How Venture First Partnered
The Transaction
Venture First facilitated the majority buy-out of Scottsdale Construction Systems (“SCS”), a solution provider for steel frame and truss manufacturing in the residential and commercial construction markets. The transaction was for a total enterprise value of $15.4M (4.3x TTM Adj. EBITDA), including $5.7M of total investor capital raised for the deal.
Attractive Core Business
The Company has over 200+ active customers in 80+ countries. Venture First believes SCS will benefit from a market shift to steel framing solutions due to the cost savings / efficiency of steel roll-form manufacturing as well as the long-term sustainability of steel framed structures. The Company’s internally developed machine / software provides a holistic solution for customers with a sticky value proposition that includes a low-cost entry point relative to customers, design software which computes all engineering calculations and checks against regulatory requirements, and no additional charge for unlimited customer support.
Equipment Financing Opportunity
While conducting due diligence on the opportunity, Venture First discovered an opportunity to make the customer’s purchasing decision easier. Many lost sales opportunities were due to the lack of financing options available to the customer. By implementing an equipment financing program, Venture First believes SCS can grow revenue by 25-50% from current levels.
Ripe for Digital Transformation
The built world ($40T in US assets alone) is the largest asset class in the world. According to McKinsey, the built world is the 2nd least digitized sector in the world. Venture First believes SCS is a prime target for digital transformation, including the implementation of phone-home technology for machines and the layering in of machine learning to make the design process more seamless and efficient.
