and the capital to expand.”
D’Hulster views Triwater’s investment in Perma-Liner as a referendum on what the company has built to date and what it is projected to produce in the future, which includes expanding into the municipal market with its Top Gun mainlining system and Steam Cure Point Repair System. “Those systems are directed at the municipal market,” he says.
“We are excited about being a part of the Triwater Holdings’ group,” D’Hulster says. “They are basically buying our growth and buying who we are and investing in our growth long-term. What’s going to benefit Perma-Liner as a company is that we are going to be able to broaden our technology and marketing, and be able to put more tools into our installers’ toolboxes, as well as grow our installers worldwide.”
Kiest and D’Hulster say they are working with Triwater Holdings to work out the synergies of each company and figure out what is the best avenue to use the technologies for their existing installer bases.
LMK and Perma-Liner had been involved in a few lawsuits against each other over the years, involving the use of intellectual property. Both men says those legal issues are behind them and they are moving forward to strengthen their products and networks. The lawsuits were settled prior to the investment deal with Triwater. Perma-Liner is now licensed to use LMK’s lining method for cleanouts.
Kiest is looking forward to what’s to come for LMK and the lateral market. “We are going to grow and invest in other businesses,” he says. “Lateral rehabilitation is more significant than the mainlines right now. There has been a big swing in the market. [LMK’s and Perma-Liner’s] main focus is serving the industry by raising the bar on training, certification programs and different channels for patented technologies.”
“We are extremely pleased to work with the two leaders in the trenchless sewer industry to provide capital and assist with their growth plans,” says Reardon. “Demand is increasing for trenchless solutions to the world’s rapidly deteriorating water and sewer infrastructure problems. These solutions require creativity and reliable access to innovative technology. Our investment in capital and management will enable these two market leaders to accelerate their growth plans to provide more of their proprietary solutions to more customers in North America and around the world.”
According to Reardon, these two companies, on a combined basis, comprise the most comprehensive array of products and technology in the trenchless industry, covering everything from laterals and manhole rehabilitation, to mainline sewer repair and proprietary gasket seals. They also have the industry’s broadest distribution network of installers/contractors and the most extensive array of intellectual property, providing the most innovative no-dig solutions. The companies will continue to operate independently, to address the specific needs of their respective customer bases, market channels and individual growth plans. However, the companies may share certain intellectual property assets and “know how” to satisfy their respective customer requirements under licensing agreements.
Sharon M. Bueno is managing editor of Trenchless Technology.