Precision Pipeline, LLC

Eau Claire, Wisconsin

has been acquired by

MasTec, Inc.

Miami, Florida

Capital Alliance Corporation initiated
this transaction and assisted in its closing.

Precision Pipeline, LLC

Precision Pipeline, LLC builds transcontinental oil and natural gas pipelines in the United States. With the assistance of Capital Alliance, Precision’s shareholders sold their business to MasTec, Incorporated, a publicly traded infrastructure company, for approximately $250 million in aggregate value.

Established by industry veterans, Precision Pipeline exceeded $500 million in revenue in just four years, with an additional $500 million in future contracts. When Precision Pipeline needed a partner to showcase its business, it selected Capital Alliance.

After extensively screening dozens of potential acquirers, Capital Alliance determined MasTec, Incorporated to be the best fit; a company specializing in large-scale infrastructure projects in the fields of communications, public works, and energy, among others. Despite the obvious synergies, connecting these businesses was no simple exercise. A common problem with establishing valuations for companies in the energy sector is that the M&A marketplace can be as volatile as energy commodities, making the evaluation process uncertain. Seasoned companies can be notoriously cautious when valuing acquisitions, and often discount earnings heavily.

Critical to the negotiations was the future of the United States energy markets. Capital Alliance presented the case that the domestic future would be largely dominated by natural gas for both mobility and power generation.  Capital Alliance argued that rapidly growing available reserves had  shifted fuel cost to favor natural gas power generation, along with environmental and political factors.  In a changed energy economy, Precision Pipeline’s sustainability was certain and transcontinental pipeline installation capability was a strategic necessity for MasTec.  It was the detailed case presented by Capital Alliance that eventually overcame MasTec management reservations and successfully bridged the divide in the negotiations.

MasTec increased their initial offer by 41%. The terms of the transaction included a payment to Precision Pipeline of $132 million in cash at closing, and a MasTec assumption of $34 million in debt. Including earn out consideration over a five-year period, the aggregate transaction value will likely exceed $250 million.