Huron Capital began pursuing opportunities in the asphalt and paving sector two years ago, after identifying it as a fragmented industry ripe for consolidation with aging infrastructure and fundamentally strong tailwinds. On January 14, 2021, the Detroit private equity firm announced a new infrastructure services platform through its acquisition and recapitalization of Sunland Asphalt & Construction Inc., a vertically integrated, market-leading asphalt producer and paving services provider serving the rapidly growing southwestern U.S. Two months later, Sunland bought its nearest rival.
While the asphalt and paving industry is seasonal in some regions, it is mostly year-round in the Southwest. The sector “provides critical support to the country’s essential transportation infrastructure and is therefore immune to most political, policy and regulatory fluctuations,” Heather Madland, partner, business development, told Mergers & Acquisitions.
In Sunland, Huron found a profitable and growing regional market-leader with a strong management team that could form the foundation of a platform well-suited to Huron’s Buy & Build strategy. Sunland offers a suite of services to a diverse mix of public and private clients, including transportation departments, municipalities, industrial markets, and commercial markets. It has opportunities to gain market share by expanding both commercial and government customer relationships, as well as expanding its geographic reach through M&A.
CEO Doug DeClusin founded Sunland in 1979 with a single truck. Today, the Phoenix-based company has offices in Arizona, Colorado, Nevada and New Mexico, and has grown from an asphalt maintenance company into a full-service, vertically integrated solutions provider. Two months after Huron’s deal for Sunland closed, Sunland acquired cross-town industry rival ACE Asphalt. The combination of the two companies provides pricing leverage for raw materials, adds substantial scale, expands Sunland’s presence into two new states – Texas and Oklahoma – and yields a broader range of services.