Meridian Industrial Services:
Operational Dislocation, Structural Moat, Harrowgate Playbook

Proposed Equity: $47M Entry EV: $91M 4.8x Entry EBITDA
22
MONTHS

Average distressed industrial services auction cycle since Q1 2023 rate shock — window closes as comps recover

60% Motivated Sellers

Target Snapshot

Company: Meridian Industrial Services
Location: Pensacola, FL
Founded: 2009
Revenue: $84M (2024E)
Headcount: 340 field technicians
Geography: 6 Sun Belt states

EBITDA Erosion 2021→2024

2021 $14.2M 2022 $12.4M 2023 $10.1M 2024E $8.9M Pricing Lag Labor Bloat G&A Creep

Why Others Pass

Complexity of Fix → Quality of Asset → Easy Wins Harrowgate Zone Low Value Value Traps Fund A Fund B Fund C MERIDIAN

Harrowgate Operating Playbook

DeltaTech Mechanical 2019 2.8x MOIC Coastal HVAC Group 2021 3.4x MOIC SunState Facilities 2023 In Process (3.2x Base)

100-Day Value Creation Plan

Pricing Reset

+180 bps margin

Ready

Labor Rationalization

–$4.1M run-rate

Ready

Route Density

Optimize dispatch

In Diligence

CFO Replacement

Candidate identified

Ready

ERP Migration

NetSuite implementation

Post-Close

Contract Renegotiation

Top 12 customers

In Diligence
!
"Every 30-day delay costs $1.4M in recoverable EBITDA as labor contracts reset."

Source: Harrowgate Ops Analysis, October 2024

Financial Model: Base / Upside / Downside

$0M $5M $10M $15M $20M $25M 2024E 2025E 2026E 2027E 2028E Base: $19.1M exit EBITDA Upside: $24.7M Downside: $13.8M

Returns Bridge

Metric Base Upside Downside
Entry EV $91M $91M $91M
Debt Paydown ($21M) ($26M) ($14M)
EBITDA Expansion +$10.2M +$15.8M +$4.9M
Multiple Re-rating 4.8x → 7.5x 4.8x → 8.2x 4.8x → 6.8x
Exit EV $167M $203M $94M
MOIC 3.1x 4.0x 1.9x
IRR 28% 37% 14%

Exit Pathways

Strategic Sale

Apex Facility Holdings

Prior conversations on record

8.5x appetite

Sun Belt consolidation thesis

Sponsor-to-Sponsor

Secondary Market

3 inbound LOIs in comp sector, last 18 months

7.0–7.8x range

Platform-scale buyers

Probability-Weighted Exit EV Range

$155M – $181M

Risk Register & Mitigants

RISKS

Integration Execution

Multi-state ops complexity

Customer Churn

Top 5 contracts = 38% revenue

Labor Market Tightening

Skilled tech shortage

Interest Rate Sensitivity

Debt service coverage

MITIGANTS

Dedicated VP Integration

Owner: Sarah Chen, Harrowgate Ops

Contract Renewals Pre-Close

Owner: Deal team + mgmt

Retention Bonus Pool

Owner: HR (budgeted $1.2M)

50bps Rate Hedge

Owner: CFO + lender

Authorize $47M.
Execute Term Sheet.
November 14.
Harrowgate Fund IV has $210M dry powder; this is the anchor deal.