THE TRANSACTION:

The Principals of Founders Investment Banking (Founders) acted as lead financial advisor in the sale of Tornado Production Services (Tornado), an oilfield services company. The company was acquired by Professional Directional (ProDirectional), a full-service directional drilling company seeking to expand into completion phase services. ProDirectional is a portfolio company of private equity firm Diamond Castle Holdings.


THE COMPANY:

Based in Orange Grove, Texas, Tornado Production Services is a rapidly growing, multi-basin oilfield services company providing completion fluids and customized engineering services to E&P operators in the United States. Tornado began operations in 2011 and exhibited immediate growth while building one of the strongest reputations for quality service in its industry. Tornado’s blue chip customer base is comprised of some of the industry’s leading operators in Eagle Ford, Permian, Haynesville, & Utica basins.


THE OBJECTIVE:

The Company was founded by industry veterans, Scott Kirchoff and Roger Floyd. Scott and Founders’ long-standing relationship dates back to the strategic sale of Tornado Thru Tubing to Specialty Rental Tools & Supply (now part of Oil States International) in 2003.

Tornado was founded when management identified the increasing significance the completion fluids service line was playing in completing unconventionally drilled wells. Scott and Roger recognized a lack of focus and expertise among current service providers and quickly landed an industry major as a client. Validating their market thesis and expertise, Tornado generated nearly $16M in revenue and over $5M of EBITDA in their second year. During this rapid growth, the Company became increasingly capital constrained and was limited in seizing larger opportunities. Additionally, lacking requisite back-office support, management was increasingly burdened with administrative activities. The Company required increased infrastructure to effectively utilize management in their highest and best uses while capitalizing the company for further growth.

Tornado desired to pursue a transaction with a strategic partner with an industry presence who could provide growth capital and a solid platform to leverage. Furthermore, the owners’ desired limited liquidity to diversify their holdings and to remove personal guarantees associated with the business.


THE SOLUTION:

Founders advised Tornado to seek a strategic sale to achieve the immediate goals of the company while allowing the current owners to achieve liquidity and attain equity with their future partner. Via a thorough assessment of the industry and company, a detailed marketing package was created and distributed to a targeted list of buyers, tailored for Tornado’s goals and objectives. The six month process yielded a valuation at the top of the targeted range and a variety of highly beneficial characteristics, including:

  • Significant liquidity at a strong valuation that allowed the owners to diversify their personal wealth
  • Considerable equity position in ProDirectional ensuring significant upside potential
  • Selection of a well-regarded partner, ProDirectional, who provided Tornado the ability to fund growth while providing administrative support and cross-selling synergies
  • Positions at the helm of the completion fluids division with the support and incentives to take the business to the next level

In order to provide securities-related services discussed herein, certain principals of Founders are licensed with M&A Securities Group, Inc. or Founders M&A Advisory, LLC, both members FINRA & SiPC. M&A Securities Group and Founders are unaffiliated entities. Founders M&A Advisory is a wholly owned subsidiary of Founders.

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